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Cheese: U. S. imports for consumption, by variety, 1931 to date

[In thousand pounds)

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Blue mold, in original loaves..
Bryndza, in casks, barrels, or hogsheads

weighing with contents over 200
pounds each.
Cheddar:
Not processed except by division

into pieces. Otherwise processed. Edam and Gouda:

40 percent or more butterfat.

Less than 40 percent butterfat.
Goya, in original loaves...
Gruyere, process
Provolette
Romano, Reggiano, Parmesan, and Pro.

volone, in original loaves.
Roquefort, in original loaves
Sbrinz, in original loaves
Sheep's milk cheese for grating, in orig.

inal loaves.
Pecorino, in original loaves.
Pecorino, in original loaves, not suitable

for grating Swiss or Emmenthaler Other cheese and substitutes

35 35 35 35 35

25 25 25 20 35

15 25 25 20 25

3
5
5
5

15 20 25 20 20

7
7

5
5

7

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1 Other than Cuba and Philippine Republic. * Includes changes as formulated at Annecy, France, in 1949, mostly effective in 1950. 3 Includes changes as proposed in tentative agreements forinulated at Torquay, England, in 1950-51. Source: Compiled from reports of the U.S. Department of Agriculture.

Mr. GAUMNITZ. Now, Mr. Chairman, I have read the statement of Mr. Paul of this morning and also the statement of Mr. Fifer. I agree with the general contentions which those two gentlemen presented.

Mr. Chairman, there can be little question that milk production is going to decline unless section 104 is retained.

If no action is taken under any other statute, then probably the Government will be forced to buy a rather large quantity of dairy products under its price-support program.

In other words, that only supports what was stated this morning by Mr. Paul, particularly, that those products would then be accumulated under a condition where, to all intents and purposes, the United States is underwriting world dairy product prices.

The statements made with reference to other statutory authority we agree with also. It is generally contended that other authority exists under which proper protection might be afforded. At the same time it is argued that action under section 104 is contrary to certain provisions of the General Agreement on Tariffs and Trade.

We are unable to understand how it can be argued that action under section 104 would violate the general provisions of the General Agreement on Tariff's and Trade, without the same type of violation resulting from action under any of the other statutes under present conditions.

It has been brought out particularly that the reduction in import duties, in terms of dollars and cents, has amounted to about 50

percent-taking all dairy production as a group. There is some difference in the case of cheese, because the reductions have been 50 cents in terms of dollars and cents, because of an ad valorem difference.

I want to touch very briefly on something which I think has not been touched upon by the other witnesses. A somewhat new element in international trade has recently become evident and should be given weight in considering section 104.

Reference is made to the arbitrary and discriminatory export pricing arrangements of certain countries exporting to the United States. Examples of such arrangements, we can cite two or three.

In summary I think it is increasingly evident that a clear statement of policy should be forthcoming from the Congress.

It appears that the provisions of section 104 set forth such a policy and we believe that such section should be continued in effect at least for another 3-year period, or until international conditions become more settled.

That completes my statement. I would like permission for Mr. Frigo, one of my colleagues, to make a short statement.

The CHAIRMAN. We will now hear from the representative of Treasure Cave, Mr. Swain.

STATEMENT OF WILLIAM E. SWAIN, ON BEHALF OF TREASURE

CAVE

Mr. SWAIN. Mr. Chairman and members of the House Banking and Currency Committee, I will try to be as brief as I can.

Treasure Cave is a partnership of F. M. Frederiksen, managing partner, and his wife, Dorothy S. Frederiksen. It is located at Faribault, Minn.; and has operated continuously producing blue cheese since it began in 1935. It is the oldest of existing plants in the United States producing blue cheese-producing 10 to 15 percent of the domestic total of this

type of cheese —which is its only product. The plant uses caves which have been dug in natural sandstone for curing, storing, and packing. The nature of the plant does not lend itself to the supplementary production of Cheddar or other types of cheese or dairy products.

Treasury Cave, like other producers of specialty type cheeses, has been concerned about the accelerated rate of imports of foreign cheese and other products which are directly competitive with domestic production, and knows, first hand, the results of the impact of such imports. Since May of 1950 we have been faced with the problem of reducing or discontinuing production.

During the summer of 1951 we were forced to sell over 50 percent of the milk from patrons at a loss. This milk went to a plant which used it to make Cheddar. At this very time the Commodity Credit Corporation was making purchases of Cheddar under the support program. Within a month after the issuance of Defense Food Order 3, Suborder 2, we again felt able to use all of our milk from patrons in anticipation of increased demand.

The passage of the Defense Production Act of 1950, as amendedwhich included section 104—and the issuance of the Defense Food Order 3, Suborder 2, did not materially reduce the amount of imported blue cheese available during the closing 5 months of 1951. The threat

of repeal of section 104 has not provided the assurance to domestic producers which is needed if they are to continue as sources of specialty types of cheese.

