its market in times of surplus affects not only the farmer who produces raw material for the butter factory, but every dairy farmer in the United States. We appreciate that oleomargarine interests now enjoy a rare opportunity to further their cause because butter prices are high. I believe every dairy farmer would like to see lower-priced butter, but those butter prices are high because the supply of milk is short. If dairying were as profitable as some would have you believe, why is it that there are approximately 3,000,000 fewer cows on our farms today than there were in July of 1944? Milk production is down because the costs of its production make it unprofitable for dairy farmers to produce milk. They can make more money and do it with less effort by producing other farm commodities. I know this for certain: If our markets are further restricted by turning over our butter business to oleomargarine manufacturers, there is going to be a further reduction in dairy herds, with the inevitable result that the consumer will pay far more for fluid milk and other dairy products than is represented by the difference in the cost of butter and uncolored margarine at the present time. Not too well understood is the role played by butter in contributing to the economic stability of the dairy industry. Milk is not produced in an even flow, month by month. A major share of the production is concentrated in the three flush period months from April 15 to July 15, when pastures are at their best and the largest number of cows freshen. It is during those months that most of the reserve stocks of manufactured dairy products are produced. In order to have sufficient fresh milk for the consumer's table during the months of lowest production, it is obviously necessary for any milkshed area to have more cows and more spring production than that marketing area can absorb as table milk. Thus, as a protection to the consumer, there must be what is, in fact, an overproduction during about 7 months of the year to provide a sufficient supply of fresh milk during the remainder of the year. It goes without saying that no farmer could afford to produce fresh milk throughout the year in sufficient quantities to safeguard the table supply, at prices the consumer could afford to pay, if he did not have some market which would absorb his seasonable surpluses. Of course, various dairy products take various shares of that milk supply, but there is only one that fulfills all the characteristics of a satisfactory surplus product, and this is butter. Those characteristics are three in number: 1. The commodity must be a staple article of diet. 2. It must concentrate a relatively large quantity of milk into a small compact unit which can be transported long distances at minimum cost. 3. It must be capable of being stored without deterioration for long periods of time. Of all dairy products, only butter meets all of these requirements. Destroy the market for that basic product and you destroy the dairy industry. Follow through this reasoning logically and you will have the answer to any question regarding my previous statement that he loss of butter markets will mean reduction in dairy herds and, inevitably, higher prices for fluid milk and other dairy products. But it would not be only the dairy industry and the consumer who would suffer. Other types of agriculture and industry would also be in danger of decreased employment and lost markets. Forgetful of or indifferent to the fact that while butter prices are high, those of oleomargarine are relatively much higher, some of our labor organizations have joined in the cry to eliminate this safeguard for the butter industry. I wonder if they have ever stopped to calculative how relatively few people are employed by the oleomargarine industry and how inconsequential is that number compared with the amount of labor employed on the dairy farms, in our dairy factories, and in the distribution of dairy products. The CHAIRMAN. Do we have any statistics on the number of people employed in the oleomargarine industry? Senator LUCAS. A previous witness gave some. Mr. TRUITT. I cannot give that offhand, Senator, but I can get it for you. The CHAIRMAN. Would you please assemble that and send it in? Mr. TRUITT. I will be glad to do that, Senator. (The information supplied in response to the above is as follows:) NATIONAL ASSOCIATION OF MARGARINE MANUFACTURERS, Washington, D. C., May 20, 1948. Hon. EUGENE D. MILLIKIN, Chairman, Senate Committee on Finance, DEAR SIR: In response to your oral request made at the hearings on H. R. 2245 on May 18, the following telegram was sent to all margarine manufacturers in the United States: "To supply information directly requested today at hearings on H. R. 2245 by Senator Millikin, chairman, Senate Finance, I need total number of all employees your company assignable to manufacture, sale, and distribution of margarine. Include where possible number employees engaged in supplying milk for margarine. Please do not include employees engaged in refining but start with delivery margarine oil at plant. Please give figure by wire today. Advise if you cannot furnish. Individual replies considered confidential." From information thus gathered, it appears that there are 4,619 persons engaged in the direct operations in manufacturing margarine in the