13 cents a quart for their milk, and as I understand, the average price paid by the consumer is around 232 cents.

Mr. GEYER. That is right.

Mr. ANDRESEN. So you have about an even division, the wholesaler and retailer and distributor charge about one-half of the retail cost? Mr. GEYER. Technically the retail spread runs about 10 and 14-10 to the retailer, 14 to the farmer. But if you take that back to the blend price at the farm, the farmer's obligation to get the milk from his farm to the dealer's plant, you take that back to the blend price at the farm net, you don't have far from a 50-50 split.

Mr. ANDRESEN. Just one question of this gentleman. You proposed a rather interesting proposition when you mentioned that the producer should be protected in some manner for the years that he had losses as against years when he has big profits and pays a big income tax. I don't know whether you meant to have the same plan as industry has, where if they make big money one year and take losses the next year, they have a drawback over a period of years where they are reimbursed by the Federal Treasury because of the losses taken as against the high profit and high tax years. Is that what you had in mind?

Mr. HUTTON. In farming, our drawbacks are more apt to exceed the big income years. I don't think that that would particularly help. In the old days the farmer could take the money from those good years and he could build a reserve. He could put it in the bank. He had something to tide him over the lean years that are bound to come. Today he can't do that. I think that farmers are particularly interested, especially the farmers that have been farming for a while, in maintaining the equity in their farms. I went through the thirties and a lot of you gentlemen did. We saw those people lose two things: the lifetime work, the equity they had built up in their farms; and their faith in farming. I don't think either one of those things was a good thing.

I hope we are smart enough to have some farm program that can at least stabilize the agricultural price level so the farmers won't have to worry about losing the equity in their farms.

Mr. ANDRESEN. You mean a minimum floor that the farm prices to the producer wouldn't sink below that minimum?

Mr. HUTTON. The details of it aren't all clear in my mind, but I think that is the line along which I am thinking.

The CHAIRMAN. Are there any questions on this side? Any further questions? Mr. McIntire has a question.

Mr. McINTIRE. Mr. Chairman, I would like to ask a question or two of Mr. Hutton. One of them is: Could you tell us the status of the marketing agreement which you had in the potato industry in southern New England for a time?

Mr. HUTTON. I am glad to discuss that, Mr. McIntire. I happened to be on that marketing agreement committee. I suppose that the issue was confused in the year we voted in because support was one of the things that went along with the marketing agreement. I might add that that marketing agreement was continued the following year. In late January or early February, as you recall, the price of potatoes went up so high that there was no necessity for withholding any from the market. So the marketing agreement was put on the shelf. It was not discontinued.

It might interest you to know that yesterday I sat in at a potato meeting to discuss some of the problems affecting us in Connecticut. One of the questions that was raised by the growers was whether or not we could activate that marketing agreement. The growers are thinking seriously in our State of doing it.

I do say that all the farmers want are tools to work with. I think we have smart enough farmers in this country so that if you give them the tools, they will do a job that won't cost the Government too much money.

Mr. McINTIRE. You were speaking somewhat for an area of agriculture in which the risks are higher proportionately than the producers of some other commodities. What is your credit situation at the moment in the production of these high-risk commodities?

Mr. HUTTON. You mean the credit situation of the growers?
Mr. McINTIRE. Is it adequate for production finance?

Mr. HUTTON. Offhand I would say so as far as the majority of the growers go. We have had two pretty good potato years, and I do think that the support program in tobacco has kept a lot of growers in the valley on their feet who otherwise would be in a very serious credit situation. But we have good credit facilities.

Mr. McINTIRE. How about producers of fruits and vegetables other than the potato producer? Is his credit adequate for his production needs at this time?

Mr. HUTTON. I would say offhand that the credit of the tobacco growers is probably adequate, but I do know from talking with people in the Production Credit Association there are a lot of farmers who have credit difficulties.

Mr. ANDRESEN. Just one other question. You will recollect that when we had the support program on potatoes, large quantities of potatoes came in here from Canada and sold a little under the support price and took over the market?

Mr. HUTTON. I don't like to recollect about the potato program. Mr. ANDRESEN. How do you feel about imports of potatoes at a time when we have a Government support program?

