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Mr. PAUL. Controls reduce production?
Mr. DOLLINGER. Yes.
Mr. PAUL. Yes.

Mr. DOLLINGER. Can you explain to me, Mr. Paul, why it was that during the OPA days, milk products were at an all-time high?

Mr. Paul. During the OPA days milk products were at an all-time high?

Mr. DOLLINGER. Yes.
Mr. Paul. Just a moment and I will try to get the figures.
Mr. REED. I think we can give you some figures on that.

In the first place, I think it probably is true to state that that was a wartime push; there was a tremendous push to secure production at whatever cost.

In addition to that, however, the prices of dairy products were maintained at reasonably favorable relationships, in view of their costs, and in addition, very large-scale subsidies were paid directly to the farmers.

In addition to that, every effort was made to channel as much of the limited manpower as was possible to farm production.

Mr. DoLLINGER. That could be done at the present time.

Mr. REED. No, I do not think it follows at all that that would be the case, because while OPA was operating to hold down prices, there were a number of other activities undertaken by the Government to increase production, in addition, of course, to the sheer push that farmers put out to produce more during the war, that does not exist today.

Mr. DOLLINGER. The farmers still have subsidies today?
Mr. REED. No; and we do not want them.
Mr. DOLLINGER. You do not want them?
Mr. Paul. No.
Mr. DOLLINGER. But they still have them, do they not?
Mr. PAUL. No.

Mr. DOLLINGER. Let me ask you this question, then. I do not seem to understand. You testified, Mr. Paul, that you want to continue section 104 of the act. That is correct; is it not?

Mr. PAUL. That is right.

Mr. DOLLINGER. Two days ago Mr. Allan B. Kline, president of the American Farm Bureau Federation, testified before this committee that his association urged that section 104 be eliminated. Will you please explain to me the reason for the difference between these two farm groups?

Mr. PAUL. Well, Mr. Kline is the head of a Nation-wide organization that has diversified interests, and in the main it is doing a good job.

However, in doing that job I do not want him or the Department of Agriculture or the Department of State, or any importers or exporters, to begin the liquidation of the dairy industry, as the first step in what the present administration would do to establish free trade in the United States.

In other words, we do not have a free-trade climate existing in this country at the present time. There are restrictions all around us, and yet they want the dairy industry to be the guinea pig and accept free trade.

Now Mr. Kline has stated that under section 22 of the Agricultural Adjustment Act, that possibly the same end could be served. How

ever, such a method would be so time consuming that our dairy industry could be sold down the river and destroyed before that could be brought into play.

Mr. Bollinger. Your members do not belong to Mr. Kline's organization, do they?

Mr. Paul. Well, individually, a great many of them do. I happen to be a member of the Farm Bureau myself, in the State of Iowa.

Mr. DOLLINGER. You see I asked that question because we are here to legislate for the best interests of the people of the United States. Where two farm organizations are at odds as to what should be done under the circumstances, I wonder how it can be expected that Members of Congress will be correct in their decision?

Mr. Paul. As I explained, the Farm Bureau Federation has attempted to do a job for all types of farmers, and if in doing so they overlooked one important segment of the industry, I hope that will be forgiven.

Mr. DollingER. I imply no criticism; I am just trying to get information.

Mr. Paul. Well the dairy industry is not in favor of Mr. Kline's position on that.

Mr. DOLLINGER. That is all.
Mr. Brown. Mr. Fugate.

Mr. FUGATE. Mr. Paul, you have attached to your statement an appendix, and on page 2 of the appendix you give a table in which you indicate the trends in cattle population, production, and so forth.

In 1945 it appears that there were more cows 2 years and older on the farms than at any other time in the history of the country.

Mr. Paul. That is right.

Mr. FUGATE. At the same time you will notice, according to your table, that there were 6,307,000 heifers 1 and 2 years old in 1945. There has been a gradual decrease in the number of heifers along with the number of cows. Today you have 23,000,000 cows, and 5,700,000 heifers.

Mr. PAUL. Yes.

Mr. FUGATE. Is not that a further indication that in the next several years there are going to be even less cows because these heifers, being fewer in number, coming into production, are going to continue to reduce the population of cows?

