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did in a period of a couple of years. That is the reason butter went down. They purposely increased the price of cheese to encourage more production of cheese and milk was moved into cheese production right away.

Mr. Hays. Then you had an artificial inflation of the cheese production?

Mr. FIFER. In the case of manufactured dairy products, we would hope to maintain production. In the case of milk used for fluid production it would probably be increased. In other words, that goes back really to some things that were mentioned this morning.

The Department of Agriculture some several years ago estimated the amount of dairy production that should be consumed to maintain, or to furnish, an adequate or a relatively adequate diet. And as I remember those figures, it was somewhere in the neighborhood of about an increase of 10 percent in the total United States milk production. That study, I think, was made in around 1943 or 1944.

So that there is a question at the present time, as to what the purpose is to maintain milk production, or increase it, as a part of this general defense deal; then certainly it will not be increased or maintained if 104 goes out of the picture and nothing replaces it, unless something else comes along, of course.

Mr. Hays. One other thing I have in mind. Do you say that the domestic cheese is better than the imported, and if so, on what basis do you arrive at that?

Mr. FIFER. I would answer that question in this way: Every time you get three cheese people together and ask them which particular cheese they like better than some other cheese, one will say this one, one will say that, and the other will say that.

Mr. Hays. How does your fat content compare with, say, Dutch Edam cheese, and domestic Edam?

Mr. FIFER. As I remember, approximately the same. At the present time both must meet the fat and moisture requirements of the Federal Security Agency, which issues standards of identity for Edam and Gouda-some 2 years or 3 years ago.

Mr. Hays. Does not the Dutch Government control the fat content of Edam now way below what it used to be?

Mr. FIFER, I believe it controls the fat content but if it is sold in the United States, it will have to meet United States standards. As far as I remember the hearings, there is not very much difference, they are practically the same. There might be some variation but it would be slight.

Mr. PATMAN. Mr. Gamble.

Mr. GAMBLE. Where does all this propaganda originate against section 104? All the mail I have gotten is against it. Of course I represent consumers and not dairy interests.

Mr. FIFER. I do not know that I can answer that. I was a little surprised myself at noting that the letters which came from certain of the foreign countries all came at about the same time. It always strikes you—at least when I get 50 letters from a group of people, all at once, I kind of have a little reason to think that possibly somebody induced a part of those letters.

Mr. GAMBLE. I get that same thought at times. But one more question: You had a free market before this section 104 was put in. And yet last year, none of your group came before

this committee and advocated section 104. It was put in the bill from the floor. Was that an afterthought or how did you happen to slip up and why did you not try to get it in in 1950 as well as 1951?

Mr. FIFER. Well I think there are two answers to that.
In part it was a slip, frankly.

Mr. GAMBLE. I did not know we had missed anybody last year nor does it seem like we are missing anybody this year.

Mr. FIFER. In part, however, the industry had not begun to feel the effects of, I would say, the changed conditions internationally.

Remember that the industry was, in part, supported. There were price support programs in effect, since the war-there have been price support programs in effect since the war.

Now prior to the Korean incident, the price of dairy products was not so far out of line with the price of competing agricultural products, and also, there were some subsidized export programs.

So at that stage, it did not appear that there would be any sharp or material decline in milk production.

Now it begins to appear that that is not the case. We are moving in the other direction. Now it is true that if you look at the figures, production began to slide off a little in 1945, but it seems to have been accentuated a little by it. It is going off a little faster. It is a combination of things, in other words, which brings it to the forefront now.

There is another thing that should be mentioned. Up until a year ago, in the case of butter, at least, the importation was controlled under Public Law 590, and it was not until that gap of about a month, when there was nothing in effect, that suddenly the industry began to be alive.

In the first instance, we would assume that importations might be greater in the case of butter, rather than in the case of cheese. Over a period of time, it appears that we would all be in about the same shape.

So, in part it is a changed situation which becomes more apparent as some of the other artificialities, I guess you would have to say, pass out of the picture. You have a new set of artificialities, looking at it in another way.

