The committee has voted repeatedly in support of enabling new producers to receive a base over a period of time reflecting their share of the market, and that has been our position from the start and it is our position now and it is also the overwhelming position of the majority of the farmers. In every poll of the farmers, the original straw vote committee took was over 90 percent favorable. When the plan came back with the new producer provisions deleted, the vote conducted by the Department was 72 percent favorable. In February the committee conducted another straw vote on extension of the plan with the assurance that we would work for the Meeds amendment and the farmers voted 89 percent favorable. Since then additional ballots, all favorable, have come in which would put the total over 90 percent, but we put a cutoff date in the return for the ballots. There has been some small opposition to the class I base plan as it is presently being operated. It comes primarily from producers who have sold their bases and are now in on the new producer percentage. We think that new producers should be able to come into the market over a period of time and we are just-it just makes a farmer just ill to think that he would have to go back on the blend price every year. Mr. Gordon has reminded me that at our last committee meeting, we had a vote in which we assured the new producers that if the Meeds amendment was passed, we would immediately ask for a hearing and ask that the provisions be included in our class I base plan. There is one thing that came up earlier in a question to Mr. Forest, and it was my understanding that anybody anywhere can ship to our market any time he wants as much or as little as he wants. However, if that is not done on a regular basis, he would be penalized. Thank you, Mr. Chairman. Mr. STUBBLEFIELD. Any questions? Mr. ZWACH. I have a question. Then, really, what you are after is to free up this law so that you could take a new market and divide it between the baseholders and the new members. On an equitable basis. Mr. KELLER. Yes, sir. Mr. ZwACH. And secondly, what you are after is to take new members and make them baseholders, is that correct? Mr. KELLER. Yes, sir. There are two things that bother the farmers most-(1) the lack of performance in our present legislation, and (2) the fact that the bases are tied to 1966 and as things go on, I mean, that has just got to be changed. It is getting unrealistic. Mr. GORDON. I would like to say one other thing on this allotment of bases. The baseholder, this is the way I feel and the committee feels, a baseholder is entitled to his share of the market, and we feel he should be entitled to some share of the increased sales. But there is also another side to that. If a man has failed to produce up to his base, he has an obligation to the market and should not be allocated any additional base. Mr. ZWACH. I agree with you that the old baseholder certainly is entitled to some new market. Now, one other question. You talked about a sale of a base. Now, when a man retires or moves out, becomes ill, does his base come up for sale or does somebody else take that and reallocate it? What is the value of a sale, say, per cow, of a base? Mr. GORDON. They are not. 29-515-69- 4 Mr. ZwACH. Are they sold that way? Could you sell it to me as a farmer at so much a cow, so much a hundred pounds? How is that handled? Mr. GORDON. I think I get your question all right. It is not on cows. When the committee wrote this, we tried every way in the world to keep it out of the hands of the speculator. The first thing you said was that if you were a farmer-you would have to be a farmer to buy a base. Mr. KELLER. Grade A farmer, strictly in the market. Mr. GORDON. Then, to make it a matter of bookkeeping, we limited it to put a-well, anyway, not less than 100 pounds keep a lot of transactions out of it. And the way you figure the price of it is the difference between class I and class II price. And it is strictly a private treaty between farmers. Mr. ZWACH. What, to your knowledge, is the highest premium paid for a base? Mr. GORDON. The market administrator does not make it public knowledge, but I paid $10.50 per pound. Mr. ZWACH. Per pound? Mr. GORDON. And I think that that is-I am just guessing now-I think that is an average of the transactions. Now Mr. ZWACH. What would that amount to on a good cow? Mr. ZWACH. $300? Mr. KELLER. Yes; approximately Mr. ZWACH. Thank you. Mr. STUBBLEFIELD. Mr. Chairman? We thank you gentlemen. Mr. GORDON. Thank you, Mr. Chairman. Mr. KELLER. Thank you. Mr. STUBBLEFIELD. The next witness is Mr. William C. Eckles, general manager, Pure Milk Producers Cooperative, Fond du Lac, Wis. Happy to have you, Mr. Eckles. STATEMENT OF WILLIAM C. ECKLES, GENERAL MANAGER, PURE MILK PRODUCTS COOPERATIVE; ACCOMPANIED BY PAUL AFFELDT, SPARTA, WIS., PRESIDENT, PURE MILK PRODUCTS COOPERATIVE Mr. ECKLES. Thank you, Mr. Chairman. I am William C. Eckles, general manager of the Pure Milk Products Cooperative, with offices at 500 North Park Avenue, Fond du Lac, Wis. I have with me on my right, Paul Affeldt, Sparta, Wis., who is president of our organizations, and a dairy farmer. We have a statement that we