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Senator HAWKES. May I ask you this: Was that drop from 19 pounds down to 10 due to the fact there was not any butter available?

Senator FULBRIGHT. No; in some of those periods, it did not jump up at all.

Senator HAWKES. Of course, in 1946, I imagine, there was a shortage of butter, was there not?

Senator FULBRIGHT. That was after the war.

Senator HAWKES. I know.

Senator FULBRIGHT. Here is a shortage in this sense: what has happened, the dairy people have diverted their product into the more profitable lines.

I can go to that right now. I have the table here showing exactly what happened. Take, for example, the utilization of whole milk, and these are Department of Agrinculture figures.

Fluid milk and cream, the average 1935-39 was 44,000,000,000 pounds.

It went up in 1946 to to 59,000,000,000 pounds. That is an increase of 35 percent.

In ice cream, it was 3,083,000,000 in that base period to 8,420,000. That is an increase of 173.1 percent.

I need not go through all of the figures.

There was an increase of 64 percent in cheese in the same period. In the utilization of milk in these other fields, evaporated milk was 51.5 percent; condensed milk an increase of 34.7 percent; and dried whole milk, an increase of 992 percent.

That is remarkable. Here it increased from 146,000,000 to 1,448,000,000 pounds.

Senator HAWKES. That is dried milk?

Senator FULBRIGHT. Yes.

The reason for it? The return from butter fat sold as butter is the least profitable way you can market your milk.

Senator HAWKES. May I ask you a question there, because it is amazing when you say that. Why would the dairy group conduct a lobby, as you say, for 62 years, to do this thing if the butter business was the least profitable way to get rid of their milk?

Senator FULBRIGHT. I think you ought to distinguish between the dairy group and the butter group, and there is a distinction.

Senator HAWKES. You said the lobby was the dairy group. Senator FULBRIGHT. No; butter. The Butter Institute is their organization, which is the primary organization interested in this. I think they have made some dairy people feel this is an integral point.

Let me make that other point about the price, and then I will come back to that.

The average price paid to farmers for butter fat sold as fluid milk or cream during the 10-year period, 1936 to 1945, was about 74 cents a pound. For milk sold as butter fat, that is, in the form of butter, 37 cents per pound.

There is a very complicated system of prices.

You say why do the dairy people support these taxes. I think it is interesting. There are a whole lot of them who do not, and I have some quotations on that point, objecting to the so-called formula for the setting of the price of milk in such places as the Boston milk shed.

Senator HAWKES. By whom was that article written that you read a few moments ago, where their ultimate goal was to get oleomargarine totally destroyed?

Senator FULBRIGHT. This is in the Dairy Record. That is a magazine representing the dairy industry, and I read what they said in an editorial.

I say that a lot of dairy people think this is to their advantage, but I do not think it is, and the people who are really concerned about it are specifically the butter industry.

But the butter end of the dairy industry has become a very small part of it.

Senator HAWKES. You see what I am thinking of; do you not? I wondered why, if the dairy group got more money for their fats in other forms, that the dairy magazine would advocate the elimination of this oleomargarine. In my business, we have always tried to put all of the raw materials and things we had in the most profitable items. Senator FULBRIGHT. That is what they are doing.

Senator HAWKES. I think if those facts are correct, the dairy group would be down here backing you on this move.

Senator FULBRIGHT. Exactly what they are doing, is selling their whole milk in these other forms rather than butter. That is the reason these tremendous decreases in butter production have taken place, pretty nearly 50 percent, in spite of all the protection they have had during this period as a result of these taxes.

Senator HAWKES. What I want to know is: Are they backing you on this thing?

Senator FULBRIGHT. No; they are not.

Senator HAWKES. They ought to be if those figures are correct.
Senator FULBRIGHT. I think they ought to be, too.

You are familiar with the fact there are some very capable representatives of the butter industry here in Washington who are led by one of the ablest men, I have been told by some of the older Senators, who ever represented any industry in Washington.

Senator HAWKES. I would not think the butter industry was big enough and powerful enough to keep the Congress on the wrong track. Senator FULBRIGHT. I can say I confess I was amazed at it, too. If you talk to some of these older Senators around here, they will tell you it has been.

