less of a $437,000 allocation will be spent this year and that only 336 of the State's 1,000 schools are participating in the program.

Mr. ABERNETHY. What is the reason for that? Why don't you think they will use it all?

Mr. JOHNSON. I do not think they will use it all for some of the reasons that I will point out in the concluding page, some of the needed changes in the program, or changes that seem to me to be needed.

Mr. ABERNETHY. Is it administrative difficulty?

Mr. JOHNSON. It is partly administrative difficulties without having any funds for administration of this program. Then the use of a base period which ties back payments to the schools only on amounts above historical bases and allowing payments to be made even though the price to school children is not reduced. We have schools in Connecticut that are getting payments under this program where they are still charging the school children 8 cents a half pint. I think that the emphasis should be shifted away from historical bases and toward getting a reduction in price to the school children.

Mr. JENNINGS. Then they are actually making a profit on the milk in some of the schools as a result of that charge?

Mr. JOHNSON. I presume that those schools that are charging 8 cents that get the money have to use it in some way or other to promote the use of milk. I am assuming that they are doing it.

Mr. JENNINGS. That may be a good assumption, but are those the facts?

Mr. JOHNSON. I am assuming that with limited administrative funds they are checking to see that this is done, but ways that are permitted such as these accumulating the money to be used to buy a refrigerator for milk. And it seems to me that, although that needs to be had if the milk is to be stored, a better way is to include that as one of the requirements of the dealer in letting out the schoolmilk contract. And to use the money in reducing the price

Mr. LAIRD. It would seem to me that that your State has fallen down on the program. In our State we have had the cooperation of all of the agricultural groups, our State director of agriculture, our superintendent of public instruction, and we will far exceed the original quota set for Wisconsin this year.

As a matter of fact, it was only a few weeks ago that I met with the Department. I met with them in January, and got an additional $174,000 allocated to Wisconsin. I was given assurances just 2 weeks ago that additional funds would be allocated to our State. We are taking advantage of it.

Certainly, any States that want to, can push it in to schools. I think Wisconsin has shown that it can be a very successful program. Mr. JOHNSON of Wisconsin. The last time I talked to the State superintendent of schools on the matter, I believe he told me the administrative cost in Wisconsin was going to run about $1,500 a One extra girl in the State superintendent's office.

year.

Mr. LAIRD. Only one extra girl in the school-lunch-administrator's office?

Mr. JOHNSON. The percentage of schools in Connecticut, being about 34 percent, is just about on the national average. I think it is true, I agree with you, that the program has gone over better in Wisconsin than elsewhere. It may be associated with the fact that

Wisconsin is a leading dairy State and it feels it has much more at stake in the local communities than the prosperity of the dairy farmers. Mr. JENNINGS. I would like to say for the record at this time that I think that this school-milk program certainly needs investigation, because I have found in some cases that the milk is being sold for a profit; that some of the authorities feel that the additional burden which is not justified and are not taking advantage of it. I think it is the best way to dispose of our surplus-milk problem. That is through the school-lunch program. I would like to say that I think we should definitely investigate it, because I know of some specific instances where the milk is being sold at a profit. Mr. ABERNETHY. The gentleman has anticipated me. I have just made a memo to that effect, not necessarily to investigate but to inquire.

Mr. JENNINGS. The spirit of the law is not being carried out, Mr. Chairman, in a number of cases.

Mr. ABERNETHY. You have stated that Connecticut will use only one-half of its allocation this year. Mr. Laird says they can use the rest of it.

it.

Mr. JOHNSON. They have turned it back in already so you can use

Mr. JENNINGS. That is just it. They should not have. This milk should be used by all.

Mr. ABERNETHY. I think we ought to let the record show, I do not know what the figures are, that that situation just does not apply to Connecticut. It applies to many

Mr. JENNINGS. Virginia.

Mr. ABERNETHY. Many States. If I am informed correctly, the allocation was made for this year's program, the consumption will fall considerably under the amount allocated. That is true, is it not? Mr. JOHNSON. That is my understanding that that is true.

Mr. ABERNETHY. Is there anyone in the room who could tell us? Mr. LAIRD. About $34 million will be used during this year of the $50 million that was allocated for the program. Of that $34 million, about $3 million will be reallocated funds to States in which there have been considerable increases.

Mr. JOHNSON of Wisconsin. From what I can find out from the Department, they tell me that a lot of schools did not enter into it at the start of the school year. Some did not get into it until January or February of 1955.

Mr. JENNINGS. Do you have some recommendations on how this should be increased in your statement?

Mr. JOHNSON. I have some recommendations in my statement, yes. Mr. JENNINGS. I won't ask any questions again. I am interested in this.

Mr. JOHNSON. I might add further, before turning to it, that Connecticut had more than 336 schools enrolled in the program. It came up to about $500. But many of the schools that had been doing a good job in supplying the milk to school children were finding that with the large historical base, that the payments from the program were only amounting to $1, $5, $10, and were more of a nuisance than a help. And so the deadwood has been cut out.

Mr. JENNINGS. Who is responsible for that?

