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PLAN OF SELF-HELP FOR THE AMERICAN DAIRY FARMERS

DECEMBER 8, 1953

HOUSE OF REPRESENTATIVES,

COMMITTEE ON AGRICULTURE,
SPECIAL DAIRY SUBCOMMITTEE,
Washington, D. C.

The subcommittee met at 10:30 a. m., pursuant to call, in room 1310, New House Office Building, Representative Andresen (chairman), presiding.

Present: Representatives Andresen (presiding), Lovre, and Williams. Also present: Representatives Berry, of South Dakota; Byrnes, of Wisconsin; O'Hara, of Minnesota; Davis, of Wisconsin; and Talle, of Iowa.

Mr. ANDRESEN. The committee will come to order. This subcommittee is meeting this morning to consider a plan proposed by the National Milk Producers Federation on the matter of self-help for the dairy industry. Mr. Russell S. Waltz, the president of the organization, will be the witness who will explain the self-help plan which has been adopted, as I understand it, by the organization at their annual meeting held last month.

Mr. Waltz, we will be very glad to hear from you. We will be glad to have a full explanation of the plan which your organization has proposed.

STATEMENT OF RUSSELL S. WALTZ, PRESIDENT, NATIONAL

MILK PRODUCERS FEDERATION

Mr. WALTZ. I have a prepared statement. My name is Russell S. Waltz, general manager of the United Dairymen's Association of Seattle, Wash. I am president of the National Milk Producers Federation.

The federation is an organization made up of approximately 460,000 dairy farmers residing in 46 States. These farmers, through their cooperatives, market over 22 billion pounds of whole milk equivalent annually or more than one-fifth of all the milk and cream leaving farms in commercial channels.

The purpose of my testimony is to explain to this committee a plan of self-help for the American dairy farmer. This plan would relieve the Government of such expenditures as it now makes from time to time with respect to losses on dairy products acquired under the present authorized support programs.

We have been developing this plan for several years in an effort to both simplify it and make it practicable.

I would like permission to file for the record of the hearing a copy of the preliminary draft of our proposed bill and also a copy of an

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editorial from Hoard's Dairyman of December 10, 1953, and one from the Cleveland Plain Dealer of November 14, 1953, together with a few short tables which I will discuss in connection with my testimony. Mr. ANDRESEN. Without objection the tables and editorials will appear as part of your statement.

(The documents referred to are as follows:)

[From the Cleveland Plain Dealer, November 14, 1953]

THE DAIRYMEN LEAD THE WAY

American independence is not dead, as attested by the Nation's dairymen's determination to cut loose from Government purse strings and work out their own salvation.

It is stirring news that 1,000 delegates to the National Milk Producers Federation meeting at Houston, Tex., approved unanimously a resolution authorizing the federation's officers to draft a law which would provide for a direct deduction from every dairyman's milk check to pay the cost of a price stabilization progrəm. It is the intention of the organization to have the bill introduced in the next session of Congress, and it is hoped that it will become effective in 1955.

The bill would call for the naming of a 15-man administrative committee by President Eisenhower from a list of 45 candidates elected from the ranks of active dairy farmers. This group would be empowered to borrow funds from the Commodity Credit Corporation, to launch the price stabilization pool. These funds would carry interest at current commercial rates and would be replaceable from money received by deductions from farmers' milk checks.

Once the plan is in operation, according to its designers, there will be no need for additional financing from the Public Treasury. Nor would the public be required to support any overproduction of the industry.

The dairymen have led the way back to self-help, and self-esteem. Other similarly minded agriculturists may be expected to follow. This kick-in-thepants to paralyzing socialism is precisely what this country has needed for a good long time.

[From Hoard's Dairyman, December 10, 1953]

THIS SELF-HELP PROPOSAL DESERVES A CHANCE TO WORK

The long-awaited self-help proposal of the National Milk Producers Federation was revealed and approved by the federation in Houston, Tex., November 12. Representing a half million dairy farmers, the federation is the recognized, highly effective Washington voice of the dairy farmer. Its action, therefore, is particularly significant and charts the course of battle in the Halls of Congress this winter.

