Also, it is contemplated that in both 1959 and 1960 approximately $15 million of the regular school lunch appropriation will be utilized for procurement and distribution of food under section 6 of the act.

Mr. WHITTEN. If the Secretary, at the policymaking level, should determine not to buy these section 32 commodities on the basis that the situation is not sufficiently acute, where is it going to leave you gentlemen in your commitment with Mr. Santangelo?

Mr. LENNARTSON. The estimate couldn't be reached then. Mr. WHITTEN. You are basing your statement on the outlook? Mr. LENNARTSON. Yes; on the outlook. We are assuming that we are going to be able to furnish section 416 and section 32 foods in the same amount, per capita wise, per capita value wise, that will be available this year. This assumes favorable weather and crop conditions and no major shifts in the present economic outlook.

Mr. WHITTEN. I raise this here not to embarrass you gentlemen, but to protect you. Because if we go along with you and something happens beyond your control

Mr. MILLER. I think I have misunderstood Mr. Santangelo. Given a supply situation remaining unchanged for the donated commodities, cornmeal, wheat flour, rice, cheese, butter, dried milk, and the other commodities we have in the CCC, we will contribute the same amount per capita next year that we have contributed this year, irrespective of what the population is.

Mr. WHITTEN. Well, what if I finally succeeded in my efforts to get you to sell many of these things in world trade to regain our normal share of the world markets, and you were successful and sold them and didn't have them. Where would you be?

Mr. MILLER. If we are able to sell all the dried skim milk we have in CCC inventories we will not be able to contribute CCC milk next year.

Mr. MICHEL. Is that the only item you cannot keep up with demand?

Mr. MILLER. NO; I was giving that, because that is one we can keep up with demand.

Mr. WHITTEN. If I might proceed one moment further, one of the reasons that I raise this point is that there are a whole lot of factors. One of them is, as the committee sees it, the Secretary has in times past moved rather too slowly in some areas. And then, the farm situation can change greatly. As evidence of that, in 1957, I believe you donated approximately $132 million in commodities, and in fiscal 1958 you donated only $75 or $76 million. And then you estimate this year that you will donate only $74,700,000. So with all these factors involved in it, there can be ups and downs, however sincere I know you are in your present estimate.

MARKETING RESEARCH ON COSTS AND MARGINS

Mr. SANTANGELO. Well, going off that, Mr. Miller, I read a statement or a sentence in your statement on page 6, that said that you are studying the ways of reducing marketing costs. Can you advise me whether the reduction in marketing costs is reflected, or has been reflected in the reduced price to the consumer? Mr. Wells may be able to answer that.

Mr. MILLER. Congressman Santangelo, one of the most difficult things facing American agriculture today is to narrow the spread between the producer and the consumer. I would also like to see that reflected, any studies we might make, reflected in some benefits to the producer end of it, greater compensation to him for producing the agricultural commodity. Efficiencies in marketing are one of the best sources, we think, of narrowing the spread between the producer and the consumer. Anything that we can do to effectuate a better distribution system, a better marketing system, in any aspect, will have, we think, a beneficial influence.

Mr. SANTANGELO. Mr. Miller, it appears to me during the last 5 or 6 years the efficiency in marketing has improved, and yet the producer has received less and the consumer has paid more. Then there is the question of services. I don't know whether it is services or what it

And if you can put in the record what the number of food chains that I think I saw in the record one year, the difference in corporate. profits of the various chainstores as between 1958 and 1957 has increased, I think, over 50 percent. I don't know the precise percentage, but it has increased substantially. I don't know whether Mr. Wells can get that survey up showing where the distribution costs are going. It appears to me that since the farmers' share of the consumer dollar has been reduced from 47 to 40 percent, and the price to the consumer has gone up within the past 4 or 5 years, that there is a spread which is not explained by labor costs and it is not explained by service costs. It is explained by a larger spread which is profits, and we would like to be able to pin it down. And I trust that Mr. Wells can get that study up so that we can try to pinpoint it. Up to now, I have notions where it is going, but I would like to be able to prove it.

