ÆäÀÌÁö À̹ÌÁö
PDF
ePub

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.

Mr. 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 91⁄2 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, Hull, 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 gentle

men.

STATEMENT OF RUSSELL FIFER, EXECUTIVE SECRETARY, AMERICAN 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.

It is a matter of conjecture, of course, to what extent exports in 1952 and thereafter would be diverted to this country. There is one practical certainty: The support price for butter paid by the Government. of the United States would be the most attractive outlet for the surpluses of the exporting nations of the world. By mutual consent, the United Kingdom and countries having long-term contracts with her could agree to divert considerable quantities of butter to this country. The gains in dollar exchange to the British Empire and to non-Empire sterling bloc countries would be considerable. Argentina, which is experiencing a sharply unfavorable trade balance, would probably divert the bulk of her butter surplus to the United States. It does not seem at all unreasonable to conclude that about 25 percent of the world butter export surplus would be diverted to the United States in the event of repeal of the Andresen amendment. This would mean about 240 to 250 million pounds of butter. The consumption of butter in Great Britain is reduced approximately 250 million pounds since the period immediately before World War II. Since this country was, and is still, the greatest butter importing country in the world, it is logical to assume that this so-called free butter would be seeking a desirable market.

This foreign butter can be sold wholesale, duty-paid, in the United States from 48 to 60 cents per pound, taking into account present foreign exchange rates. In other words, at a time when our Federal Government maintains the domestic price level for butter and at the price of 67.75 cents per pound, foreign imports would take over a substantial portion of our domestic market. All this would be done at the expense of American producers and taxpayers.

In the 5 years preceding 1939, the world price of butter, New York basis, averaged 8 cents below domestic prices at New York. A duty of 14 cents per pound was adequate to protect the domestic dairy industry except during times of extreme shortage when some foreign butter came in over the tariff barrier.

Since World War II there have been two major developments which, in absence of legislative relief, have completely nullified the protection historically granted to the butter and dairy industry: 1. The 50 percent cut in the duty of 14 cents down to 7 cents per pound for the first 60 million pounds of foreign butter admitted per year; and

2. The progressive devaluation of sterling bloc currency by 42 percent in terms of the United States dollar.

The effect of the latter can be illustrated by the present agreement between New Zealand and the United Kingdom. On the basis of the United Kingdom pound sterling, worth $2.80, New Zealand realizes 361⁄2 cents per pound f. o. b. steamer for her butter. New Zealand can, therefore, put butter down in New York for 41 cents per pound before duty and 48 cents per pound, duty paid, as compared to our domestic market at New York city of 69.75 cents per pound for 92 score butter on May 7, 1952. It must also be remembered that the butter production in New Zealand increased approximately 10 percent or 40 million pounds in 1951 as compared to the previous year. If New Zealand was still being paid in British pounds, worth $4.86 American dollars, her butter would be worth 631⁄2 cents f. o. b. steamer, which would mean 68 cents landed in New York. If the old duty of 14 cents still applied, it would mean 82 cents duty paid butter, a

price not too far out of line with a level which would be reasonably protective to the domestic producer.

In other words, United States butter prices are not out of line. The unbalanced international payments ledger of the United Kingdom plus the arbitrary cut in the protective tariff have combined to expose the domestic butter market to the world market. Why was the protective tariff on butter cut in half when the differential between the domestic and foreign price of butter increased threefold?

The Denmark dairy situation is reviewed in Foreign Crops and Markets, volume 64, No. 17, pages 387-388, released on April 28, 1952. The following statement is made:

Free commercial export-market prices, which are considerably above the United Kingdom prices have been an important factor in the price obtained by farmers. For some months there has been a tendency for decreasing prices of butter in these markets.

This means that the lowered prices in Denmark would result in greater competition for the American domestic butter market.

Is the dairy, and particularly the butter industry, being asked to take the whole load in support of certain exports for other farm products? If free trade should be encouraged, then the Sugar Act of 1948, as amended, which restricts imports of sugar to certain quotas from various countries, should be repealed. Likewise, a careful study should be made of other legislation and action taken to have it stricken from the statute books if the American agricultural economy should go on a tariff-free or free-trade basis.

