to enjoy the benefits of liberal supplies of invaluable dairy foods, the total milk supply must be increased and the supply must be used more efficiently. Are you utilizing any funds in your organization to study this problem of perhaps shifting over into whole milk much of the product which is now put into butter? Are you doing anything toward encouraging that shift in any way? Now, you say, on the one hand we must produce more whole milk. All right. And, on the other hand we in southwestern Minnesota find it difficult to get the price we should for our butter to continue in business. We have to have that price supported. Now, what is the answer? Is there any way for my region to get the benefits of wholemilk consumption by people who need it all through the East? That is what I would like to know specifically. Is anything being done toward encouraging the movement of whole milk out of such areas of Minnesota instead of putting it through butter channels? Dr. REED. NO, Mr. Chairman; really that does not come in our bailiwick. Mr. ANDERSEN. I know it doesn't. DR. REED. Ours is a research bureau largely devoted to problems of milk production, milk processing, manufacture, and utilization. We have done relatively little on marketing research. This is pretty much a problem of economics and marketing and therefore, is largely outside of the activities of our Bureau. However, the work which we do on improving the quality of concentrated milks and dried milks through manufacturing procedures are directly related to this problem. When we have these products of sufficiently good quality and appeal, the public will take more of them and they can be produced in areas such as your district. This approach would appear to be a logical one for a good market outlet for at least part of our milk supply. Mr. ANDERSEN. Let me disagree with you slightly. I think it does come within your bailiwick, because you represent the dairy industry of America. Your job in research is to do everything that you possibly can to help that industry, and you have always done so through the years. We want you to study into this and see if we can shift this butter production over into whole milk production and find a market for that whole milk, so as to prevent these farmers through that area giving up their dairy herds. I think that is in your purview. Mr. WHITTEN. I would like to agree with you and point out that what you have in mind there clearly comes within marketing and distribution which is in line with research problems. A man dealing with that particular commodity certainly is interested in the preservation, the handling, and the marketing and that leads into distribution. Mr. ANDERSEN. I want to encourage Dr. Reed here to get into that field. Mr. WHITTEN. Certainly the marketing of milk is a proper subject for the attention of the Bureau. COORDINATION OF DAIRY RESEARCH WORK Mr. HORAN. Dr. Clarkson, at this point, how do you coordinate your dairy research work? One of the items that bothers us is-and we are making some headway on it is the wise use of research and marketing funds. There is no question but what we have unrest and a lot of dissatisfaction in our dairy industry at this time. We are consulting the Bureau of Human Nutrition and Home Economics on this. They have an item to determine the quantities of different. foods and other foods and services consumed by families in various regional and economic groups, to evaluate the economy and nutritional adequacy of diets and to study the factors such as income, prices, family size, that affect family expenditures for living. We know that there is a trend away from butter and dairy products as pure products in the direction of spreads and butter substitutes. It is an economic fact that has been fought out on the floor of the Congress, and it is well known. We also have the Bureau of Agricultural Economics that conducted at least related research. I just wonder what is going on now to attempt to meet the problems of the dairy industry in a changing world. Obviously, something has been done because, as I mentioned a minute ago, Secretary Benson when he was before us raised the point that one of the problems in the dairy industry was the trend away from butter to spreads. Obviously, the dairy industry is interested in this, and it would seem to me, though, that if we are going to get the most out of our taxpayer's dollar, we ought to have a closer relationship between at least three bureaus, and the place where the cooperation should be, it seems to me, would be through your Office. Dr. CLARKSON. Certainly, Secretary Benson has placed the responsibility on the industry and upon the Department to work out a solution for this problem. The Dairy Research Advisory Committee that met with us about a month ago emphasized very strongly these aspects of marketing, distribution, and also this research that Mr. Reed's bureau carries on to find new and better uses and more acceptable uses for the products other than butterfat of the dairy industry. Now, under