STATEMENT OF MARVIN MCLAIN, LEGISLATIVE DIRECTOR, AMERICAN FARM BUREAU FEDERATION; ACCOMPANIED BY JOHN C. DATT, ASSISTANT DIRECTOR, WASHINGTON OFFICE

Mr. McLAIN. Thank you, Mr. Chairman. I have with me, as you indicated, Mr. John Datt, who is one of the real experts in the dairy field, and particularly this area, because he followed it since the beginning of the request for this kind of legislation.

I have a very brief statement. I will read it and we will be happy, if you have any questions, to try to answer them.

On behalf of the American Farm Bureau Federation, which represents 1,796,641 paid-up member families in 49 States and Puerto Rico, I want to express my appreciation for the opportunity to appear before this committee with respect to the provisions of H.R. 7996 and similar bills.

Farm Bureau is a voluntary, nongovernmental organization wholly controlled by its members. It is financed by membership dues. It is organized to provide a means through which farmers can work toget her toward the goals upon which they agree.

It represents farmers from every part of the country, producers of every kind of agricultural commodity. The policy resolutions that guide Farm Bureau during the year are developed through a program featuring individual member participation and including study, discussion, and development of policy recommendations at local, county, State, and National meetings.

At our most recent annual meeting, in December 1968, the official voting delegates of the member State Farm Bureaus adopted the following policy statement concerning dairy class I base plans. This was done after very thorough discussion during the convention because as many of our policies are decided, there is not in the beginning always complete understanding and agreement, but this policy does state what we are currently for. I will read it:

For many years we have supported base plans developed by individual dairy cooperatives. Using this approach, producer members of a cooperative could themselves make the decision as to production and marketing needs of their organization. Base plans have also operated on a State basis.

In 1965 the Agricultural Marketing Agreement Act was amended to provide authority for class I base plans under Federal Milk Marketing Orders.

In 1968 the law was amended to extend this authority through 1970. This means that any area which has a Federal milk marketing order has the right to inaugurate a class I base plan if producers choose to do so.

Since this legislation was enacted in 1965, only the Puget Sound area of the State of Washington has adopted a class I base plan as a part of a Federal milk marketing order. Other milk marketing areas have studied such a program but for various reasons have rejected this approach.

Farm Bureau has pointed out that a class I base plan, operating under the Federal milk marketing order program, would:

(1) Restrict individual opportunity by dividing up milk markets and hampering normal adjustment within them.

(2) Put a price on the right to market.

(3) Create new pressures for a nationwide milk marketing order. (4) Give broad discretionary power to the Secretary of Agriculture. We believe these are still valid considerations which dairy producers should study when contemplating use of a class I base plan.

Since the legislative authorization does not expire until December 31, 1970, Farm Bureau should make an in-depth analysis of the class I base plan in the Puget Sound area, pointing out both its advantages and disadvantages to dairymen so that there will be adequate discussion of this program. If the study establishes that a class I base plan is not practical or feasible, study should be given to another mechanism or alternative plan to help solve this problem. In the meantime, however, we shall oppose any attempt to extend legislation authoriz ing class I base plans under Federal milk marketing orders.

As this policy statement indicates, currently only one area having a Federal Milk Marketing Order has adopted a class I base plan; namely, the Puget Sound area. The Farm Bureau has conducted an in-depth analysis of the operation of the class I base plan in this unique milk marketing order area. We are in the process of preparing the results of this particular analysis and will make it available to our member State Farm Bureaus for extensive discussion by our members this summer and fall. This means that this matter will be reviewed and reexamined at county, State, and our annual meeting in December 1969.

We urge that because of the above, no action be taken on this legislation before this committee at this time.

Mr. STUBBLEFIELD. Thank you, Mr. McLain. Any questions?
We thank you, gentlemen.

We have one more witness who is Mr. Walter De Jong, chairman, None-Base Holder Committee, Monroe, Wash.

STATEMENT OF WALTER DE JONG, CHAIRMAN, NONBASE HOLDER COMMITTEE, MONROE, WASH.

Mr. DE JONG. Thank you, Mr. Chairman.

Mr. Chairman, members of the Committee, my name is Walter De Jong. I am a dairy farmer in Monroe, Wash. I milk 171 Holstein cows and market approximately 2 million pounds of milk annually in the Puget Sound Federal milk marking area. My milk is sold by the Northwest Dairymen's Association, a cooperative marketing organization which strongly supports H.R. 7996. I am, like Mr. Keller and Mr. Gordon who testified previously, also a member of the Puget Sound Class I Base Plan Producers Committee, and I support the major portion of the previous statement. The Puget Sound order contains regulations referred to as a class I base plan. Under this plan all milk marketed by me is treated by the Federal Milk Market Administrator as new producer milk, as I do not own a class I base allotment.

