DAIRYMEN, INC., Louisville, Ky., May 12, 1969. Hon. FRANK A. STUBBLEFIELD, DEAR CONGRESSMAN STUBBLEFIELD: The milk producers of Kentucky and the Kyana Division want to take this opportunity to thank you for voting in favor of the School Milk Bill. There is another piece of legislation that we feel is of extreme importance to the Kentucky dairymen which is bill H.R. 7996, the Meeds Bill. We would like to comment on it and hope that you would file it in the Record. The legislation enabling the inclusion of Class I base plans in Federal Milk Marketing orders was first provided by the Food and Agriculture Act of 1965. This authority was initially scheduled to terminate December 31, 1969, but this date was extended to December 31, 1970, by Act of Congress on October 11, 1968. Since the passage of the Food and Agriculture Act of 1965, a Class I base plan has been incorporated in the Federal order regulating the handling of milk in the Puget Sound, Washington area. Experience with the Class I base plan in the Puget Sound area demonstrates that (1) authority for such plans should be permanent to permit any long-run objectives to be accomplished and (2) modifications are necessary in order that such plans can be adopted to changing market conditions and local market characteristics. The provisions of H.R. 7996 are a modification of the provisions authorized by the Food and Agriculture Act of 1965. This legislation does not include a termination date and includes improvements which would permit, through public hearings, the inclusion of Class I base plans designed to be compatible with current market conditions and local market characteristics. This legislation enables the inclusion of Class I base plans in Federal marketing orders. It does not make these plans mandatory. Even though a type of Class I base plan has been a permissible part of Federal milk marketing orders since 1965, most milk marketing associations have not used it because the present law is not workable. It has not been used but we may want to use it when the plan has been amended to make it workable like it is being proposed in H.R. 7996. The management of Dairymen, Inc. feels that Class I base plans are not presently needed in those Federal marketing orders in which Dairymen, Inc. markets milk. However, should we find it desirable in the future to incorporate such a plan in these orders, then this amendment to the Agricultural Marketing Agreement Act of 1937 would allow us to do so almost immediately. There are several milk producer organizations in the Southeast who are desirous of including Class I base plans in those orders under which they operate. We have worked closely with these organizations in developing and coordinating the marketing program for our producers. Such legislation would provide another tool to use in the marketing of milk of the dairy farmers. For these reasons and for those so well presented by Mr. Gordon Laughlin on May 5, 1969, we strongly support H.R. 7996 and urge you and your committee to make every effort to obtain its enactment. I hope to see you on the morning of May 27 at the planned Congressional Breakfast for the Kentucky delegation. Again, I want to thank you for your interest and diligent work for agriculture in Kentucky and the nation. Sincerely, BURDETTE L. FISHER, Manager, Kyana Division. Re H.R. 7996, Class I Base Plan. Hon. FRANK A. STUBBLEFIELD, CINCINNATI MILK SALES ASSOCIATION, INC., Chairman, Subcommittee on Dairy and Poultry, House Committee on Agriculture, Washington, D.C. DEAR MR. CHAIRMAN: In order to get this worthy legislation in a form that the country can use, we urge that permanent, equitable and flexible authortiy be approved by Congress. This is broad "consentual" legislation only. . . which can be utilized by farmers for improved marketing only through the Federal Order hearing process wherein all interests are heard and considered, followed by producer referendum. For farmers to become interested in this long procedure; and, subsequently, for them to adjust to this two-price system, it is necessary to have a permanent program and a flexible base system that will work equitably between old and new producers, and according to one's production from year to year. By eliminating the blend-price system, individual farmers could produce for a price reflecting actual market requirements. This constitutes an automatic, individualized supply-demand factor which will benefit the producer, the market and our economic system. There is no government money involved, of course. We only seek an adjustment in our Federal Order pricing mechanism a simple adjustment which farmers should have the right to consider. The present law does not effectively give them that opportunity because it is written in inflexible, inequitable and temporary terms. Sincerely, CHARLES B. ENGLISH, Vice President. MILK PRODUCERS, INC. Milk Producers, Inc. is a cooperative organization of approximately 7800 