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. DOLLINGER. 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 fluid 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

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. FIFER. 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 am 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 through 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. Clerk.

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

Mr. BROWN. You may proceed, Mr. Fromer.