Mr. JOHNSON. For that base-the base is calculated in our State on sales to school children in November and December in 1953.

Mr. JENNINGS. That is, the same is true in my State. Who is responsible for establishing that base? Who is responsible for the administrative order? Was it written into the law? Who is responsible?

Mr. LAIRD. The law states that the payments will be made for increased consumption of milk in the schools. For that reason they had to figure out what was being consumed in the schools prior to the adoption of the program and they made the payments on the basis of what the increase was. The purpose of the school milk amendment in the Agricultural Act was to use Commodity Credit Corporation funds to relieve purchases by the CCC.

Mr. JENNINGS. That should not penalize those people who were active in the matter.

Mr. LAIRD. The purpose of the program was to further increase the consumption of fluid milk. That was the purpose of the program. Mr. JENNINGS. If we do away with the base, won't that also facilitate the program?

Mr. LAIRD. If you did away with the base, you would find yourself spending considerable money and you would be buying the same milk that had been consumed over a period of years. The purpose of the program was to increase the consumption and not pay for milk already being consumed. That was the purpose of the amendment as adopted by this committee. Some schools have not increased their consumption as was anticipated by this particular program.

Mr. JOHNSON. The various regulations were set up by the Secretary of Agriculture.

Mr. LAIRD. The regulations which were set up had to be in keeping with the amendment which was established and passed on by this committee. The Secretary of Agriculture was not authorized to pay for milk that had been consumed, and the base that had been consumed over the last 2- or 3-year period he could not pay for that milk. Mr. ABERNETHY. You may proceed.

Mr. JOHNSON. In other States, participation in the program also is on a limited scale, with "1 school in 4" in the milk program commonly quoted as describing the national situation.

The latest figures were that 46,000 of the Nation's 160,000 schools were enrolled in the program.

From what study I have made of the problem, and participation in several meetings at the State and local level concerning the school milk program, it seems that the following improvements might be made:

(1) Provide funds for administration of the program. Some local people say that their schoolteachers feel they are overworked and underpaid at present, and since they are on the verge of quitting, to ask them to do an additional task such as would be necessary with school milk might mean the teacher would leave.

I have heard that said at a number of local meetings.

The aim of not allowing any of the $50 million to be wasted on needless salaries is commendable, yet it is probable that efficiency in use of the fund would be promoted by an earmarking of a small proportion for administration.

(2) Use of a base period, and payments only for use in excess of the base, helps to focus attention and effort on schools where little milk is used and possibilities for gain are greatest. On the other hand,

schools which have been doing a good job on school milk do not find it advantageous to enroll in the program, and substantial possibilities for gain in such situations are not fully exploited. Either next year, or certainly the year after, the disadvantages of making payments only on extra milk over historical quotas will outweigh the advantages, and bases should be discontinued.

(3) If bases are discontinued, an alternative method which seems to have merit is to make payments conditional on two things: on a reduction in the price charged children for milk and on making milk available to children on at least two occasions each day.

Summary: I have presented information on three phases of dairy economics (1) production and consumption trends; (2) Federal and State regulations affecting the milk marketing; and (3) disposal methods for stocks acquired under price-support programs.

I would be glad to answer questions on the material presented, on these additional points, or on any other phases of the subject which you may wish to cover.

(The paper entitled "Trends in Milk Production and Consumption" is as follows:)

TRENDS IN MILK PRODUCTION AND CONSUMPTION

Prepared by Stewart Johnson, Professor of Agricultural Economics, March 1955W. B. Young, Director, Henry M. Hansen, Associate Director, Extension Service, College of Agriculture, University of Connecticut, Storrs, Conn. TABLE 1.-Changes in milk production by States, 1954 compared with 1938-40 [Million pounds]

Source: Milk production on Farms and Statistics of Dairy Plant Products, 1954. Agricultural Marketing Service, U. S. Department of Agriculture, Washington, D. C., February 1955.

NOTE.-United States total population increased 23 percent between 1938-40 and 1954 (includes all United States people, whether in military service or not).

TABLE 2.-Changes in milk production by regions, 1954 compared with 1938-40

Agricultural Marketing

Source: Milk Production on Farms and Statistics of Dairy Plant Products, 1954.
Service, U. S. Department of Agriculture, Washington, D. C., February 1955.
NOTE.-United States total population increased 23 percent between 1938-40 and 1954 (includes all United
States people, whether in military service or not).

TABLE 3.—Percentage of United States milk production increase from 1952 to 1954 accounted for by each State

NOTE.-United States milk production in 1952 was 1.2 percent lower than in 1950, and 0.7 percent lower than the 10-year 1940-49 average. But between 1952 and 1954, production increased by 7.2 percent. This sharp production increase explains in large part why the Government began buying butter in November 1952 (at the existing level of price supports), and bought large quantities of dairy products in 1953 and 1954. Of the total increase in United States production between 1952 and 1954, 33 percent is accounted for by increases in production in the 3 States of Wisconsin, California, and Minnesota.

Source: Dairy Situation, Feb. 21, 1955, p. 12.