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I think you
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?
But I would like to correct one statement I made. 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. 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. 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. 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. 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. 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. 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
reduced. That might be the tendency temporarily in the case of milk for fluid distribution.
Over a period it is practically certain that the price of milk used for fluid distribution would increase and manufacturing diminish. In other words, there is a difference between the short term and the long term.
Certainly, if 104 is not maintained over a period, milk production will be reduced. If milk production is reduced, fluid milk prices will be increased, manufactured-products prices will be decreased, over a period.
Now immediately, most of us, I think, believe that in the next 12 months milk production even with section 104 in effect, is likely to be reduced. If 104 is eliminated, then that reduction will be accentuated.
Mr. PATMAN (presiding). Mr. Betts.
Mr. BETTS. Are you claiming that 104 should be retained as permanent legislation?
Mr. GAUMNITZ. We have said here for a 3-year period or until the international situation is clarified. What we mean by that is this: In the first place, the present international deal seems to be so confused that there seems to be nothing short of a quota which will enable producers to know where they are, enable them to make plans. I think Mr. Paul this morning indicated that to double herds, I believe he said, would take 9 years. And he also made the point that if herds are reduced they cannot readily be increased within a 3-year period from the time of the birth of the calf.
He went into the question, them, as to how far ahead producers are going to be able to plan. If it appears that there is to be no import restriction, then I would assume that there will be a great exodus out of the dairy business of the United States, milk producers going out of the business. It will accentuate that trend.
If 104 is retained or comparable action is taken, then there will be less tendency. But there will still be a tendency in that direction. Prices today are not sufficient, according to the records, to maintain milk production, in spite of an increase in population. Milk production has been going down since 1945. And there is every indication it is going to continue to go down under present conditions. It will be accentuated if 104 is out of the picture.
Mr. PATMAN. Are there any other questions?
Mr. DOLLINGER. Dr. Gaumnitz, domestic cheese is cheaper than imported cheese; is it not?
Mr. GAUMNITZ. That depends on the cheese.
Mr. DOLLINGER. On the whole domestic blue cheese is cheaper than imported blue cheese?
Mr. GAUMNITZ. I will have Mr. Swain answer that.
Mr. DOLLINGER. Generally speaking, I believe, and I think the public is of the opinion, that domestic cheese is cheaper than the imported.
Mr. GAUMNITZ. With Cheddar it would not be the case.
Mr. Swain. Imported cheese generally, at the present time, the prices are just about equal in New York. However, before the quotas actually became effective which was probably February of 1952, just this current year, there was no shortage of imported cheese
and they were able to undersell us by 4 to 6 cents a pound in New York, and I am speaking of the wholesale level.
When you get to the retail level that is 8 to 12 cents a pound.
Mr. DÖLLINGER. You also made the statement that in your opinion domestic cheese was better in quality than imported cheese.
Mr. Swain. Yes; I feel it is.
Mr. DOLLINGER. Why should you worry about competition from foreign cheese if we have better cheese and at the same price as imported?
Mr. Swain. You have the problem of the buyer interested in making as long a margin of profit as he can, so he is interested primarily in price and not quality. We had that case, where stores would sell the import, because they could buy it a little bit cheaper and be more competitive.
Mr. DOLLINGER. The public is interested in good cheese at the best price it can be purchased. If domestic cheese is better they are going to buy it. If imported is better they are going to buy it.
Mr. Swain. It is not the public that buys the cheese. They buy what is made available to them. It is not always bought on quality but bought on price like many other commodities.
Mr. DOLLINGER. Do the public buy because the product is advertised on TV or radio?
Mr. Swain. There is not enough in blue cheese to do much advertising. Take 10 million pounds, a cent a pound, which is the profit, you have a hundred thousand dollars. You cannot do much on TV with that.
Mr. NICHOLSON. The reason herds are falling off is because they are killing the calves for beef instead of letting them grow into milk cows, is that not right?
Mr. GAUMNITZ. Apparently the number of calves being kept for cows is not sufficient to maintain herds.
Mr. Hays. Right at that point, you made the statement that you thought the exodus from the dairy business would be accelerated if 104 were discontinued. Do you mean that as a general thing throughout the country, or in special areas where they sell largely for cheese making?
Mr. GAUMNITZ. It would be generally true throughout the country, that is, if you took the average for the U.S. A. But I have no question that it would differ by areas, materially. It is probable that the reduction in the case of fluid milk would not be nearly as great as the reduction in so-called manufacturing milk areas.
Mr. Hays. Well all the agricultural experts claim that the demand for fluid milk is going to increase.
Mr. FIFER. That is right.
Mr. Hays. And the point I am getting at is this might happen in areas where the great bulk of the milk is sold for manufacturing purposes but it certainly would not happen necessarily, would it, in the Aluid milk areas?
Mr. FIFER. But the fluid milk areas are expanding all the time and taking in those manufactured milk areas.
Mr. Hays. You mean they are reaching out further and further? Mr. FIFER. That is right. If we did not have the great amount of milk used for butter in World War II available to divert to the cheese production, they never could have increased cheese like they