1236 GENERAL FARM PROGRAM 



incidence of the State regulatory programs are indicated in table 2 of the ap- 

 pendix which lists the States having milk-control laws. 



While information is not available to us as to the total volume of milk under 

 Federal^ and State regulations in this country, we know from general information 

 that it is a significant portion of the total fluid milk markets. For example, the 

 State of Pennsylvania has a very active milk-control board which regulates the 

 marketing of milk in a number of the major markets of that State. The same 

 situation prevails in such States as New Jersey, California, Massachusetts, and 

 Georgia. Some idea of the importance of State regulation of fluid milk markets is 

 indicated by the fact that in 1948, the 17 States having milk-control laws accounted 

 ior 33 percent of the milk sold from farms in 1948. While part of this milk was 

 delivered to manufacturing plants, it is obvious that a large portion of the fluid 

 milk marketed in this country is either controlled, or subject to control, by State 

 ^nd Federal authorities. Certainly, we know that in most of the major metro- 

 politan areas of the United States, fluid milk marketing is under such regulation. 

 While the Federal Government does not have any orders in the State of Cali- 

 fornia, for example, the California State Milk Control Board regulates milk 

 marketing in nearly all of the metropolitan areas of that State. 



Dairy farmer returns in the areas under regulation are, we believe, being 

 maintained on a fairly adequate basis through the marketing regulation discussed 

 above. It should be emphasized that the stability and maintenance of dairy farm 

 income in these regulated areas is achieved at very little cost to the Government. 

 Under Federal milk orders, milk distributors are required to pay a small assess- 

 ment to provide for the administration of the order by which they are effected. 

 The only cost to the Federal Treasury in the administration of these orders is the 

 personnel of the Department of Agriculture engaged in the work — undoubtedly 

 a very small amount of money considering the volume of business involved. 



While we do not have any information regarding the expenses of administration 

 incurred by State governments in the regulation of fluid-milk markets under their 

 jurisdiction, we think it is reasonable to assume that these costs are very minor. 



We have then a very large segment of the dairy industry which is being rather 

 adequately taken care of insofar as maintenance of prices and income to producers 

 is concerned without any costly program of Federal subsidies. It is to be noted 

 that this system of Federal regulation can be extended a great deal more than it 

 has been to date. However, Federal orders are not issued unless requested by the 

 dairy farmers involved and in many instances farmers apparently have not thus 

 far felt the need of Federal regulation. 



At this point I will discuss briefly the contrasting relationship between a pro- 

 posal — such as that of Secretary Brannan's — and the Federal and State fluid-milk 

 regulatory programs. Secretary Brannan's proposal means that the prices of 

 milk and dairy product?, particularly dairy products, would be left to seek their 

 own levels. The differences between national average market prices received by 

 farmers, and the income support standard of the Secretary, would be made up to 

 producers by direct payments from the Federal Treasury. The Federal order 

 program, on the other hand, maintpins returns to producers by sustaining piices 

 and orderly marketing conditions, as do the State milk regulatory commissions. 

 I cannot understand how these two types of programs can operate together without 

 conflict. They are, I believe, basically in conflict and in time I think the Federal 

 order program would be seriously endangered by the producer payment program. 



I have indicated before this committee on several occasions the marked relation- 

 ship that exists between the prices of milk entering manufactured uses and the 

 prices of milk in fluid-milk markets. At the present time prices of manufacturing 

 milk are supported by the direct purchase of dairy products by the Commodity 

 Credit Corporation. Under Secretary Brannan's proposal the purchase of dairy 

 products as a price-support measure apparently would be discontinued. This 

 would result in lowered market prices for manufactured dairy products. This 

 would in turn have a very strong tendency to reduce the price for milk received by 

 producers in fluid-milk markets. Under most of the Federal orders this reduction 

 would be almost automatic, because fluid-milk prices in such orders are based 

 largely on prices received for manufactured dairy products. 



3. Cooperative dairy marketing associations have significant influence in the 

 maintenance of returns to producers. In addition to the Federal and State 

 regulatory programs discussed above, there is a very widespread system of 

 cooperative marketing among dairy farmers in this country. These cooperatives 

 bargain with distributors for prices for their producers. In addition, many of 

 them operate dairy product manufacturing plants in which they process the milk 

 of their members and market the products therefrom throughout the country. 