Mr. HUTTON. Let me say that the last 2 years we have bumped up against that same situation when we didn't have a support program. This last year boats came into Jacksonville and Charleston where we sell the bulk of our potatoes and dropped the price 25 to 40 cents a hundred down there. That thing is going to be with us whether we have a support program or not. I am not familiar enough with all the trade agreements to know whether that is right or wrong. I read in the Packer yesterday that Canada is blaming the low price of potatoes up there on imports from the United States, and they are asking that the duty be increased.

Mr. ANDRESEN. I won't embarrass you any more by going into that. Mr. HARRISON. I noticed in the States of Massachusetts and New Hampshire and Connecticut second on the list of your industries is the dairy industry. Last year at the beginning of the present administration there was a meeting of the dairy industry people with the Secretary of Agriculture, at which time they decided that they would continue the 90 percent of parity program. It seems as though that at that time there was an understanding that the dairy industry would try to work out a program whereby we could probably take care of our

surpluses. But since that time, our surpluses have continued to rise in the form of butter, cheese, dried milk, and so forth.

I am wondering right now whether any of you people have any answer to what is being done or whether there is anything being done at the present time to sort of level out this program so that we might continue this 90-percent program. That is, it has been my understanding in listening that we are opposed to the support program. However, we are going along with the 90-percent program in the dairy industry. Is there anything being done at the present time?

The CHAIRMAN. I was going to suggest to Mr. Harrison, we have with us this morning Mr. Davis, the general manager of the New England Milk Producers' Association, and also president of the National Milk Producers Federation. Perhaps we had better wait until he comes on, although we would be glad to have anyone else answer the question.

Mr. DAVIS. At the time I appear as a witness I will be glad to discuss that question, or I will be glad to pick it up now.

The CHAIRMAN. We expect to call on you next, Mr. Davis, so with your permission why don't you wait until we do call on you and we will see if there are any other questions we desire to have these witnesses answer. Do you have any other questions, Mr. Harrison? Mr. HARRISON. No.

The CHAIRMAN. I think the Chair would like to ask one question of Mr. Wadhams. What percentage of your poultry industry in New England is organized cooperative?

Mr. WADHAMS. I can't speak for all of New England. I speak for Connecticut. It is approximately 25 percent in the State of Connecticut that is organized, with eggs going through cooperative channels. The CHAIRMAN. Are there any marketing agreements in connection with the poultry industry?

Mr. WADHAMS. There are no marketing agreements whatsoever, and the poultry industry doesn't want any marketing agreements.

The CHAIRMAN. I thought possibly you had made some efforts to work out marketing agreements.

Mr. WADHAMS. No; we feel in the poultry industry practically every farm has something to do with chickens, and it would be practically impossible to have any control whatsoever over any agreements. I happen to be a cooperative manager and it has been pretty hard to sell cooperation.

The CHAIRMAN. I don't think you can have marketing-agreement programs that are successful in any branch of agriculture where you are not pretty well organized cooperatively, and I thought perhaps in some areas here you might be organized cooperatively to the extent that you might have considered some marketing-agreement program. Mr. WADHAMSs. No; I don't think so, Mr. Chairman.

Mr. GEYER. Mr. Chairman, if I might just for one moment comment on the gentleman's question which Mr. Davis is going to comment on later, only to say this: In Connecticut, as a cooperative, we are fairly well organized there. We started out the 1st of March to try to do something that we could in this greater sale of fluid milk. We are spending, our 19 members, about $110,000 this year for the first time in direct consumer advertising of no branded milk, but just milk and dairy products. In addition to that we are cooperating with the Amer

ican Dairy Association program, and we have had for 30 years a dairy and food council which we spend about $65,000 a year on.

The point I wanted to make was, and I am always afraid to make this point, but for the last 2 or 3 months our milk sales have been running around 6 percent above a year ago, which is more than our production has increased from a year ago. Whether that is just because the weather has been better or consumer incomes are better or what, I don't know. But the fact remains that sales are up.

Mr. HARRISON. That is fluid milk?

Mr. GEYER. That is right. And the information I get also is that butter sales are increasing somewhat. They are running about 3 percent above a year ago. If we just had time enough, I believe we could work this out. We had one of these scares in 1949, late 1949 and 1950, when we had a very unusual production year which nobody could seem to understand. We just suddenly got a lot more milk than anybody expected. I grant you the Korean war came along in June 1950. Whether that was psychology or what, I don't know, but it removed those surpluses at that time. God grant we are not going to have another war to get us out of this one, but I believe if we can work it out in some way for a year or two, these dairy surpluses are going to disappear.

