shall not be considered speculative within the meaning of this section. No memof the Board, or any other person directly or indirectly connected with the Board or its activities or who shall have access to the files or information of the Board, shall divulge any information concerning the Board or its activities which the Board shall have classified as confidential. Any person violating the provisions of this section shall upon conviction thereof be fined not more than $10,000 or imprisoned not more than one year, or both.

SEC. 51. Except as otherwise provided in this Act, the general penal statutes relating to crimes and offenses against the United States, its property, contracts, employees, and operations shall apply with respect to the Board, its property, contracts, employees, and operations.

SEC. 52. The price-support operations of the Secretary under title II of the Agricultural Act of 1949 with respect to milk, butterfat, and dairy products shall be suspended April 1, 1955, and shall continue to be suspended during the entire period that stabilization operations are carried on by the Board under the authority of this Act.

SEC. 53. The stabilization operations of the Board and the collection of stabilization fees shall begin April 1, 1955.

Mr. WALTZ. The rest of my testimony will be entirely oral. The objective of this proposed legislation, among other things, is to maintain adequate supplies of milk and milk products for the American domestic market. That is proposed to be done by establishing prices that will encourage sufficient production and maintain prices that will not be excessively high and which in the past have caused decreases in consumption, or in other words, one of the main objectives is to develop the orderly marketing of dairy products without the peaks and valleys of price fluctuations.

It is proposed also that under this plan it will be possible to substantially stimulate and increase consumption of all dairy products. It will establish a system of financing. I will refer later to most of these subjects that I have enumerated. I will attempt to give you a very brief and not a complete analysis of the bill.

I shall be glad to attempt to answer any questions that you may wish to raise. It is proposed that the United States be subdivided into 15 districts. The subdivision of the country into those districts would be made by the Secretary of Agriculture. In arriving at the subdivision he would take into consideration not only geographic representation but also the importance of milk in each district.

We feel that such a segregation of the country into districts would give a complete and adequate representation on the board of 15 men from every segment of the American dairy producers, whether their product leaves the farm as farm-separated cream or whether it leaves as whole milk for manufacturing purposes, or whether it leaves for bottling purposes.

Mr. ANDRESEN. May I ask you, as a preliminary question, what led your organization up to working on such a plan of so-called selfhelp? Is your organization represented on the basic study committee created by the President and the Department of Agriculture?

Mr. WALTZ. Not directly, I do not believe. You are speaking of the National Milk Producers Federation?

Mr. ANDRESEN. Yes.

Mr. WALTZ. I do not believe they are directly represented on that commission.

Mr. ANDRESEN. You are not a member of that group yourself?
Mr. WALTZ. No, sir, I am not.

Mr. ANDRESEN. Do you have any of your officers or members of your organizations who are on that basic committee?

Mr. WALTZ. Several members of our organization are on different committees.

Mr. CHARLES W. HOLMAN. Mr. Chairman, it is my understanding that these appointments go to the individuals. It happens, as Mr. Waltz said, that quite a few of our leaders are members of these committees.

Mr. ANDRESEN. Will you supply for the record the names and addresses of your members who are individually on that committee or commission created by the President or the Secretary?

Mr. CHARLES W. HOLMAN. Yes, sir.

(The information requested is as follows:)

Milok K. Swanton, Madison, Wis, member, National Agricultural Advisory Commission; R. S. Waltz, Seattle, Wash.; W. P. Davis, Boston, Mass.; G. A. Boger, Allentown, Pa.; Frank Stone, Minneapolis, Minn.; George W. Rupple, Shawano, Wis.; W. O. Perdue, Fond du Lac, Wis., members of Dairy Task Force Committee.

Mr. ANDRESEN. You are familiar with the statement made by the Secretary in March of last year where the support price of manufactured dairy products would be continued at 90 percent for a year and during that year he wanted the industry to come up with some program of self-help?

Mr. WALTZ. Yes, sir. I was on the original 13-man committee myself which met in February of this year with the Secretary, at which time we had a discussion of the question of what support level should be established for the 1953-54 crop year. I was present at the time that he made his request that we attempt to develop a program that could handle these surpluses over and above the need for the Government to continue indefinitely on a support basis.

Mr. ANDRESEN. As I understand it, then, this committee that you were a member of at that time recommended the continuance of the present support program of 90 percent for this year, terminating on April 1, 1954?