dairy farmers, with farms located in New Mexico, Colorado, Texas, Kansas, Oklahoma, Missouri, Arkansas, Louisiana, Tennessee, Kentucky, Mississippi and Nebraska. This organization has made a strong effort to find ways and to develop programs of self improvement which would permit a reduction in dependence upon government programs for stability in marketing. Milk Producers, Inc. was formed in 1967 through the dissolution and consolidation of milk marketing cooperatives functioning in the Southwest since the early 1930's, and is now constituted of what was fourteen separate cooperatives, prior to September 1, 1967. Several of the constituent cooperatives of MPI had operated base plans of the Class I type for many years, providing blend pricing for base milk only, in an attempt to adjust Grade A production to the market needs for Class I milk. Milk Producers, Inc. designed and implemented on August 1, 1968, a base plan of this type for operation throughout its area. Dairy farmers believe in the class I base plan, but want improvement in important details of the plan authorized for Federal orders Milk Producers, Inc. has requested USDA to hold hearings to consider our proposal to implement Class I base plans in fifteen (15) federal milk marketing orders in the Southwestern States. Up to this time, USDA has not consented to hold hearings to consider such proposals. We suggest that USDA's opposition to the principles of the Class I base plan accounts for the fact that only one market has implemented such a plan since authorization by the 1965 Act. Refusals to grant hearings to consider Class I base plans would obviously place effective limits upon the scope of the program. Adverse decisions after hearings are another effective deterrent. Producers currently shipping to fluid milk markets must initiate any proceedings to implement order Class I base plans. Administrative interpretations of certain provisions of the 1965 Act arbitrarily excluded current producers from participation in market growth, reserving all such Class I sales increase exclusively for new producers and hardship cases. Current producers are reluctant to impose unfair restrictions upon themselves. This situation has further limited the scope of the program. The termination date provided in the 1965 Act has been a serious deterrent to producer acceptance of the program. Long range planning by dairy farmers and their cooperatives is precluded by the short term authorization provided. In view of these circumstances it is erroneous to assume that dairy farmers are not interested in the principles of Class I base plans. Because the market blend prices have been improved as a direct result of the MPI base plan, in the several federal orders in which MPI member milk is pooled, non-members and competing cooperatives now have additional incentive to produce more and more surplus milk, negating the stabilizing effect of our Class I base plan. Therefore, it becomes imperative that Class I base plans applicable to all producers, members and non-members alike, be implemented forthwith. This can only be accomplished through implementation of federal order Class I base plans. The alternative must eventually be elimination of the cooperative operated plan. The obvious fallacy of paying market blend prices for all milk after fluid requirements are fully met for a market, is dramatically illustrated in the MPI order markets. Blend prices, now closely related to Class I price levels, are being offered to all producers not members of MPI for unlimited quantities of milk which, in effect, can only be used for manufacturing purposes-hence its actual market value is about $2.00 per hundredweight less than is being paid. Order base plans would remove this pricing fallacy. Such an artificial stimulus for the addition of new producers, for increased production by old producers and for conversion from manufacturing grade production to Grade A production, generates unnecessary surplus Grade A milk in regions of high-cost production, creates serious competitive inequities for producers of manufacturing grade milk, and adds to the cost of the Government Price Support Program. The Class I base principles have long-run implications. Markets only adequately supplied today may have unnecessary surplus milk attached in the future through the fallacious blend price incentives. Implementation of order Class I base plans in such markets will not be a deterrent to development of adequate supplies, and will lend valuable impetus to market organization programs and to improvement in dairy farmer self-help programs. We endorse and support all of the statements made before this committee on May 5, 1969, by Gordon C. Laughlin on behalf of National Milk Producers Federation. We would place additional emphasis upon his statement related to USDA recognition of pre-existing base plans. It is extremely important, in the fifteen (15) markets in which Milk