The 5 year, 1945-49, average domestic production of blue cheese is approximately 10% million pounds, and should closely represent the capacity of domestic producers of this style. The average production of domestic producers of Blue Cheese in the 3 years, 1948–50, the period used in Defense Food Order 3 is approximately 8 million pounds, 22 percent below the 1945-49 average.

Domestic production of blue cheese in 1950 declined 33 percent below the 1945-49 average and in 1951 declined further to 50 percent of the same 5-year average. These declines were in direct relation to the increased rate of blue mold cheese imports. While our own sales in 1950 and 1951 declined somewhat less than the average of the domestic industry, our cost of production other than milk increased 32 cents per pound. The increased costs are a direct result of spreading fixed and semifixed costs over decreased production and sales. This has made it even more difficult to meet the low price of imports.

The provisions of section 104 should be included in H. R. 6546 the continuation of the Defense Production Act, and the clause (a) impair or reduce the production of any such commodity or product below present production levels should be defined so that domestic production will be considered as the average of the 5-year period January 1945 through December 1949, and that it will not be reduced or impaired below 75 percent of that average.

It is unfortunate that much of the previous controversy on the matter of import restrictions has been centered around the case of blue cheese; because it is only part of the problem. A review of reports from Denmark and conversations with those who have firsthard information and experience in the Danish dairy industry indicates:

1. That 1950 Danish exports of blue cheese to the United States represented about 5 percent of their total exports of this commodity.

2. That they could probably sell all of their cheese and other dairy products in Europe, except that they are desirous of obtaining dollars.

3. That they import oleomargarine and export butter.

I would like to read a report that comes from Denmark. This is the situation that existed then:

The milk production at the moment is approximately 10 percent lower than at the same time last year. It is a conspicuous feature that although the cattle are slowly recovering from the effects of the mouth and foot disease, it seems to take a very long time until the milk yield will reach its normal peak. Furthermore, several farmers discontinue-dairy farming because of the low return caused by the price policy of the main purchasing countries.

CHEESE OUTLOOK The production of all types of cheese is quite high, but the demand is very active, and stocks are diminishing. It may be estimated that the balance between production and demand may not be on level until approximately June-July.

In other words, they are able to sell all of the product that they have. They have a home for it. That is more than we can say in the specialty group in this country today.

They go on and point out that the United Kingdom, France, and Germany, all showing increases, and then make this specific note about overseas:

United States and Canada: In a way it is fortunate that the United States is not drawing larger quantities right at the moment because of the present situation. Canada is buying regularly and any reasonable orders can be covered.

I think that is very significant.

Now, No. 4: That Europe probably does not have exportable surpluses of food, and will always be an importer of agricultural products.

5. That they were disturbed when the United States Commodity Credit Corporation sold surplus Cheddar to England.

6. That they had increased their production of blue cheese about 50 percent in 1950 and 1951.

7. That restrictions of European countries and price, not quality, would make it impractical for American producers of specialty types to find a market in Europe.

Understand, these points that I am pointing out are from things that we have learned from people in those countries from first-hand knowledge.

8. That European countries and governments will not import what they have in abundance.

9. That European countries impose trade restrictions and tariffs to protect their industries.

10. That the price of Danish exports is regulated nationally.

11. That there are advantages in producing more butter and keeping their skim milk and buttermilk for supplemental feeding of livestock.

Blue cheese is historically French. Research, development, and production was almost simultarwous in both Denmark and the United States. United States Department of Agriculture Bulletin No. 82 indicates that work on blue cheese was being done in this country prior to 1906, and subsequent publications of the United States Department of Agriculture and various State universities show increased interest up through the early 1930's and on to the present.

From 1919 until about 1934 Grove City Creamery, in association with the United States Department of Agriculture, produced an average of 6.tons per year of American Roquefort. This was the first commercial production of domestic blue cheese.

Prior to 1935 when Italy invaded Abyssinia, England purchased large quantities of Gorgonzola, another variety of blue mold cheese, from Italy. When England stopped her trade with Italy, Danish producers got their real chance to increase their production of blue cheese. It is noteworthy that 1936 is the first year that United States import records show blue cheese from Denmark in excess of 1 million pounds. Imports of this item increased until 1940 when they declined, and from 1941 to 1947 there were no imports of Danish blue cheese. In 1948, we imported less than 1 million pounds of this commodity from Denmark. Economic Cooperation Administration funds helped make possible the expansion of Danish cheese production. Devaluation and tariff reductions have made possible the importation of blue cheese at prices which were below the cost of domestic production; thus threatening the price-support program.

During World War II, when imports of blue and Roquefort were negligible, domestic producers doubled the demand by producing high

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