the marketing law, the Marketing Act, we are looking very closely at this problem to see what can be done by way of changing our emphasis on funds already available to us, to see if we cannot be helpful in working out a solution to the marketing. But I point out that we need under that Marketing Act considerably more funds than have been available to us and we are going to have to rob Peter to pay Paul, so to speak, to put more emphasis on this particular problem. SOLUTION TO DAIRY PROBLEMS URGENTLY NEEDED Mr. HORAN. Of course, Dr. Clarkson, we run into the whole field of continuing research as against research that the economies of the moment or of the era would dictate should have accent and emphasis. I do not think there is any question but what the dairy industry is one of our industries that really needs help now. It is one of our important industries. It is your job to terminate the ones that we do not need or where they can be held in abeyance and put the emphasis. put the butter or the grease where the wheel is squeaking; that is why I wonder just what has been going on. Now, you have met with the Dairy Advisory Committee a month ago. Dr. CLARKSON. About a month ago. Mr. HORAN. Is there a continuing intrabureau committee working on this? Dr. CLARKSON. Yes, sir; we have a working group that follows up. Mr. HORAN. Who are the members of that? Dr. CLARKSON. Bureau of Dairy Industry, from PMA, from BAE, from all the agencies of the Department that have an interest in dairy problems. Mr. HORAN. That would be BAI, too. Dr. CLARKSON. Yes; also Farm Credit Administration, Home Economics, Agricultural and Industrial Chemistry, and all other agencies of the Department that are interested in dairy problems are represented. Mr. HORAN. Would you supply for the record the names of the members of that entire bureau agency who are working on this? Dr. CLARKSON. Yes, sir, because this is something of the moment. I know it has created a lot of trouble in the dairy States of the Midwest, particularly the Chicago milkshed and Twin Cities milkshed. One of the basic purposes of the Department of Agriculture is to help solve such problems, through the coordinated efforts of its specialized agencies. (The information requested follows:) DEPARTMENT DAIRY WORKING GROUP H. C. Kriesel, BAE Donald E. Hirsch, FCA H. C. McPhee, BAI George W. Irving, Jr., BAIC Wallace Ashby, BPISAE Joseph A. Becker, OFAR Max Hinds, Extension Service R. E. Hodgson, BDI L. F. Herrmann, PMA, Dairy Branch D. L. Espe, OES Kenneth McCallister, PMA, Marketing Facilities Research Branch L. G. Foster, PMA, State Marketing Services DAIRY ADVISORY COMMITTEE Agnew, Arnie, Milton Junction, Wis. Friend, L. F., secretary-manager, Mid-South Milk Producers Association, Towers Building, 1497 Union Avenue, Memphis 4, Tenn. (vice chairman) Gaumnitz, E. W., executive secretary, National Cheese Institute, Inc., 110 North Franklin Street, Chicago 6, Ill. Geyer, Ken E., general manager, Connecticut Milk Producers Association, 990 Wethersfield Ave, Hartford 6, Conn. Haymes, P. L., United Milk Products Co., 2000 West 14th Street, Cleveland 13, Ohio Howe, D. K., Fairmont Foods Co., Omaha 8, Nebr. Palmer, Clarence B., president, Sanitary Milk Producers, 2208 Washington Avenue, St. Louis 3, Mo. Sharp. Dr. Paul F., director, agricultural experiment station, University of California, Berkeley 4, Calif. (chairman) Stitts, Dr. T. G., H. P. Hood & Sons, Inc., 500 Rutherford Avenue, Boston 29, Mass. Turner, Eugene L., P. O. Box 1161, Anniston, Ala. Waltz, Russell, president, Consolidated Dairy Products Co., 635 Elliot Avenue West, Seattle 99, Wash. Henry W. Marston, executive secretary Mr. ANDERSEN. The production of a sufficient quantity of good whole milk for the children of America is important; it is one of the basic necessities. We cannot afford to let anything interfere with that production. That is my viewpoint, Dr. Clarkson and Dr. Reed, and as Mr. Horan has stated, the problem is of very serious import at this time. That is proven by the fact that we are trying to do something, to the extent of hundreds of millions of dollars if necessary, to prevent a further decline in the market and to keep these dairy farmers in production. Dr. CLARKSON. It is a serious problem in regard to this industry, very much like it is in the meat industry, the emphasis on economic use of the products in the industry. Mr. ANDERSEN. I would think that this problem is ahead of the other. Here you are dealing with a product that is important to the children of America, Dr. Clarkson. Milk in my opinion comes ahead of meat as a basic necessity. Whatever can be done through you, collaborating with the Bureau of Animal Industry, will I think meet with the approval of this subcommittee. UTILIZATION OF MILK SOLIDS AS DAIRY PRICE SOLUTION Dr. HOLM. What you said is absolutely true. It is worse than in other industries because in this industry we have learned to use only 72 percent of the solids that we produce. We are left with 28 percent of the solids