Producers, Inc. operates, that individual adjustments in production in response to the MPI plan be considered when ascertaining the appropriate base setting period. It is also vital that transfers of MPI base since inception of that plan, be recognized in the order base plans when adopted. Hon. FRANK A. STUBBLEFIELD, FOND DU LAC, Wis., May 7, 1969. Chairman of the Dairy and Poultry Subcommittee, House Committee on Agriculture, House Office Building, Washington, D.C.: Pure Milk Products Cooperative, 500 North Park Avenue, Fond du Lac, Wis. proposes that H.R. 7996, the Meeds' class I base bill will be amended by adding a new section (D) as follows: (d) Section 8C (5) D of the Agricultural Marketing Agreement Act of 1937, as amended, is further amended by changing the period to a semicolon at the end thereof and adding the following: "Provided further, That in providing adjustments authorized under clause (e) such producers shall receive for milk purchase by handlers prices equal to that paid producers who were initially allocated bases beginning with the first month immediately following the expiration of the period during which they may receive the price of the lowest use classification as provided herein." WILLIAM C. ECKLES, General Manager, Pure Milk Products Cooperative. Hon. FRANK S. STUBBLEFIELD, MAYFLOWER FARMS, Portland, Oreg., May 13, 1969. Chairman, Subcommittee on Dairy and Poultry, House Committee on Agriculture, House of Representatives, Washington, D.C. DEAR MR. STUBBLEFIELD: The Board of Directors of Mayflower Farms representing approximately 400 Grade A producers in the States of Oregon and Washington requests the support of your committee on H.R. 7996. Producers in this area are waiting for a recommended decision on a proposal for a Federal Milk Marketing Order. The extension of and improvements in the Class I Base Plan are desired by the proponents of the Oregon-Washington Federal Order program. Oregon dairymen have been marketing their milk for over 30 years under a base and quota program similar to the Federal Class I Base Plan with the proposed amendments under H.R. 7996. Dairymen in this area would like to continue to market their milk under a similar program. Sincerely yours, MAYFLOWER FARMS, STATEMENT OF MID-AMERICA DAIRYMEN, INC. Mid-America Dairymen, Inc., is a cooperative association of approximately 13.000 dairy farms with farms located in the States of Minnesota, Wisconsin, Illinois, Iowa, Nebraska, Missouri. Kansas. Oklahoma, and Texas. Mid-America has made a continuing effort to find methods and to develop programs of selfimprovement which would permit a reduction in dependence upon government programs for stability in marketing. This effort has included the implementation of a base plan in a portion of Mid-America Federal Milk Order markets. Mid-Am has requested the U.S. Department of Agriculture to hold hearings to consider our proposal to implement Class I base plans in Federal Milk Market Orders, in which Mid-Am presently operates a base plan. USDA has not consented to hold hearings to consider our proposal. It would appear that USDA's opposition to the principles of the Class I base plan accounts for the fact that only the Puget Sound Federal Order Market has implemented a Class I base plan since authorization was provided by the 1965 act. Administrative interpretation of certain provisions of the 1965 act has excluded current producers from participation in market growth by reserving all such increases in Class I sales for new producers and hardship cases. Producers currently supplying milk to fluid markets must initiate any proceedings to implement Class I base plans under the Federal Orders. These producers are reluctant to propose the imposition of unfair restrictions upon themselves. This situation has limited the implementation of additional Class I base plans under the Federal Milk Order program. The termination date provided for Class I base plans in the 1965 Act has also been instrumental in the small degree of producers' acceptance of the program. This termination date precludes any long-range planning on the part of dairy farmers or their cooperatives' association. To assume that dairy farmers are not interested in the concept of the Class I base plan is erroneous because of the circumstances just mentioned. At the annual meeting of Mid-America Dairymen, held on April 8, 1969, in Kansas City, a resolution was adopted in regard to supplying a management program. This resolution was as follows: "Some markets within the area served by Mid-America now have in effect various programs designed to more nearly align milk supplies to demand in order to eliminate burdensome seasonal surpluses. We recommend that the various divisions continue to amend and adjust such programs so as to more nearly fit their supply to the demand of their respective markets. Since the adoption and implementation of a more effective supply management program depends on amending