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Mr. FIFER. As I pointed out it has had some effect because it has acted to replace some of the markets for butter, and there is no possible way of competing on the price basis because the oil that goes into oleo is today 9 or 10 cents a pound and the fat in butter is around 70 or 80 cents a pound, and the two products have the same fat content. There is no way of competing.

And eventually if we cannot maintain honest dealing, it might mean further disruption of butter markets, because they are taking them over in an underhanded way.

The CHAIRMAN. Well, there is hardly any limit to the production of oleomargarine, is there?

Mr. FIFER. No limit whatever. The production of butter is limited to the production of milk, because butter takes the product that is left over after the amount of fluid milk is taken off. Today it is taking around 23 percent of the total milk supply.

The CHAIRMAN. Do you believe that it is essential to have a foreign market for dairy products?

Mr. FIFER. Well, I think

The CHAIRMAN. I mean do you think it is essential to cultivate a foreign market to take our surplus in dairy products?

Mr. FIFER. It may be necessary for certain dairy products, but I think we could develop a market for all of our butter here for at least reasonable years to come, because production and consumption are down. I think a market might be developed for dry-milk products and cheeses.

Mr. GAUMNITZ. I would say, Mr. Chairman, that under normal circumstances, the volume of exports of dairy products which may logically be expected by United States producers is extremely small. It is limited almost entirely to a little evaporated milk, some nonfat dry milk and some cheese, and it is not in the European territory.

The CHAIRMAN. The cultivation of business relations, though, it seems to me, might increase that, might it not? What have been our exportations of dairy products?

Mr. FIFER. Our exportations prewar were almost negligible.

During the war, and strictly under a war condition, we exported large quantities of cheese, evaporated milk, nonfat dry-milk solids and butter.

Following the war, in the rehabilitation period, a lot of that export was continued. Likewise, under the ECA program it was continued. I expect it may be continued under the Mutual Security Program, also through the United Nations program.

Now, the facts, however, would indicate-it is pretty hard to reduce it to a dollars-and-cents figure-but it has been estimated that up to 50 percent of the export of dairy products, in effect, was purchased with United States dollars. It is not a commercial proposition. It has not been a commercial proposition, at any time--was not during the war and has not been since the war. It has been strictly a matter of a partial give-away type of program.

Now there is no indication, there is no inference that I can see that can be logically drawn, that because there were exports of a considerable magnitude under a war condition or under a give-away program, that exports might be expected to continue on a commercial basis following the cessation of the gift program.

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was taken over by section 104 in this act. That control only worked in the disposition, acquisition and distribution of products that were in world short supply, or required allocations, such as oils, fats, and so forth, which is not true today.

The second provision protected stocks held by the Commodity Credit Corporation, and since they today hold no butter and no cheese, that act would not be applicable today. Public Law 590 would not have any effect whatever. That is my opinion.

Mr. GAUMNITZ. I think I would agree with that. The other two statutes commonly mentioned are section 22 of the Agricultural Adjustment Act and section 7 of the Trade Agreements Act.

T'he CHAIRMAN. Well, there was no legislation comparable to that legislation on the statute books.

What effect did foreign competition have upon your industry before the enactment of section 104?

Mr. FIFER. It so happened that during the period of the Second War Powers Act, the Government did hold stocks of butter during that time. There was a shortage of oils, so there was allocation. So it worked the same way as section 104 has worked. There were no licenses given for importing butter during that period to my knowledge, except in limited quantities.

So from the period of World War II to the present time butter imports have been at a very low level, almost nonexistent and before that the tariff duty and the rate of valuation of currency acted as your barrier. So that gives us the whole picture.

The CHAIRMAN. How much dairy, products did the Commodity Credit Corporation have to purchase in order to maintain the support price before the enactment of this act?

Mr. FIFER. 207 million pounds, as I recall, of butter, in the years 1950 and 1951.

The CHAIRMAN. What did that maintain, 90 percent of parity?

Mr. FIFER. This year it is 90 percent of parity. In 1951 it was about 79 percent of parity, or 80 percent. The law requires between 75 and 90 percent of parity. Last year it was 79 percent and this year it is 90 percent

of parity.
The CHAIRMAN. Well, the dairy herds have been reduced right
along, have they not?