Mr. MILLER. We will be glad to put data and information on these matters into the record in connection with Dr. Trelogan's testimony on results of marketing research. We must recognize there are a great many built-in services in today's consumer dollar spent for food items. A great deal more employment has been provided in the food distribution systems in certainly the expanse of our lifetime, by increasing numbers of people employed in the distribution systems, higher wages, and built-in services.

Mr. SANTANGELO. Let me pinpoint it. There is only one particular area in which I have a little competency or little information lately, and that is in the pork situation. Well, of course, the packers deliver it and the price that it is sold to the chainstore is on the delivered price. The cost of transportation is not involved, and the packer absorbs that cost. But, then, the difference between the price that the packer is selling it and the price that the consumer is getting it seems to be way out of line. I am trying to find out what that spread is, item for item. But we have not been able to get that yet. And it is not explained by labor costs.

We were down at the Safeway Co., and we saw a certain amount of packaging, which makes it a little fancier. But that does not explain the spread in price between what the packer pays and what the consumer pays.

Mr. MILLER. These items will be discussed later by Dr. Trelogan. Many of our readymade dishes in the form of frozen complete dinners,

cake mixes, which are all very good, are reflected in increased cost of distribution but are not the whole answer.

Mr. HORAN. If you will yield here if you explain your statement on page 2 in a little bit more precise terms, I think my colleague will understand here. You say that the farm employment declined onethird while the processing employment increased one-third. But you don't say what the total percentages were.

Now, we had a bulletin here 2 or 3 years ago which said that farm employment was roughly one million farmhands and that the processors at that time were going about 211⁄2 million-between the farmer and the consumer. And if you would be a little more precise—is it more than 3 to 1 now?

Mr. TRELOGAN. We don't have any precise estimate at this time, Mr. Horan, but we are convinced there are more people employed in distributing the food than in producing it.

Mr. HORAN. Also, in the preparation of TV dinners, which I buy. But I pay for a lot of stuff that is not food there.

Mr. TRELOGAN. I will be glad to treat this subject at greater length in my testimony because we have prepared material on it.

Mr. SANTANGELO. All right. Thank

Thank you.

Mr. MILLER. I think, Congressman, if we have any studies that show the number of people employed in the food distribution business today in comparison to those employed several years ago, and the ratio of people employed in the production of food products, that might clear it up.

Mr. SANTANGELO. There is another one Mr. Wells is going to furnish to us, and that is the cost of the production of concentrated orange juice. The cost of the concentrated orange juice, the canning, and also the consumer prices. Do I recall correctly that you are going to prepare something for us?

Mr. WELLS. I understand, Mr. Santangelo, you had a discussion with Dr. Shaw, and he has requested my people to bring up to date some material we did some time ago, which indicates for concentrated orange juice what portion goes to the farmer and what portion goes to the agencies.

I believe that has been supplied by the Agricultural Research Services. We will check.

CONCENTRATED JUICES FOR SCHOOL LUNCH

Mr. SANTANGELO. To what extent is the school lunch program getting these orange drinks by way of the concentrated juices? Mr. WELLS. Only as they themselves buy it.

Mr. SANTANGELO. You are not furnishing it?

Mr. LENNARTSON. They are getting grapefruit segments this year and we have in previous years, with section 6 funds, purchased concentrated juices for them.

Mr. SANTANGELO. That is all, Mr. Chairman.

Mr. WHITTEN. Mr. Horan?

Mr. HORAN. Well, I would certainly like to see those studies, because into this picture comes the TV dinner and the minute cooking preparation of such things as rice, which is all patented. And

it adds to the cost in many ways. There is a possibility of reducing transportation cost in some instances, which may partly offset it. But it is all a problem in distribution, and it adds to the cost between the raw material with which we are dealing and the finished products, that the people in New York City want, and which they want to buy-we have got a tremendous field in the middle that detracts from the income of the farmer, excepting in cases where he has a seller's market. In that case, the tendency on the one hand is for the demand to drop off, but more of the sales money to go back to the producer. But, as it rises, of course, consumers have a revolt, an automatic one, and, of course, you have a problem there that is hard to weigh. But I would like to see those studies.

