-- milk. This program was set up-I approve of it so that our dairymen in that great State might realize a little more for milk. However, no consideration was given to the consumer over there, was there, in that program? It was an effort to continue high prices to the consumer by establishing a set class I price on fluid milk in that trade milkshed by what we call a program identified as a superpool. That is the privilege of every State unless the Attorney General might consider that the distributors were a little out of line in signing these agreements with the producers to maintain that high price. That is true; is it not? Mr. KRIESEL. That borders on a legal question. I am afraid I do not have an answer. Mr. WILLIAMS. So these barriers, so frequently referred to, are mostly a State provision. I heard it said here, I think, Monday or Tuesday, that there was no program in your Federal marketing order that had barriers in it, in any Federal market, to prevent the interstate transportation of fluid milk, if that milk met the requirements of that market. They were perfectly at liberty to ship their milk in those marketing areas. Am I right about that? Mr. KRIESEL. I think that is the objective toward which the administrators of the program strive. Mr. WILLIAMS. At the present time there are no barriers in the New York order against Wisconsin or Minnesota shipping fluid milk in there if they meet the requirement of that order. If there is any barrier, they are State barriers; is not that true? Mr. KRIESEL. Well, State or local municipalities. Mr. WILLIAMS. Right. They are under the State law. But they are not Federal barriers. Mr. KRIESEL. That is right. Mr. WILLIAMS. That is all. Mr. ABERNETHY. I think that is a correct statement of what the witness testified to on Tuesday and Wednesday of this week. Mr. ANFUSO. I want to thank the chairman for trying to bring this matter out into the open. Just to clarify the matter, Mr. Kriesel, am I correct in understanding that, as the result of price-support drop from 90 percent to 75 percent, there has been a gain to the consumer insofar as cheese and butter are concerned, and a slight gain 0.4 of 1 cent so far as milk is concerned, is that correct, sir? Mr. KRIESEL. That figure is a calendar-year average. Actually the change in support level occurred on April 1, so to be more precise, in determining the change in prices I would want to use the marketing year data. But from the figures I have cited earlier that is a correct conclusion. Mr. ABERNETHY. Do you want to pin yourself down to say that is correct? Mr. KRIESEL. The figures are correct that I cited. Mr. ABERNETHY. You stated a moment ago that that drop of 0.4 of 1 cent was made up of, as I remember, the result of numerous factors, economic factors, price wars, none of which are related to price supports. Mr. KRIESEL. All right. dising methods. You are factors that are involved. There were several changes in merchancertainly correct. It is a complex of Mr. ANFUSO. I understand that you are trying to be of further aid to the committee by giving us all of these figures. Frankly, I would like to have you give me the figures, and of course give the committee the figures, on whether or not first of all, it is the claim of the Department that the drop of price supports from 90 to 75 percent results in a saving to the consumer insofar as cheese and butter products are concerned, and a flat yes-or-no on that, and a flat yes-or-no, the drop caused a saving to the consumer insofar as milk was concerned, and if there are variations I should like to know all of them. If there are other contributing factors as to why the price to the consumer dropped insofar as cheese and butter are concerned, other than the drop in the price support. I should like to know thatwhether it involved labor charges, prices paid to the producer, or to the farmer, all of the contributing factors which resulted in the change. I think that both the committee and the people that are going to eventually be affected, want to know that. Mr. KRIESEL. We will make every effort to supply that. I would like the advice of the committee if they would like to help us on this question. The matter of obtaining or gathering data for the different cities of the country presents quite a problem to us, because we have data only on about 130 markets of the country. And the fact is, it might not be possible even to supply the data for that number and certainly there are many other markets in which you might, individually, be interested on which we have no data. What I am trying to say is that we will give you as many data for as many markets as we can, and we will make every effort to select from that group Mr. ANFUSO. Both the chairman and I asked you specifically about New York City and New York State. Mr. KRIESEL. Yes, sir. Mr. ANFUSO. You have those figures? Mr. KRIESEL. We do. Mr. JOHNSON. We have been talking about, most of the morning, the 1954 price. If I understood Mr. Williams from New York correctly, he was talking about what happened since January 1, 1955; is that correct? Mr. KRIESEL. That is right, sir. Mr. ABERNETHY. If there are no further questions, that will conclude the hearing for this morning. (At 11:50 a. m. the hearing was concluded.) STUDY OF THE DAIRY INDUSTRY TUESDAY, APRIL 26, 1955 HOUSE OF REPRESENTATIVES, COMMODITY SUBCOMMITTEE ON DAIRY PRODUCTS OF THE COMMITTEE ON AGRICULTURE, Washington, D. C. The Commodity Subcommittee met, pursuant to adjournment, in room 1310, New House Office Building, Hon. Thomas G. Abernethy (chairman of the subcommittee) presiding. Present: Representatives Abernethy (presiding), Polk, Johnson, Knutson, Andresen, and Laird. Also present: Representatives Watts and Bass. Mr. ABERNETHY. The committee will come to order. We have met this morning for the purpose of hearing Mr. Zimmerman on a study that he made for the National Grange. We have also scheduled for appearance the Farm Bureau Federation and the Farmers Union. We are delighted to have you, Mr. Zimmerman. We have heard a good deal about your study. We will be delighted to hear from you at this time. Mr. ZIMMERMAN. Thank you, Mr. Chairman. I have a statement that I would like to read if that is agreeable. Mr. ABERNETHY. May I suggest first, Mr. Zimmerman, that you identify yourself for the record, your name, your background, briefly? Mr. ZIMMERMAN. My name is Gordon K. Zimmerman. I am here representing the National Grange. The bulk of what we will have to say this morning bears upon a study we made, for the National Grange, taking up about a year and a half in which we visited some 14 States, examined a great deal of material and carried on correspondence with industry people in most of the rest of the States. I would like to say that we have a general statement