existing legislation. We urge the enactment of new legislation to accomplish the following: Make existing permissive legislation permanent; that such programs can be made applicable on a regional basis; that increased Class I sales may be allocated to existing producers; that such programs be submitted to producers for a referendum as a separate issue and that the failure to secure approval shall not jeopardize other provisions of the Order." Thus, Mid-Am is clearly on record as favoring class I base plans. The operation of the existing Mid-America Class I base plan in conjunction with a similar base plan operated by Milk Producers, Inc., has been effective in reducing surplus milk production in markets in which the plant is in operation. However, the effect of this reduction in milk production has been an increase in federal order blend prices. This price increase has provided an incentive for non-members and competing cooperative associations to produce additional milk, thereby eliminating the stabilizing effect that the base plan has had on milk production. It is imperative that Class I base plans apply to all producers supplying milk in each market. This can only be accomplished by establishing Class I base plans in the Federal Order markets. Unless this goal can be accomplished, the alternative is the elimination of the existing cooperative operated base plans. We endorse and support all of the statements made before this committee on May 5, 1969, by Gordon Laughlin on behalf of the National Milk Producers Federation. We place special emphasis upon his statement in regard to USDA's recommendation of pre-existing base plans. It is extremely important that individual adjustments in production in response to the present plans be considered when determining the appropriate base setting plans. It is also vital that transfers of base that have occurred since inception of these plans be recognized in the Federal Order base plans when adopted. Hon. FRANK A STUBBLEFIELD, PURE MILK ASSOCIATION, Chairman, Subcommittee on Dairy and Poultry, House Committee on Agriculture, House of Representatives, Washington, D.C. DEAR MR. STUBBLEFIELD: Pure Milk Association is vitally interested in securing passage of Class I base plan legislation to extend and improve existing base plan legislation which expires in 1970. H.R. 7996 authorizes extension of and improvement in what has become known as the Class I Base Plan. The Class I Base Plan is a revised method of distributing money resulting from the sale of milk, among dairy farmers supplying Federal order marketing area. The authority provided by H.R. 7996 would be used in a market only after a public hearing, and after a proposed plan had received the approval of dairy farmers voting in a referendum. This bill is enabling legislation which farmers may use or not use, voluntarily, market by market. Authority for inclusion of Class I Base Plans in Federal milk marketing orders was first authorized by the Food and Agriculture Act of 1965. The initial authority was scheduled to terminate December 31, 1969, but this date was advanced to December 31, 1970, by Act of Congress on October 11, 1968. H.R. 7996 would authorize inclusion of Class I Base Plans in Federal milk marketing orders, and the legislation would not contain a termination date The provisions of H.R. 7996 are a modification and improvement over the provisions authorized by the Food and Agriculture Act of 1965. Under the Class I Base Plan, each farmer or producer, as the term is used in Federal milk marketing orders, supplying a market with milk is assigned a base determined from his history of marketings during a previous period of time. This base is then adjusted to relate it to the fluid milk requirements of the market. The purpose of the Class I Base Plan is to enable farmers, within reasonable limits, to know the amount of milk that they can send to the market and receive a price closely related to the Class I price, and to know that any milk marketed in excess of base will return the value of milk for manufacturing purposes. Under the Class I Base Plan, the price of milk received by one farmer is not depressed as a result of deliveries of milk by another farmer, which are in excess of his base. Under the plan, however, any farmer can market as much or as little milk as he desires. He can adjust his milk marketings to fit his farming operation and to the requirements of the market for milk for fluid use. The Class I Base Plan is not designed to control or to reduce milk production; however, it would remove an artificial stimulus to market milk not needed for fluid use, and this may well tend to reduce deliveries of excess milk particularly in areas of the country where production costs are high. We would appreciate your vigorous support in helping midwestern dairy farmers to secure this important marketing tool. Sincerely yours, AVERY A. VOSE, President. A. L. McWILLIAMS, General Manager. |