Chart VIII shows the sales experience of a second dairy, engaged exclusively in the distribution of milk through stores. In both cases there are no Sunday sales, and there are wide variations in daily requirements for the balance of the week. A growing percentage of milk is being distributed through stores and a lower percentage on home delivery routes. One result of this trend has been to widen the daily variations in milk requirements throughout the week. Similarly the introduction of every-other-day and, particularly, 3-times-a-week home delivery in place of the historical 7-day-a-week pattern, has had its effect.

If you will look at the two charts, 7 and 8, you will notice that in both cases there were no sales on Sunday. In the case of the one dairy, Monday sales were 112 percent of Thursday. Tuesday, 104 percent, Wednesday, 102 percent, Friday, 136 percent, and Saturday, 148 percent.

In the case of the dairy that sold milk exclusively through stores, and using Thursday as a base again, it had zero sales on Sunday, 101 percent of Thursday on Monday; 92 on Tuesday, 87 on Wednesday, 130 on Friday, and 150 on Saturday.

Mr. ABERNETHY. I am going to be the first to violate my own suggestion. Noticing the average daily delivery sales, those charts indicate to me that if there was a delivery of milk on Sunday, there would be more consumption. The average-is that true or not? Mr. MASON. Not necessarily.

Mr. ABERNETHY. Go to chart 9, we had your lowest, 87.
Mr. MASON. Yes.

Mr. ABERNETHY. Your highest is Saturday, which is 150.
Mr. MASON. Yes.

Mr. ABERNETHY. That Saturday delivery is for Saturday and Sunday, right?

Mr. MASON. And maybe Monday.

Mr. ABERNETHY. Generally speaking, there would be a lap over probably from each day to the next but strictly speaking that is for Saturday and Sunday?

Mr. MASON. Yes, these are sales through grocery stores in chart 8 most of which are not open on Sunday.

Mr. ABERNETHY. In any event, the sales on Saturday, what does that 87 mean, 87 what; is that 87 percent?

Mr. MASON. 87 percent of Thursday.

Mr. ABERNETHY. The sales on Wednesday are 87 percent. That

is your low day?

Mr. MASON. Yes.

Mr. ABERNETHY. The sales on Saturday are 150 percent?

Mr. MASON. Yes.

Mr. ABERNETHY. That two days is actually 24 percent less than your highest day of Wednesday?

Mr. MASON. Yes.

Mr. ABERNETHY. You do not think if there was a 7-day delivery it would increase consumption?

Mr. MASON. Now chart 8, as I stated before, is the experience of the dairy that sells exclusively through grocery stores, and the chart merely indicates the shopping pattern for milk of people who buy through grocery stores.

The purpose of putting this chart in

Mr. ABERNETHY. Sunday night is generally when we run out; is it not?

Mr. MASON. Not at our house.

Mr. ABERNETHY. Unfortunately we do at ours. If we run out, it is on a Sunday night because my boy plays ball all day Saturday. He wrecks the refrigerator on Saturday night.

Mr. MASON. Of course that comes back to many other considerations such as the availability of milk through vending machines, which are coming in, where you can pick up that extra quart of milk, and there are delicatessens that handle milk on Sunday. But for the most part, the home-delivered milk is scheduled such that you should not run out on Sunday. Maybe we do, but whether we do or not, these are the experiences of the two dairies in St. Louis. Mr. ABERNETHY. All right. You may proceed.

Mr. MASON. The primary purpose of showing these figures was to show how hard it is to gage requirements of milk and production of milk throughout the week. It is not quite as simple as saying you have 100 pounds of milk and 100 pounds of sales that is all there is to it.

It is enough to say that with yearly variations in production and sales, seasonal variation in production, and daily variation in sales, supplies of milk for a market cannot be geared precisely to its requirements. Furthermore, there must also be enough additional milk on every route and in every store to supply the housewife that extra quart, whenever she wants it.

If consumers are to have a dependable supply of milk on a yearround basis, and of the quality necessary to meet local requirements and conditions, it follows that the fluid-milk market must offer producers a higher price for their milk than that offered by the manufactured milk market.

These prices of necessity must also reflect the added cost of transporting milk from the farm to the city market. These costs are nor

mally higher than for delivering milk from the farm to manufacturing plants because of location. The larger the city, or the milk supply area, the more consideration must be given to transportation costs in arriving at proper prices for fluid milk.

Mr. ANDRESEN. What makes up the transportation costs that have increased this price?

You have mentioned the distance.

Mr. MASON. Distance.

Mr. ANDRESEN. Is that the only element that makes up transportation costs?

Mr. MASON. No, but that is the primary difference between milk transported to a manufacturing plant and milk transported to a fluid milk market. Otherwise, the other factors are about the same.

Mr. ANDRESEN. What is the main element in transportation costs, the main factor?

Mr. MASON. Labor.

Mr. ANDRESEN. Very well. And have labor costs gone up in transporting milk during the past 3 and 4 years?

Mr. MASON. Yes, I think the general trend in labor costs all down the line have been higher.

Mr. ANDRESEN. And they are still going up?

Mr. MASON. That is right.

Mr. ANDRESEN. In spite of the fact that producers are getting less for their milk?

Mr. MASON. That is right. In that same regard milk haulers cannot get by for less money because the price of milk has gone downthey cannot buy tires or trucks or gasoline for less money. It is another case where farmers are faced with rigid costs of things that they have to buy and lower returns for the things they have to sell. It is a very difficult problem.

Mr. ANDRESEN. Thank you.