would like to present to this committee and want to thank you for the opportunity of visiting about this very important matter. Our organization of Wisconsin, Upper Peninsula of Michigan, and Illinois dairy farmers consists of both grade A dairy farmers shipping to several markets and manufactured or B grade dairy farmers shipping to various manufacturing plants that make powder, butter, cheese, et cetera, in the area in which those dairy farmers live. I will read the statement. Pure Milk Products Cooperative is a dairy farmers' bargaining and marketing association with members living on farms located throughout Wisconsin, northern Illinois, and the Michigan Upper Peninsula. About one-half of our members are producing grade A milk, while the other half produces manufacturing grade milk, mostly under the high Wisconsin minimum quality standards. This production of our membership goes to more than 200 dairy plant intakes. The greater part of the grade A output is consumed in the nearby markets of Wisconsin, Illinois, Indiana, and Michigan, but substantial quantities also are used to supplement the needs of other fluid milk markets throughout much of the Nation. Wisconsin differs from many other parts of the Nation in its agricultural adaptability. While some parts of the United States are adaptable to a wide variety of agricultural production, Wisconsin's alternatives are limited by climate, weather, soil topography, and other conditions. We cannot produce or compete in the production of such commodities as cotton, citrus fruits, and numerous other "warm climate" farm products, but we are the best suited State in the Nation to dairy production. We produce an abundance of high quality forage and roughage that are especially adapted to the feeding of dairy cattle and producing milk. Our farmers are dairy specialists, and we have a highly developed procurement and processing industry. Not only is Wisconsin agriculture dependent upon dairying for more than half of its income, but also the existence of many of the villages and smaller cities throughout our State is dependent upon the dairy industry both through the sale of the many products necessary to the farm operations and family livelihood and through the dairy procurement, processing, and transportation industry. It is imperative to our members that markets be kept open to both interstate and intrastate movement of good, high quality of milk and dairy products. We have fostered and supported the free movement of approved grade A milk between markets within the State of Wisconsin, and we must be ever watchful to protect our right of entry into markets beyond our State line. With reference to H.R. 7996, we would certainly hope that the provisions on allocation of bases to new pooducers, on an equitable basis with old producers is not interpreted to mean that a new producer might be allocated a base in accordance with his sales into the market over a specified period of previous years including a number in which sales might have amounted to zero. Such an interpretation would certainly amount to a serious limitation and in the case of our area producers a practical prohibition against the sale of milk into the market. This is true because sales remaining after allocation of class I sales would necessarily be at the class II or manufacturing class price which in most Federal order markets is lower than the prevailing manufacturing grade bulk tank milk price in Wisconsin or Minnesota. A farmer cannot afford to bear the cost of hauling to a distant market in which returns do not exceed those of manufacturing plants in his home community. Unless there is specific provision for giving new producers a blend price equal to the average returns paid those producers receiving the initially allocated bases under the program to be established under this bill, the so-called class I base program would in fact become a tool for the exclusion of new producers from a market to the detriment of both consumers and those producers who are excluded. Even though such exclusion is not the stated intent, it is, in our opinion, bound to be a by-product of such legislation under specifically prohibited or limited in the legislation by the U.S. Congress. This fact becomes absolutely clear in the hearings before the Senate Committee on Agriculture and Forestry on October 7, 1968, when Mr. Herb Forest objected to specific incorporation of the section 608c (5) (G) language of the 1937 act in the class I base bill under consideration at that hearing. We believe it is crystal clear that failure to provide for specific retention of the full effect of section 608c (5) (G) in any provision for the allocation of class I sales to specific sales would be interpreted by USDA as a qualification or limitation of the prohibitions of that provision. For the above reasons we would expect strong support for a class I base plan from the holders, or the potential receivers of such bases. It is well known that most monopolists not only like their favored conditions, but will fight at great expense to preserve or expand some monopolistic powers. We are living in an age of change. Industrial concentration is a daily occurrence as smaller firms fall by