Mr. FIFER. Yes, sir.
The CHAIRMAN. And they are still being reduced?
Mr. FIFER. The trend is not encouraging:

The CHAIRMAN. Is that because the beef industry is more alluring to those who own dairy herds than the dairying industry.

Mr. FIFER. It has been the fact that the beef returns are higher, and there is less labor required. The parity for beef is considerably over the parity for milk and butter and other dairy products.

In fact, it is about 40 percent higher than the average on dairy products,

The CHAIRMAN. And he who is in dairying industry can probably make more money out of his cattle by slaughtering them than by using them for the purposes of the dairying industry, is that true?

Mr. FIFER. That is right.

The Chairman. What effect has oleomargarine had upon the price of butter?

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Mr. FIFER. As I pointed out it has had some effect because it has acted to replace some of the markets for butter, and there is no possible way of competing on the price basis because the oil that goes into oleo is today 9 or 10 cents a pound and the fat in butter is around 70 or 80 cents a pound, and the two products have the same fat content. There is no way of competing.

And eventually if we cannot maintain honest dealing, it might mean further disruption of butter markets, because they are taking them over in an underhanded way.

The CHAIRMAN. Well, there is hardly any limit to the production of oleomargarine, is there?

Mr. FIFER. No limit whatever. The production of butter is limited to the production of milk, because butter takes the product that is left over after the amount of fluid milk is taken off. Today it is taking around 23 percent of the total milk supply:

The CHAIRMAN. Do you believe that it is essential to have a foreign market for dairy products?

Mr. FIFER. Well, I think

The CHAIRMAN. I mean do you think it is essential to cultivate a foreign market to take our surplus in dairy products?

Mr. FIFER. It may be necessary for certain dairy products, but I think we could develop a market for all of our butter here for at least reasonable years to come, because production and consumption are down. I think a market might be developed for dry-milk products and cheeses.

Mr. GAUMNITZ. I would say, Mr. Chairman, that under normal circumstances, the volume of exports of dairy products which may logically be expected by United States producers is extremely small

. It is limited almost entirely to a little evaporated milk, some nonfat dry milk and some cheese, and it is not in the European territory.

The CHAIRMAN. The cultivation of business relations, though, it seems to me, might increase that, might it not? What have been our exportations of dairy products?

Mr. FIFER. Our exportations prewar were almost negligible.

During the war, and strictly under a war condition, we exported large quantities of cheese, evaporated milk, nonfat dry-milk solids and butter.

Following the war, in the rehabilitation period, a lot of that export was continued. Likewise, under the ECA program it was continued. I expect it may be continued under the Mutual Security Program, also through the United Nations program.

Now, the facts, however, would indicate-it is pretty hard to reduce it to a dollars-and-cents figure—but it has been estimated that up to 50 percent of the export of dairy products, in effect, was purchased with United States dollars. It is not a commercial proposition. It has not been a commercial proposition, at any time--was not during the war and has not been since the war. It has been strictly a matter of a partial give-away type of program.

Now there is no indication, there is no inference that I can see that can be logically drawn, that because there were exports of a considerable magnitude under a war condition or under a give-away program, that exports might be expected to continue on a commercial basis following the cessation of the gift program.

The CHAIRMAN. What were our exports and imports prior to World War II?

Mr. FIFER. I cannot give you all those figures.
The CHAIRMAN. As best as you can state them.

Mr. FIFER. Well, in dollars, prewar, exports of all dairy products, in 1937, amounted to $5 million worth; 1938, $6,100,000; 1939, $7,000,000. Then in 1940, 1941, 1942, 1943, it increased very rapidly, and in 1944 it was $261 million. Now of course a part of that would involve a change in value of the dollar.

Then $236 million, $296 million. In 1947, $267 million; $210 million; $174 million; $86 million; $116 million.

But again I say, that is no indication of commercial exports. It is very largely a partially underwritten program. It is almost like saying, “How many automobiles would be sold if automobiles would be sold at a hundred dollars apiece.”

There is no indication, because 10 billion could be sold, that at the commercial rate any would be sold.

The CHAIRMAN. What have been the importations of dairy products?

Mr. FIFER. They came down almost entirely on cheese, and they amounted, in the same year, starting with 1937, to $12,800,000.

In 1938, $11,500,000; 1939, $12,800,000. Then they were reduced during the war period, with the low being in 1944 at $6,800,000.