Mr. ANDRESEN. Have you reached your peak of production and is the production going down now?

Mr. GEYER. Oh, yes, very drastically. We are almost at our low point of the year now.

The CHAIRMAN. The Chair might say to the members of the audience here that Mr. Andresen is the chairman of our Dairy Subcommittee of the Committee on Agriculture. He expects to hold some hearings over the country this fall on that question. His subcommittee has held a number of hearings in Washington also.

I think we have time for just about one more witness before we recess for lunch. In that time we would like to call on Mr. W. P. Davis, who is the general manager of the New England Milk Producers Association and president of the National Milk Producers' Federation. We will be glad to hear from you at this time, Mr. Davis. STATEMENT OF W. P. DAVIS, GENERAL MANAGER, NEW ENGLAND MILK PRODUCERS ASSOCIATION, AND PRESIDENT, NATIONAL MILK PRODUCERS' FEDERATION

Mr. DAVIS. Mr. Chairman and members of the committee: First I would like to say in support of and in direct testimony behind the Agricultural Marketing Agreement Act, we were one of the first markets in the United States to begin the use of Federal milk marketing licenses which were later under the amended act termed Federal Milk Marketing Orders. Many of the constitutional questions surrounding the legality and constitutionality of that act began their testing here in this New England Milk Shed and in Greater Boston. Since that time, because of the interstate character of New England-that is, there are six New England States and Greater Boston draws its milk supply from each of those States and a small area of eastern New York, in the vicinity of Salem and Eagle Bridge served

by the Boston and Maine Railroad constitutes the milk shed for Greater Boston and southern New England.

In meeting the competition of unregulated milk and trying to build ourselves out of the depression of the thirties, these two rather basic things began to take form and shape. First, there were a series of emergency milk control acts that were enacted in each of the New England States on an emergency basis. Then in 1932 the Agricultural Marketing Act was passed by the Congress. These milk control boards undertook to do the pricing activity in the State markets, but because of the interstate character of Boston, we began the use of a Federal milk marketing order. Combined with New England, a New York order was instituted, and the two cases went before the Supreme Court together. Since that time we have extended the use of Federal orders here in New England so that five markets now utilize it. I believe we have improved the pricing techniques used under those orders. We are now using a formula here in Boston that is based upon the general commodity index, the consumer or wage-earning index of what people earn after Federal taxes, and the third factor there is grain and labor, each one of these representing a third.

This formula was created by a group of research men drawn from the industry and from the State universities. The Secretary of Agriculture and the Dairy Branch required and insisted that there be tied into this pricing program a supply-demand factor which operates to reduce the price when the supply is substantially in excess of the requirements of these New England markets.

Beginning in January of this year, the seasonal provisions of the order-that is, the price changes from June to November, plus the supply-demand factors have caused a reduction in class 1 prices of approximately $1.56 per hundredweight.

I attended a cooperative conference in Montpelier early this week. I indicated to that conference-and there were some 18 or 19 cooperatives present that were reviewing some tentative amendments to the Greater Boston order-I announced that this committee was meeting in Amherst and they asked me to say to you as a committee that they, as a cooperative conference, are thoroughly in support of the Agricultural Marketing Agreements Act and a stabilizing factor and forces that have been created in our New England milk markets by the utilization of this provision and law.

I do not think I need to go farther into that field of discussion. Now, moving over here to the national problem and national picture, I was one of a committee of 14 called into Washington in February by the Secretary of Agriculture, at which time the question of what support price should be utilized in the crop year of 1953-54, which began the 1st of April. There had begun to accumulate some surpluses of butter, cheese, and powdered milk. There was indication that the production trend in the dairy industry, not only of the eastern region but of the entire United States, was headed for an expanded program. We had had an excellent crop year in which roughage and grain supplies were excellent. We had had a rapid decline in the price of livestock and beef animals, which had the effect of encouraging probably the milking of some beef animals that normally would not have been milked, and had the effect of discouraging dairy farmers from culling their herds which they would normally do. Most of these animals had been accumulated in the herds when milking cows in this region.