improved the quality, and have maintained the high standard, of every form of Italian cheese made.

In addition to the pioneers named in this great industry, many others are presently engaged in the same business, thus causing keen competition in the markets of the United States. This business consumes annually, in excess of 850,000,000 pounds of milk, the market value which, computed at the average milk price, is in excess of $34,000,000 (computed at $4 per hundred pounds).

The investment of the various manufacturers in this machinery, and in equipment, is in excess of $10,000,000. More than 5,000 persons are directly employed therein. Various items of supplies, equipment, and machinery furnish labor to untold numbers of additional persons furnishing the industry indirectly. Thousands of acres of farm land, occupied by some 20,000 families, are thus gainfully employed away from the concentrations of our larger cities. The annual earnings of the labor employed in such manufacturing plants are approximately $15,000,000 (averaged at $3,000 per year).

Formerly, consumption of Italian cheese was largely by the Italian population of the United States. Time has wrought many changes, until today, Italian cheese is used quite generally by the American public. Because of such increased use, the production of Italian cheese has increased from a low of 3,500,000 pounds, in the early days of the industry, to 47,000,000 pounds in 1947, and to approximately 50,000,000 pounds as of today. This progress was made possible by the protection afforded the industry through import duties levied by the United States. Any let-down in that protection will be fatal to a vital industry, operating especially as it is, under the high standards, and the stringent supervision of the public health authorities.

The welfare of the many small communities depends on the small businesses, and the smaller industries, none of which separately may be too important, but all of which, taken collectively, furnish important markets to the farmers, and gainful employment to the many persons not congregated in the larger cities.

This industry in the United States is under a severe handicap when required to meet the competition of Argentina and Italy, for these reasons:

In both of these countries the cheese is produced by anyone who will: (a) without inspection of utensils or manufacturing plants; (b) without any standard requirement of the product as to moisture or fat content or solids; (c) without test of cattle for disease; (d) with low labor cost; (e) without competition with other users of milk; (f) without government inspection of the cheese, and is sold at the arbitrary price fixed by the Italian Government.

The Government of Argentina has devalued its currency 46 percent with action has the effect of reducing the import duty of the same extent. Its purpose is to get American dollars, at the expense of American producers, and at the expense of the Italian cheese industry in the United States.

On the other hand, the American manufacturers of Italian cheese must (a) compete with other users of milk such as the creameries, condenseries, manufacturers of other types of cheese, including the sale of fluid milk; (b) maintain a Government fixed standard as to the moisture content, fat and solids content; (c) maintain both factories, utensils, and milk under inspection, sanitary conditions; (d) pay the cost of inspection; (e) pay taxes on cheese made, and especially that in long storage; (f) pay top price for fluid milk in competitive market; (g) pay its labor union established prices--a living wage; (h) sell in competition with other manufacturers, not at an arbitrary Government fixed price, but at the price fixed by its competitors.

The Italian cheese industry is fighting the battle of survival. It asks only that foreign imported cheese be required to meet the same high production standards as required in the United States.

To quote from hearings before the Committee on Banking and Currency, United States Senate, Eighty-second Congress, first session, part 4, on page 3061, statement by E. W. Gaumnitz, secretary, National Cheese Institute:

"The statement is commonly made that imports are of no importance since they represent only 5 percent of domestic production. However, if figures are examined, it will be found, as in the case of blue cheese, importations amount to more than 40 percent and practically 50 percent. If we speak of Italian cheese, bulking all the various types of Italian together, it is around 40 percent. So, the importation of 5 percent of total United States production is not very much, but it is very important when we speak of particular varieties. The varieties which are particularly important and which have been injured in the last year are blue, the Italian types, and the Holland types, particularly."

Hence, from the above it is seen that 40 percent of the Italian production here in the United States is equal to the imports from outside; or, to rephrase it,

the imports constitute numerically over 40 percent of the domestic production in the States.

(P. 3070) by Mr. Gaumnitz, half way down the page:

"The imports of all Italian types for the period of 1938 to 1950 averaged 14,313,000 pounds per year. In the same period United States production of Italian types of cheese averaged 42,037,000 pounds per year. Average imports for these types were 34 percent."

We respectfully submit that 40 percent is definitely a ruinous figure to us. The same rational thought is contained in letter of L. D. Schreiber & Co., Inc., to Hon. Paul Douglas, on page 3073 of said hearings, dated September 5, 1951.

(P. 3074, fourth paragraph) letter of L. D. Schreiber & Co., Inc., to Carl D. Corse, Acting Director, Office of Economic Defense and Trade Policy:

"In all Italian cheeses imports listed 40 percent, but if the last item, "Other cheeses," about 4,000,000 pounds, should happen to be Italian type, this would make Italian imports approximately 50 percent of our production.'