Since then they have increased, and in 1950 were at the level of $34,356,000, and in 1951, $25,081,000.

The CHAIRMAN. Mr. Fugate.

Mr. FUGATE. Dr. Gaumnitz, you have a table in your statement, and you show that in 1946 and 1947 there was only a thousand pounds in each of those years imported. In 1948 it went up to 977,000; 1949, 1,300,000; 1950, 3,492,000; 1951, 5 million,

In 1950, when the present act was extended, section 104 was added.
Mr. GAUMNITZ. Yes, sir.
Mr. FUGATE. Did it have any effect on importations for 1951?
Mr. GAUMNITZ. No.
Mr. FUGATE. It came too late, did it not?

Mr. Gaumnitz. That is right. Section 104 really went into effect in August of 1951.

Mr. FUGATE. What effect will it have on 1952 imports?

Mr. GAUMNITZ. It will reduce the total imports of cheese to about a little over two-thirds of the imports in the years 1948, 1949, and 1950, or approximately about the same percentage of the imports in the year 1950.

Mr. FUGATE. You mean about 3 million pounds?
Mr. GAUMNITZ. Of all cheese, it would be about 40 million pounds.
Mr. Swain. Depending on what happens after June 30.

Mr. FUGATE. Let us assume that no action was taken last year. There would have been no change on the 1951 imports, would there?

Mr. Gaumnitz. In the last half, there was some.
Mr. FUGATE. When did the act become effective?
Mr. GAUMNITZ. The regulations were issued August 9, I believe.
Mr. FUGATE. It did affect them?

Mr. GAUMNITZ. It did, but the full effect probably was not reflected in the 1951 import figures. What I am getting at, sir, is this: That the intent was, apparently, to allow a quota for the 5-month period

from August to December, 1951, which would be five-twelfths of the imports in the base period.

Actually, before the period was over, the quotas were allowed for the period August to June 30, of the following year at eleven-twelfths.

In other words, some materials were shipped earlier in the 11-month period. They were not spread evenly over the 11-month period.

Mr. FUGATE. Let us assume that section 104 had not been added to the act in 1950. What would have been the importations, in 1952?

Mr. GAUMNITZ. In the case of blue mold cheese, I would estimate, 6 or 7 million pounds.

Mr. FUGATE. What effect would that have had on the industry? Mr. GAUMNITZ. There would not have been any industry,

Mr. SWAIN. That is 70 percent of the market. The market is around 10 million pounds.

Mr. GAUMNITZ. I should amend that a little. · It might not go out completely. In this case and in some other cases, a company may have, we will say, a demand that is special for their particular brand of blue mold cheese, and no doubt some of that demand would remain regardless, and at a price which would perhaps be out of line with the total, but by and large the effect on the industry would be that the industry would be reduced to, well, I would guess, perhaps, 2 million pounds a year. I do not know how you would figure it.

Mr. Swain. It is hard to say how far it would go. We had three fellows from Denmark here under ECA funds and they felt that they could ship to this country 16 million pounds of blue mold cheese and have it absorbed by the domestic market, where the top market that we have ever had is 12 million pounds, including all domestic production when no imports were available, which is double what it was prewar.

Mr. FUGATE. Do you know what Denmark's production of blue mold cheese is?

Mr. Swain. You can figure it relatively this way: that their exports to this country represent about 5 percent of their total capacity.

Mr. FUGATE. It would not affect them too much if there was a restriction on it.

Mr. Swain. The restriction amounts to less than a quarter of a million dollars, the difference between the restrictions and what they could possibly sell in this country if they had all the market, would run to about a quarter of a million dollars. But with their restrictions they are able to get a higher price, so the differential is not even that great.

Mr. FUGATE. What percentage of cheese import does blue mold represent?

Mr. Swain. Of the total amount of cheese imported?
Mr. FUGATE. Yes, sir.
Mr. Swain. That I could not answer.

Mr. GAUMNITZ. In 1951 it was 5 million pounds out of something over a billion pounds.

Mr. FUGATE. It is very small, yes, sir. But there are a number of cheeses, of course. Cheddar is the principal one in this country, leaving aside cottage. Cheddar cheese is perhaps around 75 to 80 percent of total United States production. But we have a large number of other varieties, and particular importations, or importations

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