here. STATEMENT OF GORDON K. ZIMMERMAN, THE NATIONAL GRANGE Mr. ZIMMERMAN. The National Grange welcomes the opportunity of presenting to this subcommittee some of its views on the dairy situation. We recognize that total milk production, for a number of reasons, has increased to a recordbreaking number of pounds. Production per capita, however, has dropped to an alltime low during the past 31⁄2 years. Meanwhile, consumption of milk and dairy products has been lagging. The use of butter and fluid milk has declined seriously and this drop has not been offset by a sufficiently increased use of fluid milk, ice cream, cheese, and other milk products. As a result, the country has had a surplus of dairy products. In this situation, the delegate body of the National Grange takes the position that action to increase consumption-especially of fluid milk-is far and away the most desirable of the possible remedies. We are pleased to notice that in recent months the trend of consumption has been upward. More than a year ago, when surpluses were more acute than they are today, the National Grange began a study of Barriers to Increased Milk Consumption. The study was prompted by three positions held then, and now: 1. Increased consumption of fluid milk would be advantageous to all concerned. It would provide a higher blend price for producers. It would favorably influence the business of handlers. And it would be beneficial to consumers. 2. A high level of milk and dairy product consumption is an essential part of a healthy grassland agricultural marketing outlet in the United States. 3. Per capita consumption of fluid milk in the United States is too low-and should be increased. It has been increasing slowly, but on the average, Americans are still drinking less than the minimum nutritional requirements. Dollar for dollar, in terms of food value, milk is probably the least expensive of foods. Yet among the nations of the world, the United States ranks only eighth in fluid-milk consumption per capita. In We wanted to find out what was standing in the way of consumption-why we weren't drinking more milk. We found eight reasons: 1. Persistent weakness in milk merchandising over the years. the judgment of many dairy leaders and marketing experts, milk simply has not been "sold" to the largest group of potential buyers in the Nation. Prof. Herrell DeGraff of Cornell University, for example, finds that "about half the adult population seldom or never drink milk." 2. Serious complacency and resistance to change in the ranks of the industry-including producers, handlers, labor, and othershave held back better merchandising. Immediately, however, it is necessary to say that this is not a universal condition. There are thousands in the industry who are bold and vigorous in their efforts to build milk sales. 3. The lack of a positive, coordinated effort by all the elements of the industry has continued as a block to expanded consumption possibilities. Most parts of the industry seem to be trying to go it alone. 4. Milk delivery labor unions have exerted influence, through contract negotiations and otherwise, to restrict price competition and marketing innovations. 5. Sanitary laws and ordinances, often excessively detailed, have been used in a number of places in a manner that has effectively restricted competition. 6. In 11 States, price competition among retail and wholesale milk sellers has been legally eliminated by State laws. 7. Complications have developed from the interpretation of Federal laws. Particularly, we refer to the Sherman Antitrust Act virtually enforces competition. In between, the industry operates in something of a shadowland. Milk sellers who joined forces to push milk sales might be suspected of violating the antitrust laws. On the other hand, sellers engaged in vigorous price competition run the risk of being charged with unfair competition. 8. In recent years, many Americans have become weight and calorie conscious. Many, apparently, regard milk as a fattening food, and have cut down or eliminated altogether their consumption of whole milk, failing to take its sound dietary value into full account. Copies of this Grange report were provided to all Members of the Congress early this year. The report goes into greater detail, of course, than the brief outline presented here. In the main, we believe that most of these barriers-all except onecan and will be resolved, eventually, by the industry itself with the aid of consumers. It is true that much more State and local marketing research and information are needed. A great deal of educational work will be required. And although this promises to be a timeconsuming program, we believe it is the most promising route in the long run. We doubt the wisdom of seeking a solution to the barrier problem at this time, through Federal legislation. There are some Federal actions, however, that would be helpful. In connection with the Antitrust and Federal Trade Commission Acts, some official, advisory statement to the industry would be useful, in our opinion. For example, it would be helpful to get answers to these questions: How far can producer, distributor, and labor organizations go in joining forces to increase dairy consumption? What is the dividing line between acceptable competition and unfair competition? The National Grange also believes that refinements are possible in the Federal milk marketing orders; especially in connection with the pricing formulas used. We believe an analysis of the reserve, or safety margin, factors would be helpful. If calculations are designed to bring forth an unnecessarily large reserve supply in the period of short production, this tends to multiply the size of the surplus during months of heavy production. And finally, we would like to recommend that a careful study be made, perhaps by the Department of Agriculture, of the possible advantages and disadvantages of regional milk marketing orders. The number of individual marketing order areas has been steadily increasing. The time may not be far off when several of these areas will be bumping up against each other within the same State or region. Since the operation of nearby markets affect each other materially, there may be real merit in the expansion and consolidation of some of the present individual orders on a regional basis. In all these considerations the prime objective should be increased consumption of fluid milk. Thus the health and well being of American people will be served and we will augment the income of dairy producers; a highly important segment of agriculture, both economically and socially. Mr. ABERNETHY. Mr. Zimmerman, when did you conclude this study? Mr. ZIMMERMAN. We concluded it, sir, about last December. Mr. ZIMMERMAN. Three members of the staff of the Grange, sir. |