Here are a few facts. In the State of Wisconsin, which has been thought to be the leading butter State, in the mind of many people, the income from the sale of whole milk, as a percentage of the total dairy income, in 1936, was 79 percent; 1941, 89.8 percent; 1946, 98.64 percent. The income from the sale of butterfat was 21 percent, in 1936, down to 1.36 percent, less than 2 percent; 1.36 percent of the total income from the dairy produce of Wisconsin, you see, and so on.

Take your part of the country. I think you would fall in the North Atlantic States.

In 1936, for nine North Atlantic States, 96.6 percent was sold in the form of whole milk. Up to 98.4 percent in 1946, and only 1.6 percent sold as butter in those nine North Atlantic States.

Senator HAWKES. Have you got any figures to show what part of that is sold in the regular form of milk and used for the production of butter outside of the dairies?

For instance, I might run a butter factory of my own and might buy large volumes of milk and make butter.

Senator FULBRIGHT. This says, "income from sale of butterfat and farm butter as a percentage of total dairy income.”

Senator HAWKES. I thought maybe you knew.

Senator FULBRIGHT. If you sell it to a creamery for butter, of course, that would fall in this category over here. If it is sold in the forms I mentioned, in fluid milk and cream, it is over here.

Senator HAWKES. That is a terrible drop.

Senator FULBRIGHT. Surely it is.

You see

Do you realize the production of butter during this period has declined 600,000,000 pounds, or approximately 29 percent? what I am getting at.

I did not make these figures up. They are from the Department of Agriculture. I do not think they can really be disputed.

Margarine has by no means taken up that slack.

The CHAIRMAN. What is the point that you are working on now? Senator FULBRIGHT. That the taxes are not protecting the dairy industry and not benefiting the dairy industry, as a whole, that is, the producer of milk, the farmer who has cows.

I will not say it has never had any influence on butter alone, although I think it is doubtful.

I think they kidded themselves about the effect of margarine.

I think the beneficial effect of the laws to them is very doubtful. Their real solution is to pursue the things they are now pursuing and sell it in the forms I now mentioned.

I hope the Senator will read this statement. It is much more coordinated than my statement is now. It is much more logical and precise.

But I was trying to show what the problem is and what is happening. I do not think the dairy industry, as a whole, is threatened by extinction.

When I mention the decrease in butter supply, I, by no means, leave the impression of a decrease in milk production; that has greatly increased from 102,000,000,000 pounds to 120,000,000,000, and there is still a shortage.

Butter, in the meantime, has about priced itself out of the market, selling now up in the neighborhod of $1 a pound, that is in New York, and here in Washington it is around 90 cents.

I hope I have just at least indicated enough that it will inspire you to read this report fully.

Senator HAWKES. I assure the Senator I will read the full report. Senator FULBRIGHT. There are one or two other points I just want to indicate.

It used to be thought this was all a question of cottonseed as against the butter industry. In the past, politically speaking, it was regarded purely as a Southern issue, but this matter of soybeans has come in to make it a Nation-wide issue, from the standpoint of the producers' interest.

I wanted to read a few facts on that.

First, for the fiscal year 1946-47, according to the Bureau of Internal Revenue, 47.4 percent of the vegetable fat used in margarine

was cottonseed oil; 41.5 percent was soybean oil; and 3.1 percent was peanut oil. Corn oil and other vegetable oils account for the remainder.

That, you can see, is a very small percentage. The total farm value of the cottonseed produced, in 1946, was $246,473,000. This was spread over 1,600,000 cotton growers.

Then in 1946, 222,000,000 pounds of cottonseed oil was used in margarine.

I have here figures on the soybean production and its remarkable growth.

In 1924, total production of soybeans for sale as beans was 4,947,000 bushels; in 1933, 13,509,000 bushels; in 1939, 90,141,000 bushels; in 1946, 196,725,000 bushels, or 41 times as much as in 1924.

That is spread over some 30 States, and the real center of the industry is in the Middle West, in that same area, in which States that used to be so interested, and still think they are interested primarily in butter, producing more soybean oil than butterfat in value.

The value of soybeans has increased from $12,698,000, in 1933, to $73,052,000 in 1939; to $517,387,000 in 1946, approximately the same value as butter for the whole Nation.

