GENERAL FARM PROGRAIVI 1235 



Our opposition to using the dairy farmer as a guinea pig in experimenting with 

 the proposed producer-payment program revolves around certain reasons, some 

 relating to principle involved and some to method, as follows: 



(1) The federation is opposed in principle to widespread subsidizing of the 

 dairy farmer that would be involved if the Secretary's plan were adopted for dairy-- 

 ing. We much prefer a more limited type of program which we think would be 

 much less expensive and would involve much less regimentation of dairy farmers^ 



(2) Within the fluid-milk sheds of the United States there is a widespread and 

 fairly adequate system of producer price controls. For example, the United 

 States Department of Agriculture under the Agricultural Marketing Agreement 

 Act of 1937, as amended, regulates the prices received by producers for milk in 

 30 of the major cities of this country. Subsidiary to these regulated major mar- 

 kets are numerous so-called secondary markets whose price structures are ma- 

 terially affected and protected, by the regulation of the central markets. 



In addition, 17 States have their own State milk control laws, most of which 

 permit the regulation of prices to producers and in some instances prices to con- 

 sumers. 



(3) Stability in marketing dairj^ products has been encouraged and improved 

 for many years through the operations of dairy cooperative associations, and the 

 self-help" efforts of these organizations would be nullified to a considerable degree 

 by the subsidizing of dairy farmers. These cooperative associations bargain with 

 milk distributors for prices for their members' milk, guarantee these members a 

 market, and in many instances actually operate plants and engage in the process- 

 ing and distribution of milk and milk products. 



(4) The dairy industry is a very complex industry. ^Vlilk leaves the farm either 

 in the form of separated cream or whole milk. Separated cream is used largely in 

 the manufacture of butter. Whole milk delivered from farms is used in many 

 different ways — for delivery to consumers in bottles, as fluid cream for table con- 

 sumption, and for the manufacture of butter, cheese, evaporated milk, dry whole 

 milk, dry skim milk, and other commodities. The price structures for milk enter- 

 ing these various uses are intricately related and it would be a difficult task to 

 adapt a producer payment program to the dairy industry without upsetting these 

 market relationships. 



1. The Federation is opposed to such widespread subsidizing of the dairy 

 farmer as appears to be contemplated by Secretary Brannan's proposal. It is 

 neither necessary nor justified. A much less ambitious program would achieve 

 good results, at far less cost and without far-reaching regimentation of the dairy 

 farmer. The goal of Government programs should be to interfere as little as 

 possible with the marketing of dairy products, and with the operations and free- 

 dom of choice of the individual dairy farmer. Perhaps in time — if there is very 

 large unemployment and the dairy farmer faces economic ruin, with resultant 

 serious effects on the entire economy of the country — current agricultural pro- 

 grams will have to be modified. We submit, however, that modification of the 

 type proposed by the Secretary is not justified. The legislation now in force, 

 amended as we have suggested in previous testimony before this committee, 

 should be given a fair chance to work before being discarded. 



2. The Secretary's program is not needed due to the fact that Government 

 sponsored programs already exist for the protection of dairy farm income. Many 

 fluid milk markets of this country are subject to price regulation by the Federal 

 and State Governments. Under the Agricultural Marketing Agreement Act of 

 1937, the Secretary has the authority to fix the prices which milk distributors 

 must pay producers in fluid milk markets, and the method of pooling returns to 

 such producers. Thirty of the major milk markets of the country are now so 

 regulated under orders issued by the Secretary. It is our belief, based on many 

 years experience with these orders, that they represent a very practical and bene- 

 ficial method of maintaining and stabilizing returns to producers in fluid milk 

 markets. 



The Federal order program influences many markets in addition to those under 

 direct regulation by orders of the Secretary. Many of these markets aie sur- 

 rounded by numerous secondary markets. The price structures in these secondary 

 markets must necessarily be closely related to the price structures of the major 

 markets. Therefore, stability in the major markets is a beneficial factor in im- 

 parting stability to the secondary markets. (See table 1, appendix, for a list of 

 markets operating under Federal orders.) 



In addition to regulations issued by the Secretary under the Agricultural 

 Marketing Agreement Act of 1937, 17 States have laws under which the States 

 regulate the price of milk to producers in fluid-milk markets. The widespread 