that cannot be consumed. Now that is the reason that the price of fat is so high. When we can use this 28 percent of solids by finding uses in products which the consumer will accept and pay for, I think we will have the butterfat problem solved. Mr. ANDERSEN. Thereby you could give the average producer in my area something for the residue material besides butterfat. I believe that is the solution. Yes, Dr. HODGSON. Work on the production of cheese and particularly concentrated milk is important from an area of production such as you mention. Mr. ANDERSEN. Just as an example, I used to figure when I fed skim milk to my hogs that the skim milk was worth about the same as the market price of hogs in dollars. For instance, if hogs are selling at 20 cents per pound today, it would indicate that my skim milk was worth 20 cents per hundred pounds. That is a ridiculous price for that good food that should go into other areas of consumption. There is the basic trouble. Dr. HOLM. The 28 percent mentioned is mostly all solids, not fat. Mr. HORAN. Is that 28 percent of those solids separate? Is it something you throw out as 28 percent of the whole milk? Dr. HOLM. It is the amount of the solids in skim milk, whey, and buttermilk produced in this country in relation to all the solids in milk. In that 30 billion pounds of skim milk, 10 billion pounds of whey, and 2 billion pounds of buttermilk, there is enough protein to supply the average protein requirement for 30 million people. Mr. HORAN. Is there any way we could get that to market and realize something out of it? Dr. HOLM. Yes. The change has been going on for about the last 15 years. It used to be that processors produced cheese or butter or some other product, almost exclusively. The time has got to come, and it is coming, when every factory will produce all of these products. Then they can shift, as the market shifts, from one product to another. That is one of the main reasons why the chairman's section of the country is a little bit hard pressed now. It is a butter section. Mr. ANDERSEN. Exclusively. Dr. HOLM. They have got to be ready to make all products and get paid for all or nearly all of the milk constituents. Mr. HORAN. Remarkable things can happen. We used to throw away knotty pine. Now it is one of our highest priced lumber. FORESIGHT NECESSARY IN RESEARCH PROGRAMS Dr. HOLM. As far as any research program is concerned, if you want the results tomorrow, it is too late to start today to get them. You have to look ahead to see what the people are going to need 5 years from now or 10 years from now because it is a known fact that research is about 5 to 10 years behind, you might say, from the test-tube stage to the industrial stage; about 5 to 10 years. So we have got to look at this research on a long time basis. We have to look into the future. Mr. HORAN. That is true. That is why I asked where the norms cross. We have enough facts on hand now to make projections. For instance, we are looking ahead to population of 190 million. If the trend in dairy production continues downward, we are going to reach some point in the future where the norms will cross. Population increase will demand that we look ahead and protect the dairy producer today and we are doing that temporarily, as I understand it, with our support prices. At some time in the not too distant future, somebody in a responsible position has got to make up his mind about these programs and that should be based upon available facts. Research has been going on a long while and a lot of it is in this field. PRICE SUPPORTS FOR PERISHABLES Mr. WHITTEN. Mr. Chairman, I have listened to what has been said here with a great deal of interest. I know the deep feeling that this committee has had in the welfare of the dairy industry, as well as the real dependence which the American people have on a healthy dairy industry. Dr. Reed, here are some factors which I think cannot be overlooked. We read in the press where by reason of price supports on butter we are pricing it out of the market; that perhaps is true. The other side of it is, as some have intimated, that the high cost of transportation, the high cost of distribution, and many other things have also contributed to pricing the farmer and the product out of the market. I think where you have had 11 freight-rate increases since World War II, you can clearly see where much of the high cost to the consumer is. The record shows that on many commodities coming from California to New York City, more than half the cost to the consumer is added after it crosses the Hudson River. But this firm price support at 90 percent of parity for a perishable is at best a temporary solution, if it is a solution; and I have been somewhat disturbed at the action taken. FEDERAL ASSISTANCE TO INDUSTRY AND AGRICULTURE COMPARED This is nonpolitical in that the original order was issued before the change in administration and the order was continued after. But I would like to put into the record at this point figures which are in the |