GENERAL FARM PROGRAM 1237 



These cooperative associations undoubtedly have been of real significance in the 

 maintenance of returns to dairy farmers. We believe that the subsidizing of 

 dairy farmers would have a bad effect on cooperative marketing associations. 

 While we are well aware of the statements that nothing contained in the proposal 

 would limit producers from securing even higher returns through their own efforts, 

 we submit that it is highly improbable that this is a correct conclusion. 



For generations milk distributors have been for low prices since they base their 

 profits upon large volume at low per unit prices. It is also true that in the fluid 

 milk sheds not under regulation, if 5 percent of the volume used in the shed is sold 

 under a cut price pohcy it will make the price for all other milk. Thus, the tend- 

 ency would be to beat down prices to producers, inasmuch as their return would be 

 guaranteed by the producer payment program in any case. This would un- 

 doubtedly weaken the bargaining position of cooperatives. The result would be 

 to reduce the level of prices below what it would be otherwise, thereby markedly 

 increasing the cost of the program. 



4. Present price support techniques should be given a fair trial before they are 

 abandoned in favor of some other method of maintaming farm income. Hereto- 

 fore, price support operations have been used as a method of maintaining price 

 returns to producers. The dairy products purchases are made directlv in the 

 market at specified prices by the Government, and the commodity is disposed of 

 either in relief channels, in school lunches, or for export. While we are aware of 

 the problems of disposition of perishable commodities or semiperishable com- 

 modities — such as the manufactured dairy products — we do not think it is realized 

 how -small in terms of total production have been the direct purchases by the 

 Government since the inception of the purchase program in 1933. 



Table 3 of the appendix gives the official Government statistics concerning 

 purchases since 1933. In table 4 we have expressed these purchases as a per- 

 centage of total production of the several commodities for the years involved. 



Purchases of butter in 1938 represented the largest volume purchased during 

 any marketing year bv the Government. Purchases of butter during that year 

 amounted to 141,979,000 pounds, or 8 percent of total butter production that year. 

 Evaporated milk purchases were heavy in 1940 and accounted for about 3 percent 

 of total evaporated milk production in that year. In 1934, cheese purchases were 

 heaviest, 17,936,000 pounds being purchased that year out of a total production 

 of 475,000,000 pounds. Cheese purchases thus equaled about 4 percent of 

 production. 



During 1949 butter is being purchased to support the market at the Depart- 

 ment's estimated figure of 90 percent of paritv. The purchase program started 

 the week of ^larch 26. Through the week of May 14 a total of 2,538,000 pounds 

 had been purchased. This is about one-half of 1 percent of production during 

 that period. Since the beginning of the year 136,411,000 pounds of nonfat dry 

 milk solids also have been purchased, partly as a price-support program and 

 partly for the procurement of supplies for feeding civilians in the occupied zones 

 of Germany and Japan and to other foreign countries. 



From the above figures it is clear that the total costs of the Government's pur- 

 chase program for dairy products for price support from 1933 to date have been 

 insignificant. 



As has been pointed out to this committee, it is quite difficult to estimate the 

 costs of the program proposed bv the Secretary as compared to the costs of other 

 tvpes of programs such as the direct market purchase program. First, there is a 

 difference between the income support standard prices that would prevail under 

 the Secretary's proposal and the support level under current legislation providing 

 for 90 percent of the parity price. The Secretary's proposal increases the support 

 level significantlv above that prevailing under current legislation. The Secre- 

 tary's program therefore involves the expenditure of a great deal more money than 

 it now appears would be expended under the current program. Using the differ- 

 ences between price supports under current legislation and those that would be 

 obtained under the Secretary's proposal, we arrive at a figure of slightly over 

 $424,000,000. This is the increase in value under the Secretary's proposal as 

 compared to current price-support levels. If support levels under current legisla- 

 tion were raised to the level proposed by the Secretarv, it is difficult if not impos- 

 sible to estimate the differences in cost of the programs. Even under this 

 condition, however, we believe that the cost of the Secretary's program would be 

 greater than the cost of the direct price-support program now in effect. We base 

 this conclusion on two factors: 



