At the same time, domestic demand for farm products increases steadily with our growing population. The total demand is subject to sudden, great increases as the result of famine in other parts of the free world or as a product of war anywhere in the world.

Hence the time has passed when we can allow ourselves to consider stockpiles of agricultural commodities as "surpluses"-unnecessary and unwanted merchandise to be sold cheap in the market place. Nothing is more precious than food when there is not enough to go around, nor fiber when there are shivering backs to clothe.

We should recognize our stockpiles as reserves, and establish a long-range national policy of maintaining substantial reserves of farm products, strategically located, to protect our population against the danger of being hungry or ill-clothed in the event of drought, war, or other national calamity.

These basic reserves should not be depleted except for emergencies which would be declared by the President and the Agricultural Advisory Committee. The cost of maintaining them should be borne by the entire Nation.

Strategic reserves: In times of abundance, reserves of food and fiber accumulated under a price-support system might exceed the amounts required for our normal reserve stockpiles.

Supplies of each commodity in excess of our normal reserves should be classed as strategic reserves. The cost of maintaining these strategic reserves should be borne by the farmers producing them by deducting the per unit cost of storage which would include warehousing, normal deterioration, insurance, interest, turning, and other factors from the support price of that commodity for the following year.

The existence of such strategic reserves, however, is an asset, and not a liability. It should be recognized as such in Federal policy. A committee, composed of the President of the United States and the Agricultural Advisory Committee and working through the Secretary of Agriculture, should be empowered to use the strategic reserves for the fighting of hot or cold wars, the alleviation of human suffering at home or abroad, improving the health and welfare of our children, stimulating world trade, and for such other purposes as it deems advisable.

Following are the objectives of the strategic reserves:

1. To help balance the production of agricultural commodities.

2. To encourage consumption of commodities held in this classification.

3. To eliminate the necessity of acreage controls and marketing quotas.

4. To demonstrate to those not engaged in agriculture the willingness of farm producers to bear the cost of carrying the strategic reserves for the benefit of themselves and the Nation.

Perishable commodities: The 1952 campaign pledged the administration to work out a support-price system for perishable commodities. It is undoubtedly needed, though the methods used and the relative level maintained for each commodity may vary.

Consideration should be given to maintaining rotated basic reserves of the major perishables-preferably in private hands with Government financing. Above a predetermined level for each commodity, they should be used as strategic reserves, with moderate support-price adjustment made to influence production.

Forward pricing: All adjustments in the amount of support prices should be announced well in advance of the ordinary planting, breeding or feeding season so that desired production shifts will be made. Commodity speculation: The American farmer must not be sold short on his own markets. The Department of Agriculture should prohibit speculative abuse of agricultural commodity markets.

Soil conservation: Nothing is more important than the conservation of soil and water resources. The soil conservation district program with local commissioners assisting in the direction of the conservation program should be continued with an adequate level of technical assistance. Congress should give full consideration to a program which will enable the farmer to leave his land in better shape than he found it.

Public relations: Misunderstanding about price supports, surpluses, and agriculture's role in the Nation's economy is rampant.

To correct it, the Department of Agriculture should organize an agricultural public relations council financed by agriculture and the industries dependent upon it, designed to do a sound public relations job for agriculture.

The Iowa Republican Farm Council reiterates the statement of principle which has been the guiding motive of all farm council deliberations, namely: "Those acts which are good for agriculture must also be good for all the people of our Nation."

Mr. HOEVEN. Thank you.

The next witness is Mr. Robert Joslin, of the Young Republican Farm Council, Clarence, Iowa.

STATEMENT OF ROBERT JOSLIN, YOUNG REPUBLICAN FARM COUNCIL, CLARENCE, IOWA

Mr. JOSLIN. Members of the House Agriculture Committee and gentlemen, I am a dirt farmer. I farm at Clarence, Iowa, in partnership with my father. I can assure you that today the corn picker is sitting in the shed because I am here.

The Young Republic Farm Council was organized to funnel the thinking of young dirt farmers to the administration, and is not primarily a policymaking organization.

