STUDY OF THE DAIRY INDUSTRY

TUESDAY, APRIL 19, 1955

HOUSE OF REPRESENTATIVES,

COMMODITY SUBCOMMITTEE ON DAIRY PRODUCTS

OF THE COMMITTEE ON AGRICULTURE,

Washington, D. C.

The Commodity Subcommittee met, pursuant to notice, at 10:10 a. m., in room 1310, New House Office Building, Hon. Thomas G. Abernethy (chairman of the subcommittee) presiding.

Present: Representatives Abernethy, Polk, Johnson, Knutson, Andresen, Williams, and Laird.

Also present: Representatives Poage, Jones of Missouri, Watts, Hagen, Bass, Jennings, Matthews, Dague, and McIntire.

John J. Heimburger, counsel.

Mr. ABERNETHY. The committee will come to order.

As you know, we are gathered here this morning for a series of hearings relative to the dairy industry.

A Federal judge once described the dairy industry as "exquisitely complicated." I think those of you who are familiar with the production of milk and its movement through the channels of commerce to the consumer will agree with the judge's conclusion.

Certainly, those who have not been brought up in close association with dairy farming or have not had a business relationship with the dairy industry find it extremely complicated and in many of its aspects difficult to understand. I am sure that many Members of Congress and a large part of the general public finds itself in this position.

For that reason, it is my purpose to start this hearing by spending the first several days in listening to testimony which will be largely informational in nature and designed to give the committee members, and to put into the record, a background of factual data which Í hope will help all of us to understand better some of the many problems and factors affecting the production and distribution of milk and dairy products.

We are aware that there exists in the dairy industry itself a substantial diversion of viewpoints as to a number of specific questions and issues. We will not avoid these questions and those who have or desire to express a position for and against the various issues and proposals will be given a full opportunity to be heard. During the opening phase of the hearing, however, I hope that the testimony will be kept as factual and as noncontroversial as is possible.

The witnesses the committee will hear this week are all officials from the operating branches of the Department of Agriculture. They are appearing as technicians and as experts in their particular field and not as spokesmen on policy for the Secretary's Office. It is our intention

and our agreement with the Department that these technical witnesses will not be asked to make statements regarding matters of policy which must properly come from the Secretary himself. At a later date in the hearing the Secretary or his designated representative will be invited to appear before the subcommittee and discuss fully all matters of policy relevant to this hearing.

Just one more word with respect to the future course of the hearings: The subcommittee expects to sit through Friday of this week and from Tuesday through Friday of next week. Thereafter, it may be necessary to recess the hearings for a week or two in order to make way for other committee activity. The subsequent schedule will be announced just as soon as the wishes of the chairman of the full committee in this respect are made known.

We have already received enough requests from groups and individuals to be heard at this hearing to keep the hearing in session for several months. For obvious reasons it is going to be impossible for the committee to hear every individual who might like to appear. We do want to get every point of view represented. We want to hear as many individuals and organizations as we can and we intend to hear every one who has a new or different proposal or suggestion to make.

However, we will have to place some limit on the extent to which testimony which is merely cumulative in effect can be received. I strongly urge all of you, therefore, who are connected with organizations which might wish to appear to attempt to coordinate your testimony with that of other organizations having the same viewpoint so that we will have an opportunity to hear all points of view but will limit as much as possible testimony which is merely repetitious and accumulative in character.

With that, we are ready to proceed with the first witness.

The first witness is Mr. H. L. Forest, Director of the Dairy Division of the Agricultural Marketing Service.

Mr. Forest, we are glad to have you. I presume that you have a prepared statement. We will be glad to hear it.

STATEMENT OF H. L. FOREST, DIRECTOR, DAIRY DIVISION; ACCOMPANIED BY CLARENCE H. GIRARD, CHIEF, MARKETING DIVISION, OFFICE OF GENERAL COUNSEL; ELLEN A. HENDERSON, MARKETING SPECIALIST, DAIRY DIVISION; AND W. G. SULLIVAN, DAIRY DIVISION, AGRICULTURAL MARKETING SERVICE, DEPARTMENT OF AGRICULTURE

Mr. FOREST. Mr. Chairman and members of the committee, we appreciate the opportunity to make this report to the subcommittee with respect to the operation of the Federal milk marketing order program.

I have a statement here which I would like to read in toto, if possible, because I think some of the questions which might be asked, might be answered in this report which I have.

I have with me, also, Mr. Chairman, two members of the Dairy Division who also will help me in answering some of the questions. Mr. ABERNETHY. Would you like to have them at the table with you?

Mr. FOREST. I think that I would like that.

Mr. ABERNETHY. Will you identify them for the record?

Mr. FOREST. Mrs. Ellen Henderson; Mr. W. G. Sullivan. There is also with me Clarence H. Girard, of the General Counsel's Office. Mr. ABERNETHY. Will you, before reading your statement, fully identify yourself, your connection with the Department, your experience, and so on?'

Mr. FOREST. My name is Herbert L. Forest.

I first became associated with the Department of Agriculture in the Boston milk market administrator's office in the year 1934.

In the year 1935 I came to Washington. I worked in the Dairy Division until 1942 approximately.

Between 1942 and 1945 I worked in the Secretary's Office on war work, mainly having to do with lend-lease and foreign requirements. In 1945, approximately, I returned to the Dairy Division and became Director of the Dairy Division about a year and a half ago.

On April 16, a new order was issued for an area in South Dakota. The data on that order we did not include in these tables, because we had the tables compiled before the order was made effective, so that in the statement we talk about 56 Federal milk marketing orders now in effect, but actually as of April 16, 1955, we have 57 milk orders in effect.

At the present time about one-third of the milk sold wholesale by farmers is marketed under the terms of the 56 Federal milk market orders now in effect. Last year more than 186,000 farmers sold 27 billion pounds of milk to purchasers who were required to pay the minimum prices established by these orders. The total value of milk marketed under the program was over one billion dollars for the year. The number of producers and the amount of milk delivered in 1954 is contained in table 1, which follows this report.

(Tables referred to are as follows:)

TABLE 1.-Federal milk market orders effective on Apr. 1, 1955, with date each order became effective, average number of producers and total producer deliveries in 1954

'Merged, Tulsa May 1, 1950, Muskogee Aug. 1, 1951.

Source: Compiled by the Dairy Division, Agricultural Marketing Service.

TABLE 2.-Average of class I prices in Federal order markets and United States average of dealers' buying prices for milk used for city distribution as milk and cream, by months, January 1953-March 1955

Source: Compiled by the Dairy Division, Agricultural Marketing Service.

TABLE 3.-Weighted average of blend prices to producers in Federal order markets, United States average of prices received for all milk sold wholesale and United States average of prices received for milk sold for manufacturing uses by months, January 1953-March 1955

Source: Compiled by the Dairy Division, Agricultural Marketing Service.