I am the chairman of the Non-Base Holders Committee, which is composed of five nonbaseholding producers; namely, Mr. Lynn Davis, from North Bend, Wash.; Mr. Robert Perrigo, Concrete, Wash.; Mr. Jerry Hardy, Everson, Wash.; Robert Baker from North Bend and myself. This committee was elected at a meeting held for nonbasehold

ing producers and extremely well attended by the same at the Garden City Grange, Snohomish, Wash., on April 25, 1969, to represent the 400 nonbaseholding producers regulated by the Puget Sound Federal Milk Order No. 125 and who are classified by the Market Administrator as new producers. I have been instructed by the Non-Base Holders Committee to make the following request on behalf of the nonbaseholders in the Puget Sound Federal milk Marketing area; namely, that the term "new producer" be defined in H.R. 7996 as a producer without a production history in the market. That it be provided in H.R. 7996 that at the time this legislation is implemented by the Department of Agriculture, all grade A producers then in the market, whether with or without a class I base, be allocated an equitable share of the class I market based on a choice of representative periods including the most recent period.

I make this request for the following reasons: First, at the present time, the only portion of the class I market allocated to the new producer is the increase in class I sales over the corresponding month in 1966 and the underdeliveries of base milk. As it now stands, the legislation provided in H.R. 7996 enables producers now holding class I base to share in the increase in class I sales. The new producers have had to rely on this small share of the class I market over the last 19 months and if deprived of the lion's share of it by producers now holding base, they would, in effect, be deprived of their livelihood. Therefore, this bill should also provide for an equitable reallocation of the class I market to include all grade A producers.

Second, that nonbaseholding producers in the Puget Sound order are in the minority, and that if these issues were left up to a vote by producers, the 80 percent majority that now have a monopoly on 100 percent of the class I base would easily overrule the minority, depriving them of an equal opportunity in the market. For this reason we cast ourselves at the mercy of the Congress and request your help.

Third, that the Puget Sound Federal market order is the only Federal order in the United States with a class I base plan and that at present this plan has a definite expiration date, December 31, 1969. H.R. 7996 would make the class I base plan legislation permanent and for this reason I strongly feel that all grade A producers already in the market should have assurance provided by Congress that they will all start out on the permanent plan with fair and equitable allocations of the class I market to all producers that have demonstrated their ability to supply the market.

Fourth, I submit that being a dairy farmer with no legal background or experience and getting notice of this hearing at such a late date, that I was not able to retain legal counsel, that I hereby implore this committee to write into the bill the necessary words to so amend H.R. 7996 to include the requests I have outlined.

Thank you very much.

Mr. STUBBLEFIELD. Thank you, Mr. De Jong.

Any questions? Thank you, sir.

That terminates the list of witnesses. We have some requests-we will insert into the record a statement from Mr. John Heimberger. Without objection, it will be inserted.

(Mr. Heimberger's statement follows:)

STATEMENT OF JOHN J. HEIMBURGER, ATTORNEY, ON BEHALF OF THE INDEPENDENT MILK PRODUCER-DISTRIBUTORS' ASSOCIATION OF THE PUGET SOUND AREA

Mr. Chairman, my name is John J. Heimburger. I am an attorney with offices at 1030 15th Street, NW, here in Washington. I represent the Independent Milk Producer-Distributors' Association of the Puget Sound Federal Milk Order area. There are about 25 producer-handlers in the Puget Sound area and, together, they serve about 7 percent of the market.

Producer-handlers are those independent dairy farmers who sell their own milk direct to the consmer.

The Committee on Agriculture has been careful to preserve the independent status of these dairymen. For example: in enacting the 1965 law which H.R. 9182 would amend, the Committee added the safeguard that the legal status of producer-handlers should not be changed by the enactment or adoption of the new pricing provisions.

In explaining its intention, the Committee said in its report (House Report 631, 89th Congress, page 14):

"The committee wishes to make it clear that it approves of the practice of keeping the producer-handlers' avenue of marketing open to dairy farmers without unduly burdensome restrictions and that this legislation shall not be deemed to be a justification for producer-handler inclusion in the pooling requirements of any Federal order. This is the purpose of section 104 of the bill."

A provision similar to section 104 of the 1965 bill is included in H.R. 9182 as subsection (c), page 4.

I urge the Committee to retain this provision in the bill and, if it reports the legislation, to include in the Committee report a strong restatement of the Committee's intention that the producer-handler opportunity shall continue to be kept open to dairy farmers.