(P. 3079 is to a similar effect.)

Hence, it is respectfully, but sincerely, submitted that the imports from Italy and Argentina, in particular, actually do constitute 40 to 50 percent of the domestic production of Italian cheese, and sufficient to create havoc with domestic industry.

Section 104 of Defense Production Act of 1950, as amended should be retained. FRIGO BROS., CHEESE CORP., By P. FRIGO.

Mr. DOLLINGER. Mr. Chairman.
The CHAIRMAN. Mr. Dollinger.

Mr. DOLLINGER. Mr. Gaumnitz, you represent the National Cheese Institute, do you not?

Mr. GAUMNITZ. Yes, sir.

Mr. DOLLINGER. The position your organization takes is that section 104 be extended; is that correct?

Mr. GAUMNITZ. Yes, sir.

Mr. DOLLINGER. I note that another group that will testify, I think right after you, representing the Cheese Importers Association of America, takes the position that section 104 should not be renewed. I note there is a difference of opinion between the two groups that deal only in cheese and I am interested to find out how the consuming public in this country will fare, by either in the repeal or continuation of section 104. I am curious to find out the position of your organization on that question.

Mr. GAUMNITZ. First, let me say that the National Cheese Institute includes in its membership manufacturers of cheese in the United States. It also includes distributors and importers. So we have some importers who are also members of the National Cheese Institute.

Mr. DOLLINGER. Do those importers also manufacture cheese? Mr. GAUMNITZ. Yes, some manufacture, import, distribute, and process cheese.

Now, going to your question as to what will be the effect upon consumer prices, over a period, in the first instance, I think it would be quite clear that if section 104 were not continued, and if there were no alternative action, that the first reaction would be for a decline in price.

The particular Defense Production Act, however, has as one of its purposes the maintenance of production or the increase of production, and particularly in section 104, it is noted that certain products, including dairy products, are deemed to be necessary. That is a finding made by the Congress.

We are pointing out that if that is the intention, then it is quite certain that in the absence of 104, or some alternative action that would result in similar regulations, that almost certainly milk production in the United States would be reduced and probably the manufacture of other manufactured dairy products would be reduced.

One further thought: Over a period of time, I think it is quite clear that prices to consumers, for fluid milk, would almost certainly be raised, not reduced. In other words, there are two effects, one a short-term effect, and the other a longer-term effect.

In addition to that, in the event of an emergency, as was the case during the last year, it is practically certain there would be no imports. During the last war, you may remember that we exported, in the case of cheese, if I remember the figure, up to in the neighborhood of 400 million pounds, or almost 50 percent of the total cheese production in the United States. We were exporters in that case.

A somewhat similar situation was the case with reference to nonfat dry milk solids and evaporated milk.

Mr. DOLLINGER. When was cheese added to this prohibition of import? At what particular time? If my memory serves me correctly, at one particular time that had been excluded.

Mr. GAUMNITZ. Section 104 was passed a year ago.

Mr. DOLLINGER. Prior to that, did Public Law 590 control it?
Mr. GAUMNITZ. Yes, sir.

Mr. DOLLINGER. Cheese was excluded from that, was it not?

Mr. GAUMNITZ. No action was taken with reference to cheese under that act. There was no prohibition. As I remember the action taken with reference to one of the other dairy products, specifically butter, it was taken in part upon the condition

Mr. DOLLINGER. You see, I am trying to find out when it was decided that it was necessary to prohibit the importation of cheese into this country.

Mr. GAUMNITZ. There is no prohibition on the importation of cheese.

Mr. DOLLINGER. In effect it does that?

Mr. GAUMNITZ. No, sir.

Mr. DOLLINGER. Because the prices are out of reach of the consuming public; is that correct?

Mr. GAUMNITZ. No, sir, quotas are established at the present time for the importation of cheese which are based on the average importation during the years 1948, 1949, and 1950. In the case of other products, there may be a hundred percent quota. In other cases, the quota may be zero.

Mr. DOLLINGER. That is all.

The CHAIRMAN. Dr. Talle.

Mr. TALLE. I notice, Mr. Fifer, according to my information, butter production has been decreasing, is that correct?

Mr. FIFER. It has been, yes. In the last 3 years, particularly. Last year it was about 12 percent below 1950, and this year production is down under last year to some extent.

Mr. TALLE. How does it rank with the production of other manufactured dairy products?

Mr. FIFER. But even at that butter still serves the purpose of the balance wheel because butter even at the present time utilizes about

20 to 22 or 23 percent of the total milk supply, or about the total of all the other manufactured dairy products put together.