Mr. WALTZ. That is correct.

Mr. ANDRESEN. During that interval of a year you were to come up with some program from the industry?

Mr. WALTZ. That was the request made by the Secretary at the time.

Mr. ANDRESEN. And your contribution or that of your organization, and what you are presenting to us here, is an effort to establish a new program for the handling of dairy products in this country?

Mr. WALTZ. That is entirely correct. We have been attempting for a great many years to develop such a program. This year we have spent a great deal of time and the program that I will present to you is the result of that effort we have made since the February meeting with the Secretary.

Mr. ANDRESEN. You have stated so far that you proposed to have created an organization with a board of 15 directors coming from 15 districts in the United States, dividing the United States into 15 dairy districts. Is each district a separate unit with trade barriers between the districts, or will milk flow freely in commerce throughout the United States without having a barrier between the districts?

Mr. WALTZ. It is not proposed in this legislation that there shall be any restrictions of any kind established in relation to the movement of milk from one area to another. Neither does this legislation pro

pose any changes in the present system of distribution. It is hoped, if Congress sees fit to pass this proposed legislation, that the effect on the regular commercial methods of handling milk as of today will be interfered with to the least extent possible.

Mr. ANDRESEN. You may proceed with your explanation of the proposal.

Mr. WALTZ. After the country is subdivided by the Secretary of Agriculture under the restrictions that I mentioned, the 15 districts, there shall be an election in each of those districts at which all producers producing milk on a commercial basis shall be entitled to vote. There are some details in connection with it that are rather long, one of which is a definition of a commercial producer of milk.

After a great deal of consideration we have felt that to be a commercial producer, a farmer should be selling milk on a commercial basis for at least 10 months out of the year.

Mr. ANDRESEN. By commercial basis do you come up with any plan saying the farmer must have so many cows?

Mr. WALTZ. No, sir.

Mr. ANDRESEN. A man can have one cow and sell milk to his neighbor and he will be then doing commercial business?

Mr. WALTZ. I doubt if he would qualify under the provisions that we have in the bill. On commercial selling we anticipate that his milk is moving into the usual flow of the channel of milk disposal either for manufacturing purposes or for bottling purposes. We are not attempting in any way to interfere with a man who has one cow and who may sell a few quarts of milk to his neighbor, and neither are we attempting in this bill to make any collection of the stabilization fee from the type of producer that you have just mentioned.

Mr. ANDRESEN. This type of proposal will take legislation by Congress?

Mr. WALTZ. Yes, sir.

Mr. ANDRESEN. Congress can only legislate on interstate flow of milk, or any other commodity.

Mr. WALTZ. That is correct.

Mr. ANDRESEN. It is your theory, is it, that it will govern all commercial milk in the country, and I assume that is on the basis of what is sold within the State and does not pass into interstate commerce?

Mr. WALTZ. Milk sold within a State affects the flow of milk in interstate commerce. That is the assumption that we have proceeded upon in the drafting of this proposed legislation.

Mr. ANDRESEN. If the members of the panel would like to ask any questions as we go along-unless you would prefer not to have questions—would you prefer to go through with your explanation

first?

Mr. WALTZ. I am sure that some of the questions that might be asked will, as we proceed, be covered in the summary of the bill as I make it, and it makes no difference to me whether you ask them as we go along or wait. Possibly for brevity purposes it might be better to wait. However, it is immaterial.

Mr. ANDRESEN. If we think of any questions to ask you, we will interrupt you.

Mr. WALTZ. An election would be conducted in each of these districts by the producers. The three nominees receiving the highest

number of votes in each district, would be certified to the President for appointment of one of them on this Stabilization Board. Their terms of office would be for 6 years. It would be on a staggered

basis where there would be three new board members elected each year after the first year.

In order to have this on a basis whereby it could not be considered as a plum of any kind, it is set up in the bill that the maximum compensation for each of these Board members would be $2,500 a year, paid on the basis of a per diem of $50 per day for time actually spent in meetings of the board, and plus expenses for travel.

Mr. ANDRESEN. Would that be a bipartisan Board?

Mr. WALTZ. There is no provision in it that in any way relates to either politics or any political party.