Mr. Paul. Yes. Of course you could carry that on to its logical conclusion and have a continually declining number of heifers coming into milk.

Mr. Fugate. Yes.

Mr. Paul. Because of the decreased number of milk cows. That is quite true.

Of course

Mr. FUGATE. Will that not have an effect on the industry of reducing production, over a period of years, and making the prospect for the future continually one of lesser production?

Mr. PAUL. That is quite true, unless the trend can be reversed by making it more profitable to produce milk.

Mr. FUGATE. That is the point I am making.
Mr. Paul. Yes; that is correct.

Mr. Fugate. Now during this 6- or 7-year period you have had an increase of about 15 million people in the United States.

Mr. Paul. Yes.

Mr. FUGATE. So we are getting into the position of not being able to provide the actual needs for our people because of conditions existing in the dairy industry, primarily with respect to producing grade Å milk?

Mr. PAUL. That is true.

Mr. FUGATE. The cost of setting up a grade A operation today is almost beyond any farmer, is it not?

Mr. Paul. It is a very expensive proposition to set up a grade A milk farm.

Mr. FUGATE. Well do you not think that accounts for the fact that there are so many dispersals of dairy herds today? Cost of operation?

Mr. PAUL. That is one of the things, the cost of operation.
Mr. FUGATE. And maintenance of that type of thing?
Mr. PAUL. Yes, and shortage of labor, and things of that character.

Mr. FUGATE. And it appears to me that the dairy industry is getting into a pretty bad way because of conditions which actually exist, and we cannot permit anything to come in here that would have a depressing effect on it.

Mr. Paul. That is quite true and the failure to enact section 104 would have a very depressing effect upon any hope for future increase in production of milk.

Mr. FUGATE. One word with reference to Mr. Dollinger's statement with regard to Mr. Kline.

Mr. Kline was testifying on the premise that we decontrol, that we eliminate all controls.

Mr. Paul. That was his main premise.

Mr. FUGATE. That is right. Your position is that if controls are extended, then 104 should be a part of the extension, is that correct?

Mr. Paul. That is right.
Mr. FUGATE. That is your view?
Mr. Paul. Yes, sir.

Mr. FUGATE. And it is not in conflict with Mr. Klina's position, as I see it.

Mr. Paul. Not essentially with regard to the price control provision of the law, no.

Mr. FUGATE. That is all, Mr. Chairman.
Mr. BROWN. Mr. Widnall.
Mr. WIDNALL. Just one question.

Back in 1941, Mr. Paul, I noticed that our milk production was around 115 billion pounds.

In 1951 it is again 115 billion pounds, roughly. And that is with 2 million less cows, we are obtaining exactly the same production.

What about milk consumption? We have had a change in population during that period, of about 20 million people. Is consumption of fluid milk going down?

Mr. Paul. No; consumption has not decreased any. It has increased. Better husbandry practices have increased the amount of production per cow. That is true But we have also seen this thing, happening: in order to get enough grade A fluid milk for the needs of the people of this country, we have been taking it away from manufactured dairy products, such as butter, so that the figures I quoted here awhile ago, our annual per capital consumption of butter is down to 9.6 pounds per capita at the present time.

Mr. WIDNALL. What I do not understand is in 20 years you have had an increase in population of 20 million, which means many more consumers.

Your production is the same, according to your figures. Exactly 115 billion pounds. Why is that not reflected in good prices as far as the farmer is concerned? Because you have got that much increased demand.

Mír. Paul. Well, there are other factors entering into that. For instance, there is a lot of hard work connected with dairying. It is a 365-day a year job, twice a day, and when the farmer can produce beef cows and get a bigger profit out of beef cows than he can out of producing milk, and in addition produce beef cows with less labor than he can produce the milk with, he is going to produce beef cows.

Mr. WIDNALL. Well, I think the farmer certainly goes into that which is more profitable, but the point I would like clarified is this: you have the same production you had roughly 10 years before, but you have increased consumption of milk, and yet there seems to be no shortage of fluid milk, and you are talking about surpluses from other areas, which will be damaging to you. Do you understand my question?