Mr. GAMBLE. In other words, the situation is not so much a price situation, that the housewife is going to get cheese much cheaper if imports are allowed to come in, as it is that we are going to be helped in our dollar exchange and having to do less from the economic standpoint of helping Europe?

Mr. Firer. That seems to be the theory. There seems to be a theory that we should move in the direction of a free-trade economy and the point which I have I have been trying to touch on in my own discussion, is that there is no semblance of free trade today. Trying to impose a free-trade theory in a setting which contains no element of free trade, does not make sense. It becomes a push-and-haul type of thing, a rough and tumble.

Some of the conditions that would be required for the economists' idea of free trade would be, for example, the free international movemovement of goods and services, free movement of gold, free movement of manpower-people-free-exchange rates, and so on. None of those conditions exist today.

Mr. GAMBLE. In other words, we have somewhat of a controlled economy.

Mr. Patman. Thank you, gentlemen, very much. You have been very patient in answering all the questions that the different committee members have desired to ask you. Thank you very much for your attendance here and your testimony. It will all be considered by the committee.

Now, Mr. Chairman, I would like to ask a gentlemen who has prepared some information for me on the nonfat dry milk solids to put it in the record at this point.

Mr. Brown. That may be done, Mr. Patman.

Mr. PATMAN. Mr. Jones, would you mind just taking a minute to explain what it is, please?

STATEMENT OF ROBERT E. JONES, PUBLISHER, WESTERN DAIRY

FOODS REVIEW

Mr. Jones. Mr. Chairman and gentlemen, my name is Robert E. Jones. I am publisher of the Western Dairy Foods Review, 593 Market Street, San Francisco.

I rm glad of this opportunity of telling you what a boon the Congress conferred on the dairy industry when it substituted the true name of nonfat dry-milk solids for the old name dry skimmed milk, which a former head of the Food and Drug Administration refused to change.

The author of the bill, which is now law, is your Member, Mr. Wright Patman.

Mr. Patman asked this morning that I get figures as to the increase in the consumption of these products since the law passed.

Mr. PATMAN. How much has the increase been since the passage of the law?

Mr. Jones. Total usage of nonfat dry-milk solids increased in this country from 248 million pounds in 1945, to 668 million pounds in 1951, but the most remarkable development has been in the increase in the household package. The industry sold a little less than 2 million pounds in household packages in 1947, and 60 million pounds in 1951.

This growth in volume of business has been accomplished throu extensive advertising and promotion, made possible by the fact that the Congress gave us a name that could be used in advertising

Currently I am in Washington associated with the Dairy Industry Committee and many others of the agricultural industries asking that the Congress free us of the incubus of controls which is throttling dairying and diminishing production.

Again, thank you for this opportunity to tell about a good law that has been a boon to our industry.

Mr. Patman. I do not want to impose on these other witnesses,
Mr. Jones. It is very nice of you to prepare that testimony. Thank
you very much.
Mr. Brown. Thank you, Mr. Jones. Call the next witness, Mr.

The Clerk. Martin A. Fromer, representing the Cheese Importers Association of America.

Mr. Brown. You may proceed, Mr. Fromer.

Clerk.

STATEMENT OF MARTIN A. FROMER, COUNSEL, CHEESE

IMPORTERS ASSOCIATION OF AMERICA

Mr. FROMER. I would like to say first I represent the Cheese Importers Association, a Nation-wide organization which has within its membership a major portion of the importers of cheese in the United States.

I believe that we are the only dairy interests represented here today opposed to section 104.

I have listened very attentively, as I know you have, to the statements of the various witnesses who preceded me.

The offices of the association are located at 51 Chambers Street, New York City.

We strenuously oppose renewal of the import restrictions on cheese.

During, and since, World War II, there have been provisions in the law which permitted the Secretary of Agriculture to ban imports of fats and oils, including butter. This was the condition until July 1, 1951, when, instead of renewing the authority of the Secretary in the Second War Powers Act, the provision was added as a rider, which became section 104 of the Defense Production Act of 1951, and "cheese and other dairy products” were added to the products subject to import control.