Mr. STUBBLEFIELD. And any telegrams? We will list the telegrams and letters without objection.

The following individuals or associations have sent telegrams to the committee in support of the legislation:

Lester H. May, general manager, Wells Dairies Cooperative, Columbus, Ga.

Homer H. Martz, manager, Dairymen's Cooperative Sales Association, Pittsburgh, Pa.

R. L. Strock, business manager, Maryland Cooperative Milk Producers, Inc., Baltimore, Md.

Harmon Wells, president of board of directors, Central Ohio Cooperative Milk Producers, Columbus, Ohio.

Truman Torgerson, general manager, Lake to Lake Dairy Cooperative, Manitowoc, Wis.

South Georgia Dairy Cooperative, Quitman, Ga.

Cass Clay Creamery Inc., Don Ommodt, Fargo, N. Dak.
Grade A Milk Producers Association, Meridian, Idaho.

James E. Honan, general manager, Interstate Milk Producers Cooperative, Philadelphia, Pa.

Erwin Vanek, chairman, Red River Valley Milk Producers Pool, Moorhead, Minn.

A letter from Frank H. McDowell, general manager, Georgia Milk Producers Cooperative Association, Inc., Decatur, Ga., in support of the legislation was also received by the subcommittee.

(The following letters and statements were also submitted for the record:)

STATEMENT OF JOHN W. SCOTT, MASTER, THE NATIONAL GRANGE

Mr. Chairman and Members of the Committee, I am John W. Scott, Master of the National Grange, with offices at 1616 H Street NW., Washington, D.C.

The National Grange is a Farm and Rural-Urban Family Organization representing 7000 rural community organizations located in 40 of our 50 States. Having a heterologous membership that represents milk producers as well as milk consumers, we are pleased to be able to support H.R. 7996, H.R. 9182 and H.R. 7922, to amend the Agricultural Adjustment Act, as reenacted and amended by the Agricultural Marketing Agreement Act of 1937, as amended.

The National Grange appreciates the opportunity of appearing before this Committee in support of the legislation now under consideration. This legislation represents the long-term objectives of the National Grange and we believe they will make the Class I Milk Base Plan more attractive and equitable to dairy farmers and provide stability to the marketing of dairy products which will directly benefit the American consumer.

Our position on Class I Base Plan for fluid milk has been stated repeatedly in our Annual Conventions, most recently at our 102nd Annual Session in Peoria, Illinois, in November, 1968, when the Delegate Body passed the following Dairy Policy:

"DAIRY POLICY

"1. The Grange reaffirms support of the Class I Base Plan. To strengthen this we favor amendments to the Marketing Agreement Act providing for a promotional checkoff and Dairy Association bloc voting on marketing orders. We recommend the following amendments to the Class I Base Plan:

"(a) Allow holders of base to share equitably any increase in Class I sales.

"(b) Allow new producers to earn a base.

"(c) Remove the 1969 termination date of the Class I Base Plan.
“(d) Allocations of undelivered base milk amongst all producers.

“(e) Make provision that in case any amendment to the Class I Base Plan receive unfavorable vote, it would not change the status of the rest of the order.

"2. We believe the present standby pool program has provided stability to fluid milk marketing and a much-needed market for Class I supplies not now under regulation of a Federal order."

The provisions of the legislation under consideration by this Committee meet and fulfill the requirements of the Grange resolution with one exception, and that is to provide for a promotional checkoff for research and promotion of dairy products. However, we will not oppose H.R. 7996 on this ground, in hopes that this important addition to the national dairy program can be obtained at a later date. The other provisions of the bills that remove the inequities of the 1965 Act are far too important to be placed in jeopardy by our and other opposition on just the ground of not providing for a promotional checkoff.

However, the Grange is firm in its belief that a national promotion and research program to develop ways and means of promoting the increased consumption of milk and milk products on their merits, in competition with the increased introduction into the market place of "imitation dairy products", is in the best interest of the dairy farmer and the current potential demands of the consuming public. Such a program should not be delayed too long, as milk and other dairy product substitutes are an ever-increasing concern to the dairy farmer-in delaying much longer, "the cow will already be out of the barn," and the door locked, because markets once lost are doubly hard to recapture.

The National Grange was an original supporter of the marketing order concept and supported its application to the milk industry, which was in a chaotic condition at that time. The purpose of such orders was to pool the Class I markets in the various marketing orders, so that the competition for this market would not result in a chaotic condition in the market and the disruption of adequate supplies for the consumer. It was not the intent of the early legis