Mr. ANDRESEN. Would the $2,500 that you paid to the members of the Board and directors and other expenses of the Stabilization Board come out of the United States Treasury?

Mr. WALTZ. No, sir.

Mr. ANDRESEN. Or would they be paid how?

Mr. WALTZ. They would be paid by a stabilization fee assessed against all milk which I propose to cover in just a few moments. It would be a requirement that this Board meet at least four times per year or on call. Please keep in mind that the members of this Board are actual milk producers, or they are full-time paid employees of dairy cooperatives.

This Board would operate with an executive committee of the Board which would have full powers of the Board with some exceptions. The principal exceptions would be that they could not determine the price level for support purposes nor the amount of the stabilization fee. These would be the duty of the entire Board.

The method of stabilization is a complex question to discuss. However, briefly, it is proposed that this Board set up a surplus holding pool in which they would accumulate whatever surplus manufactured dairy products that it deemed advisable to accumulate to carry out provisions of the act itself. By the purchase of these manufactured dairy products they would then, in turn, stabilize a minimum paying price to producers throughout the entire United States.

There is no attempt or effort to affect or fix any prices of dairy products other than a minimum paying price to producers. This Board would establish a minimum price, as is spelled out in the proposed legislation, under very stringent regulations, those being that they would establish this minimum price and as a requirement would need to take into consideration inventories within their own possession at the time, all inventories of products as they are reported, and costs of production of milk to producers.

Further than that, they would consider estimated production of milk for the coming crop year which has been from April 1 each year until March 31 of the following year; and estimated consumption figures as prepared and published by the United States Department of Agriculture. It is proposed that they would be required to use Government statistics in their determination of an adequate and proper price.

I mentioned a few moments ago that the Board would be directed and specifically required to disrupt as little as possible the usual chan

nels of trade. Some restrictions on the Board in relation to their sales policies are that they shall not at any time sell back into domestic channels at less than their stabilized sales prices.

Therefore, the industry as a whole can feel completely confident in carrying their own requirements of products into a storage season, which is particularly appropriate as far as butter and cheese is concerned.

Mr. ANDRESEN. Would you fix or would the Board fix different prices in different districts for different types of milk, butterfat, butter, cheese?

Mr. WALTZ. Yes, sir. They have that power in this proposed act. Mr. ANDRESEN. So you might have a price of $6.75 for grade A milk in one area of the country, whereas in the other areas it might not be more than $3?

Mr. WALTZ. No, sir. There is no proposal made in this act to fix the prices of grade A milk in any area. Nor is there any proposal to fix the prices of fluid milk.

Mr. ANDRESEN. A minimum price?

Mr. WALTZ. A minimum price as supported by the purchase of manufactured dairy products, quite comparable to the present method used by Commodity Credit Corporation in their existing stabilization programs. The difference in prices would reflect only the usual and customary differential in the manufactured dairy products that this Board would be authorized to buy. Such, for instance, as it is usual and customary for butter in New York City to maintain a slightly higher price than in Chicago.

That is true also of the west coast which is ordinarily a deficit butter-producing area. So allowance must be made for transportation between the heavy producing areas in the mid-west to the Atlantic and Pacific coast areas.

This Board would attempt to establish purchase prices of manufactured dairy products, particularly butter, in different areas to reflect the usual and customary differentials that exist when there is no interference from any governmental or other program.

Mr. ANDRESEN. What is the present estimate of the amount of milk that goes into manufactured products?

Mr. WALTZ. It is somewhere near 50 billion pounds of milk a year. Mr. ANDRESEN. Out of what total?

Mr. WALTZ. Out of a hundred billion pounds that moves into commercial channels.

Mr. ANDRESEN. Then the Board would deal exclusively with the milk going into manufactured products?

Mr. WALTZ. The Board as such would only set up a minimum paying price to producers by the purchasing of manufactured dairy products.

Mr. ANDRESEN. And it would in no way interfere with or have jurisdiction over the milk that is sold as fluid milk?

Mr. WALTZ. No, sir. No power at all to fix prices. The Board would have the power to dispose of its accumulation of manufactured dairy products through export sales at less than acquisition costs. I mentioned a moment ago it would not have the power to sell back into domestic channels of trade at less than its own stabilization prices. There is a provision in the Act which empowers the Board with proper hearing to change its basis of support during the