Mr. REED. I think I understand your question, and the explanation is this: that milk production in this country of course is used for a number of purposes, of which fluid milk in bottles, fluid cream in bottles, cheese, and so forth, are among the purposes for which it is used.

Over this period of years which you are discussing, Congressman Widnall, while in 1940 and this last year the production was practically the same, the proportion of milk going to these various uses is markedly different.

The milk that formerly went into butter is now going into other uses, including fluid milk in bottles.

In other words, the butter producing section of the country stands as a reservoir from which additional supplies are taken to maintain fluid-milk consumption, and consumption of related products when needed.

Now the total milk-fat consumption of the country is down. And, while butter has declined from 16 to 17 pounds, prewar, to about 92 pounds now, the oleomargerine consumption has increased from a couple of pounds of about 7 pounds per capita.

So our milk has been going from the butter use to the fluid use, thereby enabling the population to have adequate supplies of fluid milk, even though the population has been increasing, but the drain is out of butter, and the fat that is lost there is made up with oleo, which is, of course, vastly cheaper than the animal fat butter because it is a vegetable oil and cheaper to produce.

Does that explain why we are able to keep up the fluid milk consumption in this country, with a practically static level of production in the face of increasing population growth?

Mr. WIDNALL. Yes, sir.

Mr. REED. Now our worry, from the point of view of the fluid milk consumer, is that if this reservoir of milk is diminished, by making butter so unprofitable that farmers will go into, as they have already, other livestock enterprises or other crops, then we will, in time, not

have that reservoir to draw upon to increase our needs as the requirements of the population for fluid milk increase.

Mr. WIDNALL. That is all.

Mr. BROWN. We will recess to reconvene at 2 o'clock this afternoon, as there is a roll call on the floor of the House now.

Thank you very much, Mr. Paul.

(Whereupon, at 11:54 a. m., the committee recessed to reconvene at 2 p. m., the same day.)

AFTERNOON SESSION (The committee reconvened, pursuant to its recess, at 2 p. m.)

Present: Chairman Spence (presiding), Brown, Patman, Multer, Dollinger, Fugate, Hays, Wolcott, Gamble, Talle, Cole, Hulí, Nicholson, McDonough, Widnall, and Betts.

The CHAIRMAN. The committee will be in order. I understand we have a representative of the Butter Institute, the Cheese Institute, and the blue cheese industry.

As we are behind schedule, I think it may be well to introduce them as a panel, let them present their statements for the record, and then let them answer questions as a panel.

If there is no objection, we will proceed in that way.
The clerk will call them.

The CLERK, Mr. Russell Fifer, of the American Butter Institute, Mr. William E. Swain of Treasure Cave, and Mr. Gaumnitz of the National Cheese Insitute.

The CHAIRMAN. Gentlemen, you may proceed as I have suggested. You may present your statement and then you may be interrogated.

Mr. Fifer, you may proceed first, followed by the other two gentlemen.

STATEMENT OF RUSSELL FIFER, EXECUTIVE SECRETARY, AMERI

CAN BUTTER INSTITUTE, CHICAGO, ILL. Mr. FIFER. My name is Russell Fifer. I am executive secretary of the American Butter Institute, a national trade association, located at 110 North Franklin Street, Chicago, Ill. Members of the American Butter Institute constitute principal manufacturers of butter in approximately 40 States of the United States. Member creameries furnish a daily market to over 1,000,000 dairy farmers.

The Second War Powers Act, enacted during World War II, has certain provisions which permitted the Secretary of Agriculture to ban imports of fats and oils, including butter. This provision was extended year by year until June 30 of 1951. Instead of renewing this authority in the Second War Powers Act, the provision this year was added as an amendment by Congressman August H. Andresen, which became section 105 of the Defense Production Act of 1951. Cheese was added to the list of commodities which the Secretary of Agriculture was authorized to consider for a restriction in imports.

Total world exports of butter are estimated at 961,200,000 pounds in 1951 (Foreign Crops and Markets, vol. 64, No. 6, p. 103). Exports from Australia were adversely affected by the prolonged drought in that country.

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