United States. In addition, it is estimated that there are approximately 15,000 to 20,000 other persons, including independent wholesalers and jobbers, engaged in the sale and distribution of margarine. These two figures should be increased by the number of such persons employed or engaged in these two categories by the Cudahy Packing Co. who did not reply to this telegram. In addition, we have attempted to develop some approximations of the number of persons engaged in allied activities directly connected with the manufacture and distribution of margarine, as follows: Cottonseed oil In 1947 margarine used 322,553,000 pounds of cottonseed oil, or approximately 29 percent of total cottonseed oil use. Approximately 5,000,000 persons are employed on farms producing cotton, of which cottonseed and its oil are byproducts. Twenty-nine percent of 5,000,000 persons is 1,450,000 persons. Approximately 75,400 persons are employed by the cotton-ginning industry. Another 18,500 are employed in mills that crush the oil from the seed. Twentynine percent of 93,900 persons is 27,231 persons. These figures do not include personnel engaged in the warehousing, transport, and other servicing of cottonseed oil. Source: National Cotton Council of America. Soybean oil In 1947 margarine used 227,595,000 pounds of soybean oil, or approximately 15 percent of total soybean-oil production. Approximately 500,000 farms raised five or more acres of soybeans in 1947. With an average of 3 workers per farm, the total labor force was about 1,500,000 persons. Fifteen percent of 1,500,000 persons is 225,000 persons. There are 178 soybean processing firms listed in the Soybean Blue Book. These range from small plants with few employees to very large plants with storage capacity in the millions of bushels. A reliable estimate of the total labor force of these plants is not available. No figures are available on personnel engaged in the warehousing, transport, and other servicing of soybean oil. However, it is certain that several thousand persons are thus employed. Source: American Soybean Association; National Soybean Processors Association. Refining Margarine, in 1947, used 19 percent of all vegetable oils produced in the United States. Eighty-seven vegetable oil refiners are estimated to have been in operation in 1947. No estimate of the total number of persons thus employed is available. However, it is reasonable to assume that the time of 19 percent of this group of employees was devoted to refining oil for the manufacture of margarine. Other sources Time does not permit the gathering of information, otherwise unavailable, on the number of employees engaged in producing the cartons for margarine, about 725,000,000 were used in 1947; producing the skim milk used in margarine, about 126,000,000 pounds were used in 1947; producing the minor oils used, including corn and peanut oils and meat fats, of which about 27,000,000 pounds were used in 1947; or producing the other minor ingredients for margarine, including salt, 23,155,405 pounds; vitamin A concentrate, 120,379 pounds; and other minor ingredients. We hope this information will be of assistance to the committee. Sincerely yours, PAUL T. TRUITT, President. Mr. NELSON. Looking into the future, I am seriously concerned lest there be a serious rift between the farmers of the North and the South created by the issue which this measure represents. That will mean a divided agriculture, when there is great need of a united agriculture in the best interests of the entire country. That concludes my statement. The CHAIRMAN. Thank you very much, Mr. Nelson. Mr. NELSON. Thank you. The CHAIRMAN. The next witness is Mr. M. H. Brightman, Dairy Industry Committee. Mr. Holman, were you present this morning when there was some discussion as to the right of butter to have a protection against the imitation of its color, as a common-law principle? If correct, that of course is a very important matter in this proceeding, and I hope that an adequate memo on the subject will not be overlooked. Mr. HOLMAN. We will endeavor to follow through on that, Senator. That is a pretty complicated question. The CHAIRMAN. It was easy to say; I think it ought to be easy to support. Mr. HOLMAN. I think the argument flows out of some old Federal Trade Commission cases, rather than the expression used by the witHowever, he is our witness and we will do our best. ness. (The information requested will be found on pp. 283 and 287.) The CHAIRMAN. You may proceed, Mr. Brightman. STATEMENT OF M. H. BRIGHTMAN, EXECUTIVE SECRETARY, DAIRY INDUSTRY COMMITTEE Mr. BRIGHTMAN. My name is M. H. Brightman. I am executive secretary of the Dairy Industry Committee, with offices in the Barr Building, Washington, D. C. The Dairy Industry Committee is representing at this hearing the six national dairy product associations as follows: Milk Industry Foundation, American Butter Institute, National Cheese Institute, American Dry Milk Association, Evaporated Milk Association, and International Association of Ice Cream Manufacturers. It will be seen that we represent not only the various segments of the dairy industry, but we are speaking for a major segment of all business organizations both large and small engaged in the milk industry whose interest is as vital as that of the farmers who produce the milk and the consumers