I am a dairy farmer and still happen to live on my farm. Since I am a dairy farmer, I will confine my remarks entirely in this discussion to the agricultural problem as it concerns the dairy industry. The problem is not just one of finding a satisfactory self-help or price-support program; in fact, there are so many angles to this problem that its solution will be extremely difficult, if not entirely impossible, under present conditions.

The following expressions are my own, but they have been approved by the officers of the association I represent. I do not know what proportion of dairy farmers think as I do, but to me it is utter folly for the Nation's dairymen to try to develop a self-help program until such time as they have been given definite assurance that the importation of all foreign dairy products will be controlled.

The solution is made more difficult because in recent years Congress granted the right to manufacturers of an imitation product to use the historic yellow color of butter, thereby paving the way for fraud and deceit in the sale of that product to the American consumer. This has been a great factor in lowering the per capita consumption of butter in a few years from 17 pounds to about 8 pounds at the present time.

There is also the added danger to the dairy industry now in the desire of some processors to remove the butterfat from milk and and substitute a much cheaper vegetable fat, and sell this imitation dairy product to the Nation's consumers.

This process, as you can readily see, increases the amount of butterfat that must be made into butter-a product of which we already have a surplus-and also greatly increases the opportunity for additional fraud and deception at the expense of the American consumer.

I firmly believe that the present practice of Government purchases consisting mainly of the better grades of butter, and leaving the lower grades to be used on the consumer's table, is all wrong. The sale of 1 pound of low-grade butter does more harm than all the good the Government can do in the purchase of many times that amount of good butter to support the market.

I think dairymen as a whole will readily acknowledge that our public relations should be improved with regard to the rank and file of the Nation's consumers and also with regard to the lawmaking bodies the Senate and the Congress of the United States-to the end that all may better understand our problems and the importance of the dairy industry to the Nation.

If the following suggestions were put into effect, I believe support prices for dairy products might eventually be unnecessary:

1. A joint effort on the part of everyone interested in our dairy economy, both in industry and in Government should be made in the direction of doing everything possible to discourage the production, sale, and consumption of butter grading 90 score or less.

2. Deny the historic yellow color of butter to any imitation product. 3. Prohibit the removal of butterfat from milk and the substitution of any other fat to that milk.

4. If dairy product prices are to seek their own level in a self-help program, then dairy farmers should be assured that they can purchase subsidized grain or feed at whatever parity ratio dairy products are sold at.

5. Federal milk-market orders have played an important role in maintaining market stability in many of our large fluid milk sheds during periods when chaotic conditions would otherwise have prevailed.

Extreme vigilance, however, must be exercised in keep the pricing provisions of all orders in proper relation to dairy markets. They should provide for a fair premium over manufactured milk-that much, and no more. That premium should be only enough to assure the market of an adequate supply of high quality milk.

6. Producer class I prices, dealers' margins, and the practices of organized labor, should be very carefully scrutinized in markets where there is too great a difference between the price that the producer receives, and what the consumer pays for that milk.

We cannot, in justice to the dairy farmer, impose upon him the task of perfecting a self-help program, while at the same time we are paying the farmers producing corn, cotton, wheat, tobacco, and rice a premium to raise soil-depleting crops.

We believe, therefore, that it will be necessary to continue support prices on dairy products, until a new program is developed and has been given an opportunity to demonstrate that it can and will work. Thank you, gentlemen.

The CHAIRMAN. Thank you very much, Mr. Rohe.

The CHAIRMAN. The next witness will be Herman Olson, of the Minnesota Dairy Industry Committee, representing a State creamery association, as the Chair understands it.

STATEMENT OF HERMAN OLSON, EXECUTIVE SECRETARY, MINNESOTA CREAMERIES ASSOCIATION

Mr. OLSON. Mr. Chairman and gentlemen of the committee, my name is Herman Olson. I am the executive secretary for the Minnesota Creameries Association with headquarters in the New York Building, St. Paul, Minn.

Minnesota Creameries Association is a member of the National Creameries Association and we endorse the statements made at this hearing by representatives appearing for the National Creameries Association.

At the regional or district meetings of members of the Minnesota Creameries Association, held during September and October of this year, our members did deliberate and thoroughly discuss and consider possible changes and adjustments in the general farm program as enacted by the Congress and administered by the Secretary of Agriculture. Resolutions were adopted at these district meetings, treating on points of the farm program and other aspects of our marketing problems.