the wayside and their business is transferred to larger and growing firms. Dairying is no exception. Small processors or bottlers cannot compete with the industrial or corporate giants. Consequently, it is with regularity that they cut off their farm milk supplies and either close their doors or become distributors for larger companies generally located in or near the large population centers of the Nation. This trend is occurring all over the country. An example of this nationwide trend is illustrated by what happened in our own hometown. In the latter half of the 1950's there were several local dairies in the Fond du Lac community in which our headquarters is located. Each packaged milk received directly from local farms and distributed it to the local community and nearby city people with whom the producers of the milk regularly did their trading. Today there is not a single processor and bottler of fluid milk in the Fond du Lac area which has a population of 50,000 people. Some merely gave up in the distribution business and closed their doors leaving their customers to be served by the remaining distributors. Others cut off their producers and continued as distributors of class I milk packaged to other areas. In either case, the local dairy farmers lost grade A market outlets. The entire distribution of milk in the area is now packaged in large bottling plants located within a radius of 150 miles. The milk now distributed in the area originates on the farms of the producers supplying those large distant processors and bottlers instead of the farms of the community. Such changes are a very common and continuing trend. They are not limited to any particular area of the United States. They are happening on a national basis as shown by the following U.S. statistics on fluid milk sales, taken from the 1967 statistical abstract of the United States: Number of companies processing fluid milk, 1958-5,008; 1963, 5 years later, 4,030, a drop of nearly 1,000, nearly 20 percent. Thus, we lost nearly a fifth of the firms in the 5-year period. Any class I base plan which reserves the class I proceeds of a given market to those producers who supplied milk to the handlers of the market during a specified base period, can only work to the detriment of those producers who have been selling milk to the handlers forced out of business, and whose business is transferred or gone to provide the growth of the large handlers of the more populous areas. It is apparent that the large handlers can be expected to need more milk to meet their growing needs as they pick up the business of discontinued firms and expand their ever-growing area of distribution. In the interest of equitable treatment to producers whose outlets are being eliminated, and manufactured grade producers moving to grade A, liberal and sensible provision must be made for new producers to share in the class I sales of the remaining larger processors or handlers. Wisconsin has long been a producer of high quality milk. Although slightly less than half of the total milk marketed by Wisconsin farmers has been sold as grade A, much more is of sufficiently high quality to meet grade A requirements with little more than formal inspection and approval by grade A inspectors. The minimum standards for Wisconsin manufacturing grade B milk are very close to most States, cities, and U.S. Public Health Service grade A standards. There have been cases in which some farmers who had been selling milk to handlers outside the State and under grade A supervision of neighboring State health departments have lost their markets as those handlers discontinued bottling operations. It was a shock to some of these producers to discover that they did not meet Wisconsin minimum manufacturing milk requirements even though they had previously been in good standing on an out-of-State grade A market. Current reports show that 60 percent of all Wisconsin dairy farms are now shipping bulk tank milk. In February 1969 the Wisconsin State Department of Agriculture reported 58 percent of all producers-65,695 dairy farms-supplying milk to Wisconsin dairy plants to be shipped milk from farm bulk tanks. Since bulk tank producers are known to be large compared with the low percent of remaining can producers, it can be assumed that bulk tank sales exceed 70 percent of the total Wisconsin milk production. These farmers have invested large sums of money and have practically completed the process for grade A qualifications. They must not be prohibited access to grade A markets anywhere in the United States of America. We urge that any continuation of class I base legislation include absolute and unequivocal assurance that new producers entering a market after the establishment of any class I base plan be permitted the right to an equal or average share of the class I proceeds in not more than 60 days after entry to a market order area. Such provision is absolutely necessary to protect the dairy farmers who have already been, or may in the future be, seeking a higher return outlet for their milk. A majority of Wisconsin producers must get into order markets and receive the grade A milk prices that are necessary to continue dairy farming operations. |