Fluid milk takes about half, and butter almost a quarter, and the other products about the same. So that means that butter produced, particularly in the months of May, June, and July, takes up the surplus at the greatest production period of the year. So even though production is down, its function as a balance wheel is still quite important and we should not in any way at all discourage the production of butter or the production of cream throughout the country.

Mr. TALLE. It furnishes flexibility in the industry, does it not? Mr. FIFER. That is right. And at the present time, our industry is encouraging the so-called green pastures program, setting up ways by which the farmer can increase his efficiency on the farm, and increase his butterfat dollars per acre, and make more money from grassland farming and have more cows.

Mr. HULL. With the boys going into the Army, who is going to milk the cows?

Mr. FIFER. That is a problem, and, of course, in our case, most of the milk that goes for butter comes from the family-sized farm. They have more problems on commercial farms than on the butter farms. It is a problem, though, just the same. It is hard work, and it is a problem.

Mr. HULL. Excuse me, Dr. Talle.

Mr. TALLE. That is quite all right, Mr. Hull.

On page 2 of your statement, Mr. Fifer, I quote this sentence:

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 then you follow with another thing, but I want to refer to this first point.

Now that cut, from 14 cents to 7 cents, that was made under the authority the President has is called the flexible tariff law, is it not? Mr. FIFER. The Reciprocal Trade Agreements Act.

Mr. TALLE. Well, the President does have power under the flexible tariff regulations to reduce it by 50 percent?

Mr. GAUMNITZ. If I may interrupt, I believe this was made under the Trade Agreements Act of 1934, which was since extended several times, rather than under the flexible provision of the Tariff Act of 1930.

Mr. TALLE. Yes. Now, I want to ask another question with reference to foreign nations, on the matter of butter. It revives the

old oleo fight. What has oleo done to butter, if anything?

Mr. FIFER. Well, it has, of course, served as a substitute to many people. It is not a substitute, actually, it is merely an imitation, but people are buying it and using it for a spread on their tables. It is being used commercially in a lot of places, too, as a substitute for butter, in public eating places.

We estimated last week-a figure which is very easy to provethat there are 70 million meals eaten in public eating places in America. every day and the food and drug history of enforcement on oleo shows there is about an 18 percent violation. That is on 30,000 restaurants checked. If you apply that to the 70 million meals served daily, you come up with a figure of $33 million a year that

the American public is paying for butter, and not getting it. That is quite a figure.

Mr. TALLE. Eighteen percent violation?

Mr. FIFER. Yes, that is a Nation-wide history, for the last 18 months, based on 30,000 inspections made.

Mr. TALLE. I should think it would be a rather difficult thing to check, so that the 18 percent is probably a low figure.

Mr. FIFER. It might be a low figure. It brings out the point we have made for all these years, that it never can be enforced as long as the oleo is permitted to be colored yellow in semblance and imitation of butter.

Mr. TALLE. On that same subject, Mr. Fifer, I notice that you make this statement: "They import oleomargarine and export butter." Does that relate to Denmark?

Mr. FIFER. Yes, that actually existed, that they had a ration on butter up until late in 1950, and allowed free all the oleo that their people could use, and Denmark, as I understand it, is one of the largest importing countries per capita of oleomargarine of any foreign country, that import from this country and that is what gives them the opportunity to threaten the world with their butter production, because the people do not consume butter at home where it should be consumed. They consume oleomargarine.

Mr. TALLE. Historically, Denmark has shipped its butter and bacon to England, is that not right?

Mr. FIFER. I think that is still their largest market on butter and bacon.

Mr. TALLE. It certainly is for bacon, at least.

Mr. FIFER. That is true.

Mr. TALLE. Because they make their bacon to suit the English

taste.

Mr. FIFER. That is right. And their bacon comes from skimmed milk, I might add. When they make butter they feed their skim and produce bacon. That is one of their methods of producing pork, and they like that idea.

Mr. TALLE. I would like to turn to your second point, Mr. Fifer, on page 2 of your statement:

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

Mr. FIFER. Yes; we proceed to show the results of that in the following two paragraphs where we point out there that the devaluation took place from $4.86 down to $2.80, an amount of 42 percent. And had the currency remained at the old basis of $4.86 or almost $5, butter would today, on that basis of currency, with the 24-cent duty, be actually higher than our present market in this country.

Mr. TALLE. Well now, if there were free trade the world over, then each country would devote itself to that enterprise of those enterprises in which it had the best advantage or least disadvantage. And if, let us say, England had advantages in everything, we would not cut off our production but we would produce those things in which our disadvantages were the least; would we not?

Mr. FIFER. That is right.

Mr. TALLE. We must look at the world as it is-we must face reality, and we do not want to rely on Russia for gunpowder, for instance, we want to make it here for our own security.