We have a manufacturing price, too, which is just about one-half. Mr. JOHNSON. As I understand it, when you are talking about manufacturing milk, you are talking about class B milk.

Mr. LAIRD. Not necessarily-not when you are talking about manufactured milk in Wisconsin-you are not talking necessarily about class B milk.

Mr. POAGE. Of course not. You are not doing it in Texas, either. We have at the present moment, of course, a surplus of milk in east Texas. It has now rained in east Texas. There is a surplus of milk of course right now. It is produced as grade A milk, produced under all of the same requirements of inspection as any other milk is. It is all treated with all of the sanitary requirements so that it can be sold as grade A milk. The processing plant cannot sell but a certain part of it in bottles. The rest of it it sells to somebody who makes cheese or butter or to evaporate it.

Borden runs a plant down there to evaporate milk. They only pay for that manufacturing part about one-half what they pay for that which goes into bottles.

As I understand it, what Mr. Forest is showing is that roughly he has maintained the same price, let us say, in San Antonio, Tex., that he has in Chicago, for the same class of milk.

Mr. FOREST. That is right.

Mr. POAGE. Plus transportation. You have about the same price. If you compared the price of manufacturing milk that is going to sell for one-half up in Wisconsin with the price of milk that is sold in bottles in San Antonio, then you would find the return much greater in San Antonio, but if you compared the price of manufacturing milk in Wisconsin with the price of manufacturing or surplus milk in San Antonio, you would find a different situation.

What we import from Wisconsin is always the bottle milk. We never import manufactured milk. I do not think anybody would assume that you would ship milk from Wisconsin to San Antonio, Tex., to make cheese out of it.

Mr. LAIRD. My point is that some of the milk which is shipped down to San Antonio, Tex., is milk that Wisconsin would put in to manufacturing.

Mr. POAGE. That is right.

Mr. LAIRD. In order to show what the milk, the majority of the milk that we are producing in Wisconsin could sell at on the Chicago market, you have to use the price that the farmer is being paid for that milk in Wisconsin, rather than the class I price. Do you see what my point is?

Mr. POAGE. No, because when the man from San Antonio goes to Wisconsin and gets milk-he has to pay your class I price. He cannot buy it otherwise. He cannot buy your milk at manufacturing price, and move into San Antonio and sell it.

Mr. LAIRD. He can. We would be glad to sell it to him, but if he is in a Federal order area, he cannot.

Mr. POAGE. That is right.

Mr. LAIRD. That is not because we in Wisconsin stop him from buying it at the lower price. It is because of the particular order that that handler is operating under. It is not the Wisconsin farmer, because he would be very happy to sell him the milk.

Mr. POAGE. That is very true-that is very true, of course.

Mr. LAIRD. It is that local order down there that makes the milk at the higher price, not the Wisconsin farmer.

Mr. ABERNETHY. I think that both gentlemen are in agreement now. Mr. Laird requested certain information.

Mr. FOREST. We will be glad to get it.

Mr. ABERNETHY. Put it in the record, and further discussion could be had on it.

(The information requested is as follows:)

Annual average class I and blend prices in Federal order markets, per 100 pounds of milk containing 3.5 percent butterfat (f. o. b. marketing area except where mileage is indicated) grouped by zones and compared with midwest condensery price, plus estimated transportation cost to designated market,2 1954

1 Zones shown on attached map radiate from manufacturing milk producing area around Minneapolis and Shawano.

2 Mileage is shortest highway distance from either Minneapolis or Shawano. Rates used are from a schedule quoted by a dairy transport firm operating in Wisconsin and apply to 27,500-pound minimum loads.

3 Rate reduced by local cost of transportation computed from same schedule: Chicago and New Orleans. 14 cents; New York and Boston, 38 cents.

Compiled by the Dairy Division, AMS.

Milk: Average prices paid by selected Midwest condenseries 2 for milk containing 3.5 percent butterfat monthly

2 Located at: Coopersville, Mich.; Hudson, Mich.; Mount Pleasant, Mich.; Sparta, Mich.; Wayland, Mich.; Belleville, Wis.; Berlin, Wis.; Chilton, Wis.; Manitowoc, Wis.; New Glarus, Wis.; New London, Wis.; Oconomowoc, Wis.; Orfordsville, Wis.; Richland Center, Wis.; West Bend, Wis.

Source: Reported by the market administrator at Chicago, Ill. Compiled by the Standardization and Program Development Branch, Dairy Division, AMS.

Mr. FOREST. If we take that series we have of the price paid by 15 condenseries which we use up there, located in Wisconsin and Minnesota, is that series sufficient?

Mr. LAIRD. That would be all right. The reason that I used Shawano County is that most of the producers in Shawano County are grade A producers. They are qualified to sell on the Chicago market. A great many of them are unable to sell on the Chicago market.

Mr. FOREST. We have had difficulty getting a series of what represented average manufacturing values. We have taken the prices paid at the condenseries.

Mr. LAIRD. That would be all right.

Mr. JOHNSON. The only thing I was trying to point out is that class B farmers can sell at that same price to the condenseries. It does not have to be grade A to go into cheese, et cetera.

Mr. LAIRD. But in Shawano County much of the milk is grade A. Mr. JOHNSON. We have grade A farmers in western Wisconsin, equipped to produce grade A, but because there is no market they are forced to sell at grade B price.

Mr. ABERNETHY. Let us proceed.

Mr. FOREST. Surplus milk prices: In establishing a price for the surplus milk in a fluid milk market, it is necessary to determine the level of prices being paid to farmers by unregulated handlers in direct competition with the handlers of surplus milk for fluid markets. The prices paid by such unregulated handlers for milk disposed of in similar dairy products are taken as a guide to the value of surplus milk in fluid markets.