We heartily endorse the recommendations of the Iowa Republican Farm Council but would add the following:

Agriculture credit: The initial investment necessary to start farming operations makes it difficult if not impossible for many young farmers to get started on their own. The cost of machinery, fuel, fertilizer, and seed are at an extremely high level compared to the level of farm prices.

A Federal fund should be established from which young farmers can borrow money at a low rate of interest over a period of several years in order that the better qualified young people from the Nation's rural population may be induced to stay on the farm.

The funds might well be administered through local banks in order to eliminate as much Government red tape as possible.

The Iowa Young Republican Farm Council feels that there is a very definite need for more adequate intermediate credit in agriculture. Soil conservation: The young Iowa farmer feels that more emphasis should be placed on soil conservation. Education and demonstra

tion in this field should be greatly expanded so that more farmers will know how and why the soil must be left in better condition than they found it. Our standard of living is directly proportional to the fertility of our soil.

The Young Republican Farm Council wants a farm program designed for the good of the Nation and the world, as well as the farmer. Mr. HOEVEN. Thank you, Mr. Joslin.

The next witness will be George Paul, of the National Creameries Association. He appears also for the Iowa State Dairy Association. He will be recognized for 9 minutes.

STATEMENT OF GEORGE PAUL, NATIONAL CREAMERIES ASSOCIATION AND IOWA STATE DAIRY ASSOCIATION, DES MOINES, IOWA

Mr. PAUL. Mr. Chairman and members of the committee, my name is George Paul, and I am a general livestock and grain farmer about 70 miles east of Des Moines. I am president of State Brand Creameries, Inc., a cooperative association which markets the produce of some 130 butter creameries and dry-milk plants in Iowa and neighboring States-we marketed about 42 million pounds in the fiscal year just closed-and which has its headquarters at Mason City, Iowa.

I am also vice president of the National Creameries Association which has headquarters at St. Paul, Minn.

We have three problems of paramount importance that must be handled in the immediate future. These are: (1) The current surplus stocks in the inventory of the Commodity Credit Corporation; (2) the development of the price-support program for the coming year, particularly the price level to be established; and (3) the assurance of the continuation of adequate controls over the imports of cheap dairy products from foreign producing areas.

1. At the present time, the CCC has available about 278 million pounds of butter, 267 million pounds of cheese, and 419 million pounds of nonfat dry milk solids.

Outlets available for the disposition of CCC stocks through the school-lunch program, domestic and foreign relief agencies, special sales arrangements to foreign areas, and our own Armed Forces will use up fairly large volumes of the commodities now in CCC hands.

However, as of the end of March 1954, it is probable, unless some currently unforeseen outlets become available, that some 150 million or more pounds of butter, from 200 million to 250 million pounds of cheese, and about 450 millon pounds of nonfat-dry-milk solids will remain in the hand of CCC.

We have some recommendations to the committee regarding disposition of these stocks, as follows:

(a) With regard to butter, after distributing as much as possible through the school-lunch program, the Armed Forces, and foreign and domestic relief agencies, the remainder of the inventory should be diverted to use in butter oil. The butter oil then would be disposed of by the Government to industrial food users, such as bakers, candymakers, and the like, at prices which would encourage these outlets to use butter in place of the vegetable oils which they now use in large volume.

Heretofore, the dairy industry has suggested to the Department of Agriculture that two methods of disposition be considered. One is a price-rollback plan similar to that in use under the OPA during the last war, with a payment to farmers equal to the amount of the rollback.

Under this proposal, the price of butter would be reduced sufficiently to move current production plus CCC stocks into consumption, and the difference between the price-support level and the price established under the rollback plan would be paid through the plants to the farmer by the Government.

The payment would be made direct to plants manufacturing milk and butterfat, and would be passed back to the producer by the plants.

The other proposal is a so-called "bargain sale" plan, under which the consumer, with the purchase of a pound of butter at regular retail prices, would be entitled to purchase an additional pound of Government butter at greatly reduced prices.