Certain organizations and departments of Government that have urged repeal of section 104 point to the possible protection against burdensome imports through the enforcement of other legislation existing on the United States statute books. If the administration does not want to act in line with the authority granted in section 104, which is purely discretionary, is it reasonable to expect that they would act under existing authority in section 101 of the Defense Production Act, section 22 of the Agricultural Adjustment Act, or section 7 of the Trade Agreements Extension Act? Moreover, the procedure prescribed under the other sections would be cumbersome, probably slow in functioning, and would not serve the purpose of protecting the vital dairy and butter industry of the United States. These sections were effective in 1950 when the Commodity Credit Corporation was required to purchase 109 million pounds of domestic cheese for pricesupport purposes, while at the same time 56 million pounds of cheese was imported. Also, foreign potato growers were subsidized under the price-support program.

We would favor inserting the word, "discretionary," in any continuing authority on this issue because there could conceivably be occasions when butter imports would be desirable. The Dairy Branch of the PMA-USDA could logically administer this authority with recommendations from a butter industry advisory committee.

A demoralized butter market would mean a ruined dairy industry because butterfat is the key to dairy prosperity. A loss of markets for domestic butterfat means the American farmer will stop producing the product he cannot sell-but what he stops producing is milk and milk shortages kick back on consumers. To permit unlimited imports at the expense of the American dairy farmer and consumers of taxpayers would actually be "colonialism in reverse."

It is our opinion that the present weak butter market, which is only one-fourth to one-half cent above support levels (May 7, 1952) and the reluctance of the industry to store butter can be blamed almost entirely on the fear that foreign butter will flood the American market when section 104 terminates on June 30. The November future market prices are about the same as last year in spite of the fact that support prices for butter are 14 cents per pound higher. The coldstorage holdings of butter on April 1 were only 6.2 million pounds as compared to 33.1 million in 1951. Estimated holdings on May 1 were 8.5 million pounds or about one-fourth of last year. Who would want to take the risk of storing butter except at values which reflect only the support-price level? In the past the domestic butter market has always been reserved for domestic producers-there never was any thought of challenging that philosophy until after World War II, when sterling-bloc currencies were devalued and tariff duties reduced, as stated heretofore.

We understand the Senate Committee on Banking and Currency has tentatively voted to repeal section 104 and substitute the language of title III of the second War Powers Act, which expired June 30, 1951. We firmly believe that this authority would not be adequate not effective in dealing with today's problem because:

1. This particular section, known as Public Law 590, provided that imports could be controlled if the President determined that such controls are essential to the acquisition or distribution of products in world short supply. It is our understanding that none of the commodities under this authority are in world short supply, and thus allocations are not required as was the case during World War II; and 2. Public Law 590 provided that imports could be controlled if essential to the early liquidation of surpluses of stock owned or controlled by the United States Government. At this time, the only stocks held by the Commodity Credit Corporation are nonfat dry milk solids, and hence no program could be inaugurated to control imports of butter, cheese, and so forth, because the Government is not holding any of these commodities under the price-support program.

In closing this statement, I would like to address the committee briefly on the subject of price controls for butter. Even though mandatory price ceilings have not been placed on butter to date, due to provisions in the Defense Production Act of 1950, as amended, we sincerely feel that the regulations imposed by OPS have curtailed production of milk and butter. Dairy cows are rapidly disappearing in this period of decreasing labor supply on the farms and relatively high prices for beef. Dairy farming requires more labor than most other farm activities. There has been the greatest decrease in cow numbers and dairy production in the Plains States because farmers have feed crops, cattle and hogs as alternative crops, and they often follow the farm practices that require the least labor, unless properly rewarded. About one-half of the approximate 4.3 million reduction in cow population suffered throughout the United States since 1945 may be traced to the West North Central States, where most of the butter in the Nation is produced.

Every utilization should be made of the production possibilities of 2%1⁄2 million dairy farmers in the United States. More than half of these units are family farms, milking from two to six cows, producing farm-separated cream for butter making, and they also produce

« ÀÌÀü°è¼Ó »