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

of particular varieties will compete, immediately, and quite directly, with comparable varieties.

Mr. SWAIN. Most of the plants producing blue mold cheese in this country cannot be converted easily to other types of cheese.

Mr. FUGATE. Is Denmark the largest exporter to this country?
Mr. SWAIN. Of blue mold?

Mr. FUGATE. Yes, sir.

Mr. SWAIN. Yes, sir.

Mr. FUGATE. And of all cheese?

Mr. SWAIN. No.

Mr. FUGATE. Which country is it?

Mr. SWAIN. Probably Switzerland or the Netherlands.

Mr. GAUMNITZ. I do not have that information; I could supply it. But I would like to correct one statement I made. I think you asked what percentage of total cheese imports are constituted by blue? Mr. FUGATE. That is right.

Mr. GAUMNITZ. I gave you the wrong figure. About 5 million pounds of blue cheese was imported in 1951, and the total importations in that year were 52 million pounds, which would mean about 10 percent. I was using domestic production.

Mr. FUGATE. Last fall a number of us on this committee were in Europe, in Austria, the Netherlands, and in France and Italy. We met with groups who were protesting the effect of section 104. They left the impression with us that it was having a disastrous effect on our economy. If it does not represent more than you indicate I cannot see how it would affect them too much.

Mr. GAUMNITZ. The only answer I can have to that is it would depend in part on how much in need of dollars the particular country might be. From that standpoint it might be very important. From the percentage of total exports of the exporting country coming to the United States, then I am sure it would be a small percentage of the cheese produced by any one of the countries.

Mr. FUGATE. Well, they offered this argument that they could relieve us of some of the burden, under ECA programs, if we would accept more of their exports, and pointed particulary to the restrictions under section 104. And of course they made a case for themselves. Mr. GAUMNITZ. Certainly; yes, sir. I think a case can be made in that manner. However, the question is, should an industry in the United States be very largely wiped out in order to accomplish that purpose or might it not be done in a better manner? That is the only question I have.

Mr. FUGATE. There are no restrictions otherwise, except quota arrangements under the Trade Agreements Act, are there?

Mr. GAUMNITZ. There are no restrictions as far as the United States is concerned except the tariff and the quotas. There are duties on most dairy products.

Mr. FUGATE. That is all, Mr. Chairman.

Mr. BROWN. Mr. Nicholson.

Mr. NICHOLSON. Do we ship any cheese to Denmark?

Mr. GAUMNITZ. Not to my knowledge, at the present time.

Mr. NICHOLSON. Do they ship to us?

Mr. GAUMNITZ. Yes, sir. We did ship some nonfat dry milk solids or dry skimmed milk 2 years ago. That was used for feed so it must have been dry skimmed milk.

Mr. NICHOLSON. We do not ship any kind of cheese to Denmark now?

Mr. GAUMNITZ. Not to my knowledge.

Mr. NICHOLSON. Is their blue mold cheese better than ours?
Mr. GAUMNITZ. I will refer that question to Mr. Swain.

Mr. NICHOLSON. Well, I go in to buy a pound of cheese in the market, and this kind of cheese is like rubber, you can roll it in your hand and does not taste any more like cheese than anything in the world, and then I go over here to buy a pound of cheese and it is real good and that is the kind I always buy, and forget about this. Mr. GAUMNITZ. Are you referring to blue cheese?

Mr. NICHOLSON. Yes, sir.

Mr. GAUMNITZ. Or to all cheese?

Mr. NICHOLSON. I am referring to blue cheese. Because some of the cheese we get on the market is pretty cheesy.

Mr. SWAIN. In this country I think we are making generally the best blue cheese that is made anywhere in the world. Some of it is shipped a little too young and particularly now, when the producers have been confused and were not sure of what was going to happen, whether they were going to have repeal of 104 or not. Some of the cheese is a little young. However, at the present time we are still shipping 120-day cheese which we think is very desirable.