Senator HAWKES. What is that soybean oil used for principally? Senator FULBRIGHT. I have the exact figures, but one of the uses is in margarine. It is used for other purposes, lacquers, and so forth. Senator HAWKES. I realize that, and I wanted to know if you had figures showing how much was used in margarine.

Senator FULBRIGHT. Yes.

Senator GEORGE. About 41 percent of that total, almost half of it. The CHAIRMAN. You gave us the percentages just a few moments ago. Senator HAWKES. Mr. Chairman, what I wanted to know was whether that percentage he gave us is used directly and only in margarine.

The CHAIRMAN. What he said was margarine is made out of so much percent of this and of that.

Senator FULBRIGHT. That figure is so much margarine out of soybean oil.

He wants the figure on the total percentage of soybean oil that goes into margarine.

Senator HAWKES. That is right.

Senator FULBRIGHT. The percentage of soybean oil used in the manufacture of margarine in the 10-year period between 1937 and 1946, inclusive, varied from 16.3 to 22.1 percent.

I have made several statements on this, and it is possible I may have omitted it in this one and put it in another. It is readily available. There are a great many interesting figures that fortify that.

You have cash receipts, for example, from the soybean crop and from butter, just as an illustration.

As I gave the figures in that illustration of Wisconsin, I have a great many States giving those same figures.

As an illustration, the soybean crop in Illinois for 1946 amounted to $183,000,000 plus, whereas the butter and butterfat was $20,000,000. Iowa was one of the few in which the butter outweighed the soybeans. It was $82,000,000 for soybeans, as against $111,000,000 for butterfat. Take Indiana, right in the middle of the Midwest: $56,000,000 in soybeans, and $12,000,000 butterfat.

In other words, soybeans were 438 percent of the value of butter.

Ohio was $36,000,000 for soybeans and $12,000,000 for butterfat, or 308 percent; and Missouri was 154 percent.

There has been a great misapprehension about the relative value to the people of these States of these two industries.

There is one other very interesting fact which I only found out myself within the last few days.

This is Iowa State College. This is in the same State I mentioned as one of the few in which butter is of greater importance than soybeans. This is Iowa State College, which published the fact that 1 acre of soybeans will produce as many pounds of vegetable fat as 2 acres devoted to dairying will produce of butterfat. Their report stated also that one man-hour of labor will produce 13.3 pounds of soybean oil compared with only 1.5 pounds of butterfat.

And we are always talking about increasing production efficiency, the use of lands, and so on.

I just found that out within the last few days, and I think those facts are very startling

The Iowa State Survey concluded by recommending that—

restrictions on the sale of margarine, State excise taxes, license fees, et cetera, should be removed so that its consumption may be encouraged.

C. F. Christian, farm-marketing specialist at Ohio State University, also studied this problem recently, and states his conclusions as follows: The dairymen raises an acre of grain, usually corn, and has another 2 acres in hay or pasture to produce 225 pounds of butter. The acre of corn will take at least 30 hours' work and hay and pasture require more work, and care of the cows will involve another 150 hours in producing 225 pounds of butter.

An acre of soybeans can be grown with 14 hours of man labor and will make about 225 pounds of margarine.

A pound of butter represents 10 times the amount of farm labor and 3 times the amount of farm land that is represented by a pound of margarine.

I think, when you get down to the basic economic facts, there is one which is most significant.

I think this tax law is a vain effort to try to bolster up an industry that is having great difficulty not because of margarine, because you will see margarine has not taken up the slack, but it is, I think, a fundamental economic fact of production and cost of production for the butter that has entered into the picture.

I just want to say it seems to me the net effect of these laws has not been to keep butter up as distinguished from the dairy industry, but has been to hold down and prevent, the development of margarine, the margarine industry primarily, and I think principally because of the limitations on outlet.

I really think that is more significant than the 10-cent tax when it comes down to what is happening, because these dealers and grocery people are not going to put up with this snooping about and keeping track of every little pound they may have and seeing that it is kept just according to certain regulations of this Department.

I think you are familiar with such regulations: That people cannot take margarine out and sell it like butter. You have got to have an order before you go out and sell it, and you have got to keep strict account of how much you received, and they check up just like they do if you are selling drugs.

It is a curious thing that fees for handling margarine, a perfectly wholesome food product, are considerably more expensive than if you are a dealer in heroin or morphine or something of that sort. It is a curious thing.

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