Statements of policy and consensus of members attending all of our district meetings are set forth in a number of resolutions that were adopted, and deal with aspects of marketing, other than price supports. We firmly believe that realization of the objectives outlined in our resolutions will constitute appreciable progress toward what will eventually prove to be a self-help program for our Midwest dairy farmers. We believe that the implementing of changes recommended in marketing procedures will obviate the need of acquisition by the Government of large stocks of dairy products under the price-support

provisions of the current Agricultural Adjustment Act, as it is now administered by the Secretary of Agriculture.

The statements herein referred to are attached and made a part of this testimony.

The CHAIRMAN. Thank you very much, Mr. Olson.

(The resolutions above refered to are as follows:)

RESOLUTIONS ADOPTED AT DISTRICT MEETINGS, MINNESOTA CREAMERIES ASSOCIATION HELD DURING THE MONTHS OF SEPTEMBER AND OCTOBER 1953

RESOLUTION ON IMPORT CONTROLS

There is inconsistency in any policy that encourages imports of agricultural commodities which are being supported domestically pursuant to provisions of the Agricultural Adjustment Act, and for which Government price supports are invoked.

We urge, therefore, that section 22 of the Agricultural Adjustment Act of 1949 be amended so as to correlate import quotas with domestic production of agricultural commodities, purchased by the Government from time to time, to support the price of such commodity.

RESOLUTION ON CONSUMER GRADE

Undergrade butter has long been recognized as a sales liability and as a factor responsible for much of the loss in butter consumption.

We endorsed the position taken by National Creameries Association at its annual meeting, held at Wisconsin Rapids on June 17, when our national association went on record favoring and advocating compulsory consumer grades for butter. We further endorsed the position of NCA which urged that butter scoring below 90 be labeled "cooking grade."

We also recommend that undergrade butter, scoring less than 90, be supported by the Government at prices sufficiently below graded butter to obviate competition; that stocks of undergrade butter thus acquired by the Government be converted to butter oil that such butter oil be sold for food-manufacturing purposes at competitive prices.

RESOLUTION ON FEDERAL MILK-MARKETING ORDERS

The United States Department of Agriculture, BAE, statistics support the contention that much of the current surplus of dairy products was realized as a direct result of unwarranted increased production of milk in areas where production and marketing is governed by Federal milk-marketing orders; and that butter production during the first 6 months of 1953, for the Nation as a whole, on a percentage basis, was two times the rate of increase of butter production in the State of Minnesota for that same period.

We request that the Congress of the United States investigate the administration of Federal milk-marketing orders, and take steps to amend the law under which Federal milk-marketing orders are operated; that the Congress determine the extent to which such marketing practices tend to reduce consumption of fluid milk when artificially and uneconomically priced. We further urge that provisions be made, in the law, for correlating the price of market milk with the parity price for manufacturing milk, in such manner that the price for market milk will reflect the parity price for manufacturing milk, plus the increased cost of producing market milk; and that if milk deficits occur then the price for market milk shall also reflect the cost of transportation of available market milk.

We urge that the Congress take such action as will assure that the USPH milk code and ordinance shall be the criterion and standard for determining the grade of market milk produced in areas where production and distribution is controlled by Federal milk-marketing orders.

The CHAIRMAN. The next witness is Mr. Gordon Klenk. With him will be Mr. F. L. Bailey and Mr. William Case, speaking for the Minnesota Farm Council, and I understand also for the Red River Valley Potato Growers Association.

STATEMENT OF GORDON KLENK, FARMER AND STATE CHAIRMAN OF MINNESOTA FARM COUNCIL, EASTON, ACCOMPANIED BY F. L. BAILEY AND WILLIAM CASE, SPEAKING FOR THE MINNESOTA FARM COUNCIL AND THE RED RIVER VALLEY POTATO GROWERS ASSOCIATION

Mr. KLENK. Mr. Chairman and distinguished members of this committee, my name is Gordon Klenk. I am a farmer in Faribault County, in southern Minnesota, and I also represent the Minnesota Farm Council.

After a series of meetings held throughout the counties in the State of Minnesota at the congressional district level and at a State meeting held on yesterday in Minneapolis we prepared the following resolutions. I shall read them.