Mr. MASON. When farm-to-market transportation costs are deducted from prices received by farmers supplying fluid milk markets, and, similarly, when they are deducted from prices received by farmers supplying manufactured milk plants, it is evident that the difference in prices as between fluid milk markets and manufacturing milk markets are less than they are generally presumed to be.

Charts IX and X show how prices received by farmers at fluid milk markets are affected by transportation from country receiving stations to city markets. In chart IX it becomes evident that Chicago producers delivering grade A milk to plants in the 220-235 milk zone lose a large share of the higher Chicago price through transportation charges.

That is the zone where Shawano, Wis. is located.

Similarly the higher prices quoted for St. Louis milk are lost to producers supplying country plants. Chart X shows a comparison of milk prices f. o. b. St. Louis and Lebanon, Mo., 150 miles southwest. Even though the St. Louis price at Lebanon is still somewhat higher than the condensery price, it is clear that producers are not receiving the quoted price for the St. Louis market.

In comparing prices received by producers for milk, the cost of transportation should be kept firmly in mind. Transportation costs for milk are high in relation to value because of the bulkiness of the product. For this reason, also, producer prices vary widely from market to market, depending upon the relationship between the amount of milk available within trucking distance and the number of consumers being supplied.

Chart XI shows the density of milk production among the several States.

If you will turn to it for just a moment, it clearly shows where the heavy milk producing region of the United States is located and it also shows that milk production is scattered widely throughout the whole of the United States.

Table No. 1 shows the percent of total milk production contributed by each of the several States and the percent of total population residing in each of the several States and the District of Columbia. (Table 1 follows:)

TABLE I.-Percentage of total United States milk production in each State in 1954 and to civilian population as of July 1, 1954

1.4

2.2

1.4

1.4

Source: Calculated from: Farm Production, Disposition and Income from Milk, 1953-54; and Population Estimates, Bureau of the Census, U. S. Department of Commerce, January 3, 1955.

Mr. MASON. In this regard, in table 1, remembering the importance of transportation in moving milk, it becomes evident that those States that produce a lot of milk in relation to the population tend to have low milk prices, and the States that produce a low percent of the milk in relation to population tend to have higher prices.

Even though milk produced for a fluid-milk market is priced at a higher level than the manufactured milk price, that portion of milk that is not used for bottling purposes is worth no more money than milk produced specifically for the manufactured-milk market. This milk meets the quality standards for the fluid-milk market and bears higher transportation costs at least in many cases.

But it cannot be priced above the manufactured-milk price level because it must be processed into dairy products and sold competitively with other products made from manufactured grade milk.

The higher prices that are necessary to assure a fluid-milk market with an adequate and dependable supply, therefore, must be borne by that portion of the milk actually bottled.

Furthermore, since milk produced for a fluid-milk market has more than one value, depending upon its use, it is logical that it should be priced to producers on the basis of its utilization.

The necessity of pricing milk on a classified basis was not generally understood by farmers when they first interested themselves as groups in the milk price problem. Attempts to sell milk to handlers by bargaining for a flat price contributed to unstable market conditions because it resulted in unequal costs to handlers for milk used for bottling purposes.

This was true because of variations among handlers in the percentage of milk used by each for bottling purposes and for manufactured dairy products. The instability caused by lack of uniformity of cost to

handlers for milk used for bottling purposes inevitably broke down the pricing system and led to low producer prices, low quality milk, and low milk consumption.

Mr. ANDRESEN. You speak of low consumption, for the reasons you have indicated. Don't we have about the lowest consumption of milk now that we have had per capita at any time in recent history, even before the milk marketing orders went into operation?

Mr. MASON. No, not of fluid milk, no.

Mr. ANDRESEN. On a per capita basis?

Mr. MASON. On a per capita basis we have had a gradual increase. There has been some fallback since the war when milk consumption per capita reached its highest point which was at that time.

Mr. ANDRESEN. And when

Mr. MASON. When most other goods or foods were in short supply, and when milk prices were low and were subsidized by the Government. And if you go back to chart No. 2, you can see that there has been a long, steady, gradual improvement in the per capita consumption of fluid milk including cream, and we know also that the per capita consumption of cream has fallen off.

Mr. ANDRESEN. Well, I had understood from some of the statements that I read from the Department they would indicate that our par capita consumption of milk over a period of years has decreased? Mr. MASON. For all uses.

Mr. ANDRESEN. That probably is true, but on fluid milk I know it has increased.

Mr. MASON. Yes, and look on chart 2 again you can see that the per capita use for all uses has tended to be downward. The per capita use of fluid milk has tended to be upward.

Mr. ANDRESEN. How do you account for that overall decrease in consumption of milk for all uses?

Mr. MASON. Most of it was the unfortunate loss of our butter market.

Mr. ANDRESEN. How was that lost?

Mr. MASON. We know that per capita consumption of butter dropped from 17.5 nearly 18 pounds, down to about 9 pounds. Mr. ANDRESEN. Who got the market?

Mr. MASON. About half of the market went to increased consumption of oleomargarine and about half of it to a total lower fat intake in the form of spread.

Mrs. KNUTSON. May I ask a question? Does that mean that the low price of fats and oils is replacing our butter so that we would rather take that than have the butter? We have a lot more of the fats and oils possibly than even butter on hand.

Mr. MASON. Well, yes.

Mrs. KNUTSON. That is what is moving butter off the market, the low-priced fats and oils?

Mr. MASON. That has been responsible for about half of the decline. The other half has been a general tendency for consumers to use less butter or oleo.

Mrs. KNUTSON. How do these compare in food value; butter with fats and oils?

Mr. MASON. I am not a nutritionist and I could only repeat what I have been told. I do not think that would be worth very much.