When we had visitors from Denmark they came to our plant primarily because they wanted to study blue cheese production in the United States, and they confided and pointed out-not confided, I should not say that-they told us their primary problem was marketing. Their cheese would slime, would spoil, get soapy, unless consumed within about 60 days after it came to this country.

They also stated they were shipping cheese at 45 to 60 days from the date of make, so it came under our standards of identity and the term of holding, but they wanted it sold within 60 days, otherwise they experienced difficulty. They were interested in our process of waxing cheese under cure and were very much surprised when we told them we did not ship cheese under 120 days. So we think we produce good quality. They want their cheese consumed in 120 days from the date of make. I think perhaps that answers your question, does it not, as to quality?

Mr. NICHOLSON. It does in a way. I am convinced that cheese makers in this country, a great many of them, anyway, are sending out a product that if they kept it another month or two, or two or three more months, would be just about twice as good cheese.

Mr. SWAIN. That might be true at the present time but over a period of time I think that the blue mold producers do hold their cheese long enough to get a satisfactory cure on it and exceed any import. Mr. NICHOLSON. Well, I get a lot of letters relating to section 104, and I am convinced that those people do not know any more about it than I do.

Where does this propaganda or whatever you want to call it, come from, in regard to this cheese question?

Mr. SWAIN. There are a lot of people who feel that blue cheese is historically Danish. Actually their production and development in that country just about paralleled our own as I pointed out. It was in 1936 that Denmark really got their break and it is the first year that you see any substantial amount of blue cheese being imported into

this country. We are the oldest producer in the country of blue cheese and we started in 1935.

It was in 1936 that Italy invaded Abyssinia. England had been a large consumer of Gorgonzola, which is another type of blue mold cheese made in Italy. They cut off their trade relations and Denmark immediately seized the opportunity of expanding their production to satisfy the English market, so they got into it actually about 1936 and most of the production in existence in this country started in the period from 1935 to 1940. So we have just as much knowledge and produce just as good a cheese as comes from across the water of that particular type.

Mr. NICHOLSON. Have they as many cows in Denmark as they have in Wisconsin?

Mr. SWAIN. They quite often compare Denmark to Minnesota, comparing it very favorably in dairy products and in the agricultural set-up.

Mr. NICHOLSON. And about the same population?

Mr. SWAIN. Not the same in numbers, no. The population is smaller.

Mr. NICHOLSON. That is all.

Mr. BROWN. Mr. McDonough.

Mr. MCDONOUGH. In addition to your appeal for the retention of section 104 in the bill, what about the present price to the retailer as compared to the ceiling price of OPS on cheese generally?

Mr. SWAIN. Bulk cheese in itself has no ceiling price because milk has not reached parity according to the Department.

Mr. GAUMNITZ. I think perhaps you misstated that, Mr. Swain. There is a ceiling price in this sense, that the ceiling price for all cheese is the price which prevailed in the period in January, roughly, of 1951. That ceiling price may have been increased by any increase in prices paid producers for milk, over what was paid in that same base period. So in that sense there is a ceiling price.

Taking cheddar as an example, the wholesale price of cheddar cheese in the base period, on a Plymouth, Wis., basis, was about 40% cents. Today the Plymouth price is 38 cents. It is actually lower than it was in the base period and therefore there might be exceptions but by and large the ceiling price would be no different than it was in the base period.

Mr. MCDONOUGH. Is the volume up?

Mr. GAUMNITZ. No, sir, it has been reduced.

Mr. MCDONOUGH. And still the price is lower, than the base period price?

Mr. GAUMNITZ. Yes, sir.

Mr. MCDONOUGH. Is there any reason to believe that it will increase in prce?

Mr. GAUMNITZ. That cheese will increase?

Mr. MCDONOUGH. Yes.

Mr. GAUMNITZ. It depends a lot on what is done under section 104 and what is done under any alternative statute. In the short run, if there is no action under 104, if there is no extension of 104, no regulations under 104, no action taken under any of the alternative statutes, then I would assume that, in the first instance, the price of cheese and other manufactured dairy products would likely be