It must be recognized, however, that volumes of surplus and the organization of the market for disposing of surplus milk vary considerably from market to market. For this reason the level of surplus prices which will contribute to orderly marketing in one area may be somewhat different from the prices needed in another area. Generally, however, the surplus price is established at the level of competi

tive prices paid producers at unregulated manufacturing plants, unless there is a clear indication that such prices are not reasonable. In determining the level of surplus milk prices which will produce orderly marketing, it is important that handlers in fluid milk markets should not be unduly encouraged to manufacture surplus milk, either by establishing prices more attractive than those paid by competitors in unregulated markets, or by making the handling of surplus milk within the fluid market appear more profitable than the handling of milk for primary uses.

Surplus milk in Federal orders is priced by one of two general types of formulas: (1) formulas based on manufactured dairy product prices, or (2) formulas based on prices paid for milk by unregulated manufacturing plants. The two types of formulas differ only in mechanics, since each is designed to relate the local surplus milk price to the approximate prices being paid by unregulated manufacturing plants for milk made into dairy products.

Mr. ABERNETHY. I think it would be well if we adjourned over until tomorrow morning.

I would like to finish your statement this afternoon, but I doubt if we can because we have other business on the floor. So if you will be present in the morning, we will start at 10 o'clock sharp. That should leave an hour or an hour and a half for questioning.

We have a witness here this morning who has come a very, very long way. He had a statement that he intended to request permission to give to the committee. The witness is Mr. John Taylor of the Indiana State Board of Health. I am very sorry, Mr. Taylor, that the time did not afford us an opportunity to hear you this morning, but I want to assure you that at an appropriate place in the record, your statement will be inserted, if that will meet with your satisfaction.

Mr. TAYLOR. Thank you, sir.

(The statement referred to is as follows:)

STATEMENT OF JOHN TAYLOR, DIRECTOR, DIVISION OF DAIRY PRODUCTS, INDIANA STATE BOARD OF HEALTH

My name is John Taylor, I am director of the division of dairy products of the Indiana State Board of Health. In addition to representing the State Health Department of Indiana, I have been requested by the chairman of the executive committee of the National Conference on Interstate Milk Shipments to represent that organization relative to H. R. 1754. The chairman of the executive committee of the national conference reports that the majority of their committee is opposed to the passage of this bill.

The problem concerning the movement of milk in interstate commerce is not new. An attempt at solving this problem was first made on a national level in 1941, when a meeting of representatives of the States was called in Chicago by the Council of State Governments. Preliminary agreements concerning the movement of dairy products in interstate commerce were reached at that time, but were dropped during World War II.

In 1946 the State and Territorial health officers recommended that a uniform program of certification of milk for fluid use moving in interstate commerce, based upon sanitary standards, be developed.

Officials representing State health departments and State departments of agriculture in the Midwest, who were charged with the enforcement of State laws concerning sanitary milk supplies from both shipping and receiving States, met in Indianapolis in 1949 and discussed problems of multiple inspection. It was decided to call a meeting on a national level. Such a meeting was held in Chicago in 1950, and later in St. Louis in 1950, 1951, 1952, and 1953.

From these meetings sanitation standards were adopted based upon the provisions outlined in the Milk Ordinance and Code recommended by the United

States Public Health Service, which is the only uniform national milk sanitation program in operation. Sanitary surveys of milk supplies were to be made by personnel of the State regulatory agency following the method outlined in Bulletin 1970, issued by the Public Health Service. The United States Public Health Service was requested to certify State regulatory personnel to insure accurate, uniform, and standardized survey reports. Information concerning sanitary ratings is cleared through the Public Health Service, and ratings of supplies are published quarterly by the Public Health Service of those supplies whose management have given written permission for such publication.

A meeting was held in Memphis on March 29 and 30, 1955, discussing the progress made in the operation of the program during the past 2 years and how it could be improved. There were 186 individuals from 36 States and the District of Columbia attending, representing State departments of agriculture, State departments of health, city health departments, and industry.

This program of certification has operated most satisfactorily to all concerned, not only for bulk shipments of raw supplies, but for interstate shipments of finished products. In Indiana the program is also being successfully used for finished products moving between local city markets.

In Indiana, as well as in many other States, the chief regulatory official is the State health commissioner, who is the only one qualified to certify interstate shipments of individual milk supplies.

Í am making certain recommendations for changes in section 7 (b). In line 8 on page 2, substitute the word "regulatory" for the word "agricultural." This would authorize certification by either the State commissioner of agriculture or the State commissioner of health; whoever is charged with enforcement of milk sanitation requirements.

In line 9 delete the words "Secretary of Agriculture of the United States" and substitute "Surgeon General of the Public Health Service." The Surgeon General of the Public Health Service prescribes standards and should be the individual to whom the States certify supplies.

In line 10, after the word "produced," insert "in a plant." This would provide certification for an individual supply, and would not authorize a State agency to certify all milk originating within the State.

In line 12, after the word "subsection," delete the period and insert "and a current sanitation rating made by a survey officer certified by the United States Public Health Service accompanies such certification. The Surgeon General of the Public Health Service shall furnish the Secretary of Agriculture of the United States a list of plants or shippers producing and handling sanitary milk and milk products." This would insure sanitation surveys made by competent personnel, which would be uniform on a national level. Such information would probably be more acceptable to receiving areas. The Surgeon General of the Public Health Service would report the sanitary status of milk supplies produced throughout the United States to the Secretary of Agriculture who enforces the act to be amended.

Mr. ABERNETHY. With that, we will stand adjourned until 10 o'clock in the morning.

(Whereupon, at 12:10 p. m., the subcommittee recessed, to reconvene at 10 a. m. Wednesday, April 20, 1955.)