TOTAL COST OF SCHOOL LUNCH PROGRAM

Now, your estimate of $690 million from local contributions I understand that that is $55 million more than last year, that is an increase?

Mr. WELLS. Our estimate of the total contribution, the States, the local contributions and the parents, is now $690 million in fiscal year 1959 as compared to $635 million a year ago.

Mr. HORAN. Won't that tend to help to take care of the 700,000 additional schoolchildren who participate in the school lunch?

Mr. WELLS. It largely takes care of them. After all, the largest expenditures in school lunch are by the parents of the children themselves.

Mr. HORAN. All right. We have $690 million for the roughly onethird or one-fourth of our schoolchildren who participate in the school lunch. And we have an increase there of $55 million, which ought to take care of that.

Now, your $288 million, which is your estimate of funds already budgeted in your books for the school lunch, that does not include such donations of food as may be made during the year from CCC stocks? Mr. WELLS. Oh, yes, that does include all commodities-whether from CCC or whether from the $35 million transfer-also it includes the special milk program.

Mr. HORAN. But you indicated there might be some switch, some flexibility there, which might increase that amount. And you are adding $75 million for milk.

Mr. WELLS. $75 million for milk, of which the major portion goes to schools in the school lunch program.

PARTICIPATION IN THE SCHOOL LUNCH PROGRAM

Mr. HORAN. You have about $978 million in the school lunch program to be taken out of the pockets of Americans, whether through. the tax process or through donations to their own children as they participate in the school program. And that takes care of an estimatedhow many school age children-I heard somebody say the other day 40 million. I thought that was a little high.

Mr. DAVIS. 39 million plus was our most recent figure on total school enrollment.

Mr. HORAN. Well, then, it is a little bit more than a fourth of the schoolchildren.

Mr. WELLS. Well, Mr. Horan, let me say this. These figures here are the number-average number of schoolchildren eating lunch. There are more schoolchildren participating in the program than these figures indicate, because, quite often, for various reasons, they don't eat lunch. Do you know, Mr. Davis? I thought about half the children had some lunch available.

Mr. MICHEL. But they do participate in the milk portion?

Mr. WELLS. Even where you have the school lunch program, you have kids carrying their lunches to school. I think about half the schoolchildren had the school lunch program available to them.

Of

Mr. DAVIS. Two-thirds, Mr. Wells. It is available in schools in which two-thirds of the children of the country are enrolled. course, this is an average participation figure. During the year, the number of individual children who participate intermittently in the lunch is much greater.

Mr. HORAN. I would like to have this figure of 10.1 million and 10.8 million clarified.

Mr. WELLS. This is average participation. I think we ought to put a statement in.

Mr. HORAN. I wish you would at this point, because I am very much for this lunch program, and I think everyone else is. And, particularly, the children who come from broken homes, who may be in school, and may not have any breakfast before they left.

(The information referred to follows:)

Monthly school lunch program participation

Monthly average September-June..
Peak month.

1958

1959 estimate

10, 134, 721
11, 492, 320

10,850.000 12,300,000

As many children participate only intermittently, the gross total of different children participating would exceed the above figures. According to the Office of Education, the estimated enrollment in elementary and secondary schools for school year 1957-58 was 38.3 million, and for 1958-59 was 39.1 million. It is estimated that approximately two-thirds of the children were in schools in which the school-lunch program is available.

Mr. SANTANGELO. Will the gentleman yield?

Mr. HORAN. Surely.

Mr. SANTANGELO. Of course, you say it might not be in in this committee. But don't forget, you are distributing a couple of hundred million dollars of farm products which normally might not be distributed. You are educating the children, and it also might be considered as a defense program, because you are preparing some of them to qualify for the Army. So you don't want to put it in the Defense Department.