FIGURE 7.-Changes in number of milk producers on the Chicago market, 1944–54.

300

200

100

O

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54

FIGURE 8.-Changes in average daily milk deliveries per producer, Chicago, 1940-54.

TABLE 1.-Average prices paid milk producers at condenseries by regions and United States, 1920-501

1 Data compiled by the Bureau of Agricultural Economics, U. S. Department of Agriculture. 2 Data from 1920 to 1924 from Illinois Agricultural Experiment Station Bulletin 269, table G, p. 538; data from 1925 to 1939; Wisconsin State Department of Agriculture, Bulletin 249; and data from 1940 to 1950, the 18 condensery prices as reported by the Chicago Federal Milk Market Administration.

Data not included for South Atlantic States for 1924 to 1927, and for South Central States for 1920-27.

TABLE 2.-Volume of class I and class II sales of milk, and milk deliveries in the Chicago market, September, October, and November 1940–541

TABLE 3.-Trends in milk sales, milk deliveries, and supply-demand price adjustments in the Chicago milkshed, December 1951 to April 1955

Source: Chicago Federal Milk Market Administration.

Mr. BARTLETT. I would like to review briefly 2 or 3 of these charts. First, on figure 1, which is the second page of exhibit No. 2, it shows condensery changes in their prices, in the farm prices, generally, 1920 to 1954. The essence of this chart is that the condensery prices of milk, manufactured milk, tend to change directly with changes in the general level of farm prices.

And taking the more immediate period, we find that the general level of farm prices fell between 1951-54; condensery prices went up to a high point, which was 1952, but then they fell along in 1952-54. The attempt of sustaining condensery prices in general and other farm prices, for butter, powder, and cheese at a high 1952 level, when the general level of farm prices was declining, would have continued to result in more and more milk.

Now, just taking briefly the condensery price, figure 4. Condensery prices in recent years have tended to be above butter, prices, using 1935-39 as a base.

As I pointed out 2 years ago, the butter price, the demand for butter has fallen during the past 20 years, with people paying less money for butter than they would 20 years ago.

The cheese price, on figure 5, and the condensery price went very closely together. The cheese market has been expanding, per capita consumption of cheese has increased. And these condensery and cheese prices have kept very closely together.

Figure 6 shows the skim-milk prices as related to condensery prices. Here we have a good, clear-cut example of what happens when we keep prices at too high a level.

Skim-milk prices have not dropped correspondingly with condensery prices. One reason is that the Government has to purchase such huge quantities of skim milk so that the price is too high to be sold in the commercial market.

Figure 7 shows the changes in the number of milk producers in the Chicago market, 1944-54. This ties in directly with the change in the manufactured price.

In January 1955, there were 1,400 fewer producers on the Chicago market than in January 1954. The underlying reason why there were fewer producers in 1955 than in 1954 is shown in the blend price in figure No. 3.

Mr. HEIMBURGER. What happened with these 1,400 producers? Did they go out of business or were they simply selling their milk off the Chicago market?

Mr. BARTLETT. Will you hold that question? I want to give the reason, and then I will give the answer.

In Figure No. 3 there is shown the blend price, the average price paid the farmers through 1944-54 as compared with the condensery price in the Chicago market during that period.

The general average for the period, the blend price for grade A market milk in the 70-mile zone was 49 cents above the condensery price. That was from 1940-54.

In 1952 and 1953 the blend price averaged 74 cents above the condensery price.

During that period, under the Chicago Federal order the butterpowder price was frequently used as the basic formula price, and the 74 cents was paid above that.

From 1953 to 1954, primarily as a result of the decline in parity prices, and the decline in condensery prices, the 74 to 48, 26-cent decline in the blend price exceeded the condensery price.

There were 1,400 producers that went off the market, because they could make more money, Mr. Heimburger, in selling to some other market. The difference between 74 and 48 was the reason that they went off. They were on the marginal edge. When the price went down most of the producers are still in the dairy business-a few of them have gone off, I mean, just taking our Kane County situation, some have gone back to beef. I would say that the majority of them are still in the dairy business.

Mr. HEIMBURGER. That was the point I wanted to bring out.

Mr. BARTLETT. I wanted to tie it in with this as to the cause and the effect.

Going back to figure 8 we have a basic fact occurring in all markets in the United States. We have a big increase in the production per herd. It increased from 330 pounds daily to 533 pounds daily in 1954. Those were the main points that I wanted to include under this discussion of this particular exhibit.

Has anyone any questions on this before I go to my next exhibit?