You are all familiar with the circumstances under which this was accomplished. There was no notice of the proposed action given to the industry; no opportunity to be heard was permitted, either to the industry or to consumers; suddenly, and without any moving cause or justification, we were faced with a ban on cheese imports.

Section 104 of the Defense Production Act provides that when the Secretary of Agriculture determines that certain criteria set forth in the act, exist, no imports of the listed commodity "shall be admitted to the United States." The Secretary has interpreted the section to be mandatory. In the case of cheese, he has determined that the act compels him to limit imports to the yearly average imports for the years 1948, 1949, and 1950. The years 1948 and 1949 were subnormal cheese-import years. European sources, with our help, were just getting back on their feet, and even by 1950 had not reached the level of their cheese exports of 1939, whereas, our own domestic-cheese production and consumption had increased during the same period by over 50 percent. We imported cheese in these base years as follows:

Pounds 1948.

23, 557, 000 1949

32, 014, 000 1950..

56, 189, 000 3-year average

37, 253, 000 Compared with 1939.

59, 071, 000 The Secretary's order, made necessary under the terms and provisions of the act, has cut cheese imports to an average annual amount of about 37,253,000 pounds, or about 33 percent less than 1950 and about 40 percent less than the rate of imports for the first half of 1951.

The volume of cheese imports does not injure the domestic industry,

Section 104 of the Defense Production Act, among other things hereafter proven, confiscates and destroys a substantial portion of the business of American cheese importers. This is a very serious and dangerous precedent unless supported by very substantial and

compelling reasons. We submit that there are no such reasons and in support of this contention cite the following:

We submit herewith a group of schedules and graphs containing statistics with regard to cheese imports; United States cheese production; and cheese exports. We draw to your attention facts contained in these statistics.

1. Cheese imports prior to World War II were as high and higher than current importation of cheese. During the year 1939, the last prewar year, cheese imports amounted to 59,071,000 pounds, as compared with 56,189,000 pounds during 1950, and about 52,000,000 pounds for 1951.

2. Domestic-cheese production has increased during the same period, from 1939 to 1950, from 708,500,000 pounds to 1,171,825,000 pounds per annum.

3. Cheese exports during recent years have exceeded our imports and continued to do so during 1951 when cheese exports totaled 79 million pounds against imports of 52 million pounds.

4. The average percent of imports of cheese compared to domestic production and consumption for the years 1931-39, the last normal representative period, is 9.4 percent, and 8.7 percent, respectively, compared with a ratio in 1950 of 4.8 percent.

5. Cheese consumption has increased from 766,091,000 pounds in 1939 to 1,173,000,000 pounds in 1950.

6. Based upon domestic production of 1,171,825,000 pounds and domestic consumption of 1,173,324,000 pounds during the year 1950, the proper ratio of imports based upon the said average for the years 1931-39 would be 110,074,000 pounds.

7. Cheese imports in 1950 were only about one-half of the normal proportionate amount based upon domestic production and consumption.

8. The average of cheese imports for the years 1948–50 is 37,297,000 pounds, which is only about one-third of the normal proportionate amount of domestic cheese consumption and production, or only about 3 percent of domestic production and consumption.

These were the facts on cheese imports compared with domestic production and consumption when section 104 was added as a rider to the Defense Production Act without an opportunity on the part of the industry to be heard. The continued growth of domestic cheese production, and particularly of foreign types of cheese, and the relative insignificant amount of cheese imported, became even more pronounced in 1951. The total United States cheese production in 1951 was 1,157,560,000 pounds, the fourth highest of record, and 1 percent greater than the 1945-49 average. Swiss cheese production during 1951, at 100,020,000 pounds, reached a new record high, 52 percent above the 1945-49 average. Domestic Italian type cheese production totaled 61,950,000 pounds, highest of record, except for 1946, and 12 percent more than the 1945-49 average.

Contrast this growth and volume with the fact that supplies of milk for manufacturing is being steadily reduced by increased fluid-milk consumption without compensating increased milk production. The Department of Agriculture's publication Dairy Situation for JanuaryFebruary 1952, reports that supplies of dairy products per person in 1952 are the lowest in three decades and that the quantity of milk available for manufacturing (including the milk equivalent of farm

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