The proposal, in brief, provides as follows:

1. Congress shall authorize the organization and activities of a Federal Dairy Stabilization Board, composed of 15 dairy farmer members or their representatives, 1 from each of 15 Federal dairy districts.

2. The Board, prior to every April 1, shall determine the price at which milk and cream will be supported during the ensuing dairy marketing year.

3. When average market prices fall below the support level, the Board will purchase the surplus and dispose of it at whatever it will bring in foreign or domestic channels which are not the "ordinary and usual channels of domestic consumption.'

4. To finance the initial surplus purchases, an interest-bearing loan of $500 million is authorized from the Commodity Credit Corporation. The actual cost of the stabilization program, however, is borne by all milk producers, who would pay a predetermined stabilization fee to offset the anticipated losses incurred through surplus disposal at less than the support price level. Dairy plants would be required to collect the fee and forward it to the Board through the Internal Revenue Service.

5. Imports would pay the fee, too.

6. If imports add to a surplus, the Federal Government must take an equal amount off the Board's hands and hold it or dispose of it outside the ordinary channels of domestic trade.

7. A surplus resulting from milk produced on "diverted acres" must also be purchased by the Federal Government and disposed of as above. "Diverted acres" are acres which cannot be planted to price-supported crops under allotment or acreage control.

How would the proposal work in 1954? (Actually, it cannot go into effect until 1955.)

First, here are the average prices per hundredweight for milk at various parity levels:

90 percent..

85 percent__

$3.92 80 percent_-_.

3. 70 75 percent.--.

$3.48 3. 26

Now, let's see how the self-help program would function at 90 percent of parity. First, we expect that there will be a 3-billion pound surplus next year. There is no domestic market for it if it goes into domestic channels at the 90-percent parity price level. The Board must dispose of it and may take, for example, a 25, 50, 75, and possibly a 100 percent loss on the 3 billion pounds. Here are the estimated fees the dairy farmer will pay and the net price returned to him:

[blocks in formation]

Dairy

There is the picture as the federation sees it. Frankly, it looks good. farmers can run their own show and come out in good shape in every case better than rigid Government props at 85 percent. If the loss on the surplus disposal is 25 percent, then the net price to the farmer is only 3.5 cents below rigid 90 percent Government props.

If we were to stop here, everything would be rosy. To us, a big problem is that of "diverted acres." There may be 30 million of them next year. How will we measure what portion of the surplus is from "diverted acres" and, therefore, a charge against other support programs? It appears to be a knotty yardstick and administrative problem.

The federation's self-help proposal is not new. Its principles and objectives have been known for years. The present program provides additional refinements and safeguards.

Although we have been skeptical in the past regarding the feasibility of such a program, we are willing to endorse the improved, protected proposal, and urge its adoption. It is the best proposal advanced thus far and merits an opportunity to work. If it does work, and we think it can, then the combination of sales promotion through the American Dairy Association and surplus disposal through the National Milk Producers Federation program gives us every prospect of realizing the maximum possible price for our product without surrendering completely to Federal control of every dairy farm in the country.

[By National Milk Producers Federation, Washington, D. C., October 26, 1953]

A PRODUCER-FINANCED PRICE STABILIZATION PROGRAM FOR DAIRY FARMERS

SUMMARY OF A PROPOSED BILL

Section 1: The official name of the act would be the Dairy Stabilization Act of 1954.

DECLARATION OF POLICY

Section 2: The purposes of the act as declared by Congress would be:

(a) To provide an adequate, balanced, and orderly flow of milk and dairy products in interstate and foreign commerce;

(b) To promote the effective merchandising of milk and dairy products; (c) To protect the security and welfare of the Nation by maintaining adequate domestic production and dependable, balanced supplies of essential foods;

(d) To stabilize prices of milk and dairy products at levels which would provide fair returns to dairy farmers;

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