I. The Minnesota Farm Council favors 90 percent parity on basic storage crops such as wheat, oats, barley, flax, soybeans, corn, and rye, that the acreage taken out of production shall be used for soil-conservation practices or summer fallowing with the provision that on such acreage no crop shall be harvested until such time as a better program becomes available.

II. This council favors 90 percent parity on all dairy products being extended to such a time that other satisfactory programs for protection of the industry can be developed and placed in operation. The dairy industry eventually will solve the problem of dairy surplus by education and sales promotion.

III. The Federal Government should establish a standard grade for butter for table use not to fall below a minimum score of 90 to qualify for support purposes.

IV. Any dairy products imported should be produced under the same sanitary conditions as required in the United States.

V. The welfare of agriculture has largely been dependent upon and related to foreign trade. We urge greater emphasis by the representatives of the United States Department of State and the Foreign Aid Organization and the Mutual Aid Security Agency in promoting sales, trade, and barters by three-way trade or otherwise in the markets of the world. We favor limiting imports of farm products when domestic prices for a commodity drop below parity.

VI. We recommend that PMA payments be made on permanent soil conservation practices only.

VII. We endorse the current investigation endeavoring to discover the wide discrepancy between the price received by the farmer and that paid by the consumers.

VIII. We heartily endorse the new crop insurance program as projected by the administration.

IX. We recommend that permanent soil-conservation practices, such as drainage, creation of storage ponds, land clearing, be financed by Government insured loans at a reduced interest rate, and that the money so expended by a farmer be allowed as an operation expense yearly in the amount in which the loan is repaid, and deductible as such from his income-tax return.

X. The Government should slow down the reclamation of new lands for food production until such time as it is actually needed.

XI. We urge the United States Department of Agriculture and our land-grant colleges shift their research emphasis to the utilization of agricultural products rather than further increased production. We also urge improved marketing methods to include higher standards of quality and new outlets in industry.

XII. This council favors a compulsory Federal labeling act providing that potatoes shall only be sold with a label printed on the bag, classifying the potatoes in accordance with the established United States grades, and that all potatoes from grower through to all retail sales must be in bags carrying such label on the bag, with the exception of certified seed potatoes; that the Secretary of Agriculture be given the power to withhold lower grades of potatoes from the retail consumers' market in years of surpluses and in the event that potatoes grading U. S. No. 2 are withheld from the retail consumers' market, that 50 cents per 100 pounds be paid to the grower as a Government subsidy to be handled by the Production Marketing Administration; that the enforcement of the labeling provisions of such act be the responsibility of the Food and Drug Administration.

I will relinquish the rest of my time to Mr. Fred Bailey.

STATEMENT OF FRED L. BAILEY, SPEAKING FOR THE MINNESOTA FARM COUNCIL AND THE RED RIVER VALLEY POTATO GROWERS ASSOCIATION

Mr. BAILEY. My name is F. L. Bailey.

The CHAIRMAN. You are speaking for Mr. Case?

Mr. BAILEY. Yes.

I am from Moorhead, Minn., and speaking for the Red River Valley Potato Growers Association, of which William Case is secretary.

The farm council passed a similar resolution with regard to potatoes. The Red River Valley Potato Growers Association favors a compulsory Federal labeling act providing that potatoes shall only be sold with a label printed on the bag, classifying the potatoes in accordance with the established United States grades, and that all potatoes from grower through to all retail sales must be in bags carrying such label on the bag, with the exception of certified seed potatoes; that the Secretary of Agriculture be given the power to withhold lower grades of potatoes from the retail consumers' market in years of surpluses and in the event that potatoes grading U. S. No. 2 are withheld from the retail consumers' market, that 50 cents per 100 pounds be paid to the grower as a Government subsidy to be handled by the Production and Marketing Administration; that the enforcement of the labeling provisions of such act be the responsibility of the Food and Drug Administration.

This will prevent lower prices and be inexpensive to the Government. The CHAIRMAN. Thank you, Mr. Bailey.

The next witness listed is Mr. Thatcher, who is unable to be here at this time, but will be here this afternoon.

The CHAIRMAN. The next witness is Mr. Paul H. Petran, a vegetable grower, representing that branch of the agricultural industry..