Both plans have serious shortcomings, and so far neither the industry nor the Department are sure that they either present the right solution to the problem, or that the rollback plan can be accomplished under current law.

Perhaps the most frequent criticism of the rollback plan is that it is a subsidy. For my part, I think it is time we took a realistic view of the matter. It is quite inconsistent to argue against subsidies on the one hand, and on the other hand to advocate large-scale Government purchase for the purpose of supporting prices above the level they would attain otherwise.

(b) Some of the CCC inventory of cheese can no doubt be disposed of through the school-lunch program, and to domestic and foreign charitable institutions.

Also, it is probable that the British may be willing to buy some of our cheese, after they have taken the volumes required under their contracts with other cheese-producing countries, such as Australia, New Zealand, Denmark, the Netherlands, and Canada. We have no other specific proposal regarding cheese.

(c) We think that there are real possibilities to dispose of large volumes of non-fat-dry-milk solids in milk countries and in such fashion that it will not cause any repercussions in our international trade in other farm commodities.

Some of the members of the National Creameries Association have had a measure of very real success in developing markets for our non-fat-dry-milk solids in foreign areas, particularly the Central American countries and Mexico.

The milk is distributed in consumer packages, and is used for purposes of reconstitution into fluid milk. Most of the seriously milkdeficit countries throughout the world with whom we trade do not receive nearly enough milk to meet the minimum dietary requirements of their populations.

Further, their production conditions, and the relation of the size of their population to their land and other agricultural resources, are so limited that they have small prospects of meeting the milk and dairy product requirements of their people during the foreseeable future. It seems to me that in such countries with the possibilities for developing large-scale nonfat dry-milk solids use already demonstrated

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to be significant by our own dairy industry, our Government could do the dairy industry in this country a great service by cooperating in a program to expand such foreign disposition. Further, such a program would be of immense value to the people of such countries from the point of view of health improvement.

Such a program must be studied very carefully in order to realize its full potentialities. The Government should stand ready to pay an export subsidy in case cheap foreign sources threaten to take over the market. Consumer package distribution should be stressed.

Instructions as to use should be very clearly set forth, naturally in the local language. The Government should assist in developing teams of demonstrators, composed of people from this country and the foreign countries involved, so that consumers in the particular country can have the very best information and example of how to use the milk best. After a time, United States personnel could be withdrawn, if the experience in some of the point 4 programs is any criterion.

Of great importance, in our view, is that the program should be handled so that the United States would receive the credit for its efforts. We have observed in the past that very frequently the United States has received very little credit for the shipment of vast amounts of food and agricultural products during the last 10 years, while some countries have shipped very small amounts to the same people yet have reaped wide-spread propaganda benefits for their small token shipments.

The Government also will have to use its foreign representatives to smooth the way in the development of the program. Heretofore our foreign representatives have granted very little aid to our businessmen who have been trying to develop foreign markets; at least this is what the members of the National Creameries Association have told me.

2. Price-support levels that should be established this coming marketing year represent one of the most perplexing of the problems facing the dairy farmer and the Government.

I think you gentlemen are well aware of the fact that most of the major farm organizations, including dairy-farm organizations, opposed the enactment of amendments to the Agricultural Act of 1949, during the 1952 session of the Congress, which made it mandatory upon the Secretary of Agriculture to support the prices of the basic commodities at 90 percent of parity.

As far as my knowledge of the matter is concerned, there has been little change in the thinking of these groups from the point of view of the long-range position-namely, that we should return to the principle of flexible price supports.

For this next year the prices of the basic commodities are to be supported at 90 percent of parity according to the amendment to the act of 1949 that was passed in 1952.

It is, indeed, a difficult matter to persuade one group of farmers, such as the dairy farmers, that they should be satisfied with pricesupport levels materially below those established for their colleagues in other lines of agricultural production.

On the other hand, we all must realize that fixed high-level supports may have serious repercussions on the market for dairy products. Fixed high-level supports will in time almost inevitably be accom