18 



I. A. A. Record— March, 1934 



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Milk Price Problem 5 



Worries AAA Leaders 



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•See Need For Cutting Produc- 

 ^ tion and Bringing Up Whole 

 Level of Industry 



^^^ :. W milk production at the highest 

 point since 1924 Secretary of Ag- 

 riculture Henry Wallace, and Chester 

 €. Davis, administrator of the A.A.A., 

 ; are of the opinion that the only solu- 

 tion to low prices for milk and but- 

 ■ terf at lies in cutting production ap- 

 proximately 15 per cent. - ^ 

 :^ '■ In a recent statement before lead- 

 ers in congress, Mr. Wallace pointed 

 out that milk production since 1924 

 /had been stepped up from 87 billion 

 • pounds to more than 101 billion 

 •pounds in 1932. 

 ; -"When we speak of overproduction 

 in dairying," said the Secretary, "we 

 mean production of quantities of dairy 

 5 products beyond the ability of con- 

 : sumer purchasing power to absorb at 

 anything above distress prices to 

 ; farmers. Therefore we do not think 

 of curtailment of milk production in 

 •any absolute or permanent sense as 

 we do in the case of wheat.'' '< 

 /.The Administration in response to 

 co-operative leaders asked that an ex- 

 tra appropriation of $200,000,000 be 

 'made by congress to be used in addi- 

 ction to processing taxes for financing 

 Tthe proposed dairy and beef adjust- 

 / ment programs. .■? v^;'^.-'' • 6;' /^ ■■•'■•:•/'. ^ 

 •r r ^^ Proposed Plan ^ 



^ Under the proposed dairy plan ap- 

 " proximately $250,000,000 would be 

 'paid to dairymen for reducing their 

 production, |150,000,000 of which 

 would be raised out of the graduated 

 tax up to five cents a pound of but- 

 terfat — also a similar tax on oleo— 

 and $100,000,000 to be taken from the 

 proposed emergency fund. 



The dairy reduction program would 

 be partially accomplished by further 

 tuberculosis eradication in cattle. The 

 exact method of curtailing milk pro- 

 duction would be left to the judgment 

 of co-operating producers. It has also 

 been proposed that good dairy cows 

 be moved from the surplus sections to 

 the southern cities and other regions 

 where there is a shortage, hence un- 

 der-consumption of fresh milk and its 

 products. 



The Administration emphasized the 

 point that the proposed plan would 

 not be put into effect unless organized 

 dairymen want it and agree to co- 

 operate. "We simply submitted the 

 plan," said Mr. Wallace. "It won't 

 work unless dairymen are behind it. 

 It's up to the producers but we warn 

 that if something like this isn't done 



/Mf?3.6(?vy)- THE BOSS /S 

 :. GOING TD a)T MY wOfNK 



the path of the dairy industry is likely 

 to be rough." 



Organized butterfat milk producers 

 in the northwest are reported to be 

 lukewarm if not opposed to the plan 

 because of the tax on butter. Their 

 original proposal was to have the ad- 

 ministration buy up surplus butter 

 and give it to the unemployed. The 

 Administration has been doing this 

 through the Federal Surplus Relief 

 Corporation. But it is believed by ad- 

 ministration leaders that this program 

 is not sound because it provides no 

 check on production and is not self- 

 financing. V > , , . : . : - 



In the meantime organized milk 

 producers around the larger cities are 

 attempting to maintain prices sub- 

 stantially higher than the prices being 

 paid producers in the condensery, 

 cheese and butter-producing areas and 

 are asking the government to dam up 

 the flood of milk immediately sur- 

 rounding the city milk sheds. 



Moot Question / ,. 



Novsensible person believes that the 

 government can or should enforce a 

 price that is greatly higher than that 

 paid in the condensery butter and 

 cheese districts. On the other hand 

 fair-minded persons concede that fluid 

 milk producers in the city milk sheds 

 are entitled to a premium for their 

 milk to compensate for t|ie extra in- 

 vestment and expenses incurred in 

 complying with city health inspection. 



How much per centiweight the pro- 

 ducers in the city milk shed should be 

 paid is a mooted question. Some of 

 the producers think they should get at 

 least twice as much for their milk as 

 their neighbors 50 or 100 miles back 

 in the country are getting. Impartial 

 observers, however, are inclined to be- 

 lieve that no government can prevent 

 farmers who live outside the charmed 



By H. M. Conway, Feb. 21, 1934 



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A substantial reduction in the sup-iv' 

 ply of finished steers next fall is indi- 

 cated by present feeding operations. 

 Also at that time the market is ex- 

 pected to be supported by a rather 

 strong demand for stocker and feeder 

 cattle, thus making the situation: 

 somewhat the reverse of last year and 

 one more favorable for grass cattle. / 



The outlook for fed cattle is a little 

 more optimistic for the next two 

 months. Heavy choice steers will tend 

 to show the most advance but there is 

 a strong undertone to the whole mar- 



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The hog market has improved but 

 the anticipated reduction in supplies 

 during March and April is now largely 

 discounted and especially in view of 

 the increasing processing tax. It is' 

 well to continue to feed light weight 

 hogs and market them only when they 

 are fully finished.y-'^ :^?: : ' 'i" 



Pork prices are increasing as a re- 

 sult of lower supplies and of a better; 

 consumptive demand. The market al- 

 so has been improved by government 

 buying. This makes it advisable to 

 crowd early pigs, and as to the late 

 portion of the crop, grow them out 

 for finishing in the summer. The 

 corn-hog program will reduce market 

 supplies next fall. The outlook indi- 

 cates a favorable feeding ratio during 

 the last half of 1934 and next year. . 



' As to fed lambs, the situation calls 

 for early and systematic marketing, 

 although it is well not to crowd too 

 many into competition with the Cali- 

 fornia spring crop. The strong wool 

 market has bolstered lamb prices and 

 promises to hold them steady. De- 

 mand is expected to show further im- 

 provement during the next two 

 months. Lambs should be well fin- 

 ished but not too heavy. ; ^ ^ 



circle known as the city milk shed, 

 from selling their milk at a price 

 higher than that offered by their local 

 condensery or cheese factory to big 

 city buyers whether they are organ- 

 ized or independent distributors. It's 

 a case of one farmer against another. 

 The only solution to the perplexing 

 problem, many believe, is to bring up 

 the whole level of milk prices 

 throughout the country so that higher 

 prices can be maintained in the or-, 

 ganizedmilksheds. ; ;; v^^^^^^-;-v^^:C 



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