who utilize the products of this great industry. Milk is produced on about 75 percent of 4,500,000 of our farms. These farms are located in every State of the Union. The size of the dairy herds varies from one cow to, in some cases, several hundred; but the great majority of herds comprise five cows or less. Hundreds of thousands of these small dairy farmers depend on marketing farm separated cream, which is churned into butter; in fact the great bulk of the butter is made from milk produced on these family-sized farms. Any curtailment of this market would deprive these farmers of a market which in turn would bring about a decrease in the dairy cattle population of this country. Butter may be termed the "economic stabilizer" of the dairy industry, and thus to a great extent of our total economy. The farmers of the United States received in 1947 approximately 13 percent of the total cash farm income from the sale of milk and milk products. Sales of beef and veal from dairy herds substantially increased this income. The dairy cow enables the farmer to market as milk an essential nutritious product produced from grasses and other roughage that would find a market in not any other form except as meat. Also the dairy cow is a most essential contributor to good farming and sound conservation practices in maintaining the fertility of our most precious resource, the soil. Milk is used in many forms-fluid milk and cream, butter, cheese, evaporated milk, ice cream, dried milk, and many chemical and biological products as shown by the accompanying chart. These dairy herds also supply a very large percentage of our beef and veal, as well as the hides and various pharmaceutical products. Aside from those engaged in the production, manufacture, and distribution of milk, it has been estimated that about 10,000,000 workers in other industries, together with their families are dependent upon the dairy industry for their livelihood. Senator LUCAS. Would you mind expanding on that statement just a little? Mr. BRIGHTMAN. That has been the estimate that has been arrived at by several economists working in the field at different times. And we take in, as I have in the next paragraph, the various affiliated segments of our total economy that contribute to a greater or lesser extent to the dairy industry. The CHAIRMAN. Would that take in, for example, the workers who make the machinery that goes into creameries? That kind of statistics? Mr. BRIGHTMAN. Yes. That, I think, will be expanded upon a little more in this next paragraph. The dairy industry has been remarkable in its ability as a source of employment and farm income in both depression and boom periods. This is because milk is produced every day and must be marketed and processed accordingly. If the balance of our economy could be stabilized in this respect to the same extent, the problem of periodic waves of unemployment and depression would be solved. The stability found in the dairy industry contributes substantially to the stable employment and production in a large number of other industries, such as refrigeration, rubber, glass, paper, lumber, automobile, metal processing machinery, air conditioning. insulation, and many others. Thus it will be seen that the dairy industry is an integral part of our economy, and any action taken by Congress that would adversely affect the dairy industry will have repercussions, not only on most of the farmers, but on those industries directly or indirectly dependent on the dairy industry, as well as every consumer. Ex-President Hoover after his experience in the feeding of starving children in Belgium after the First World War, made the following statement: The white race cannot survive without its dairy products. I might state that that statement was made at the American Child Hygiene Association at St. Louis, October 11, 1920. The dairy industry at the present time is confronted with a very serious problem of producing sufficient milk and milk products to meet the needs of our greatly expanded population, and also to assist in alleviating nutritional deficiencies in many countries in western Europe. In fact the production of milk even in the fluid-milk-market areas is running below last year. Milk production per capita for April averaged 2.29 pounds, the lowest for the month since 1937 and the third lowest in 18 years of record. Alternative opportunities, the higher return from meat animals, the higher price of grain, and various factors have retarded milk production. The greatest export demand is for nonfat milk solids, a complementary product to butter. More butter-more solids; less butter-less solids. Due to wartime conditions and the highest income per capita in our history, our birth rate for 1947 reached the highest point on record, but our cow numbers and the consequent milk production is not keeping pace with this marked increase in human population. Any measures adopted by Congress which will add the slightest note of discouragement to our dairy farmers will have a tendency to still further decrease milk production with the consequent ill effects on our total economy. The Dairy Industry Committee is steadfast in its belief that it is essential to the welfare of the consumers, milk producers, and all who are connected in any way with the dairy industry, that the integrity 76269-48- -19 |