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The American housewife and her family want yellow table spreadsbutter or margarine as they prefer. Our eating habits and food desires are deep-seated. We like yellow spread on white bread-pleased with a spread artificially colored and a bread made from flour artificially bleached. From the richest to poorest, we Americans want in our foods color or lack of color natural or artificial-as best suits our eye and taste.
We fully recognize that approximately 82 percent of our population is urban and only 18 percent is rural. It is evident to us that that 18 percent or any segment thereof could not for long dictate in the face of the public demand for tax-free yellow margarine.
Annually since 1941 the American Soybean Association has gone on record as favoring the repeal of all Federal and States taxes which burden the manufacture, distribution, or sale of colored margarine provided that margarine is made from domestically produced oils—the product of American farms.
Our position, which has the effect of leaving the present restrictive taxes on margarine made from imported oils, is, in the opinion of our members, well-founded. Prewar soybean growers know from actual experience that it is difficult or impossible to compete with imported oils. The reasons that the American soybean grower cannot compete with producers of tropical oils are well known and do not need repeating here; buying in a highly protected market, our growers feel they must favor protection for their own products in the domestic market. We appreciate the fact that our position might be characterized as highly nationalistic and even narrow; a point which is particularly emphasized by the fact that, coconut oil from the Philippines, to which country we are closely tied, has historically been one of the most severe competitors that domestic producers of fats and oils have had to meet.
We fully consider the fact that our position in favoring the removal of restrictions only on margarine made from domestic oils might be construed by many as a violation of certain reciprocal trade agreements. It was our conclusion that the present laws already constituted a discrimination against foreign oils and that the removal of the discrimination on domestic oils would not, per se, change the present status as to discrimination against the use of imported oils in margarine.
It is the belief of the American Soybean Association that yellow margarine made from domestically produced fats and oils should be allowed to sell for what it is, on the basis of its true value, without Federal or State discrimination. We believe that butter has a right to a free market, and that soybean oil in the form of margarine has a similar right. We consider the present discrimination unfair. We believe that the immediate removal of Federal taxes on yellow margarine will benefit not only the producer of soybeans, cottonseed, peanuts, and corn, but also the producer of dairy products, including butterfat.
A population increase in the United States the past 9 years equals to the total population of Canada, has created a tremendous drain on our food resources. Experts expect this population increase to continue with a total increase of 18 to 20 millions from 1939 to 1950. The oncoming generation of Americans is nutrition conscious, creating a definite demand for larger quantities of meat and animal products.
Continued production of large quantities of efficient low-cost vegetable protein meal is essential to the adequate supply of meat, milk, and eggs necessary to the proper feeding of our increased population.
Currently the annual per capita consumption of table spread is 15 or 16 pounds—of which butter supplies approximately two-thirds and margarine one-third. We believe this per capita annual consumption can be increased not only to the prewar rate of over 20 pounds per person, but eventually to somewhat the nutritional standards recommended by the United States Department of Agriculture of 30 to 35 pounds per person.
Many soybean growers also produce cream for butter. We believe that yellow butter and yellow margarine are complementary and both necessary and that the market for clean quality butter and clean nutritious margarine can be expanded—constructively and fairly without confusion or misrepresentation and without tax on color.
Our position or policy has not, in the past and does not now, in any way, shape or form take an antagonistic attitude toward the dairy industry. Let me repeat again that our growers for the most part are also dairymen. We feel, and the economic trend of the past 40 years supports our opinion, that the milk production in this country will more and more go into a higher value use. We know of no soybean grower who would be interested in owning and milking less cows as a result of the passage of the pending legislation to repeal the taxes on margarine. We do know that year by year our farmers are meeting requirements which enable them to turn their dairy production to higher value use.
This inevitable economic change and trend does not mean that butter will become extinct but it may mean that the per capita production of butter will continue to fall. Surely no thinking person can maintain that as a lesser portion of our people are able to get butter that all others must either go without yellow table spread or pay a discriminatory tax to enjoy it. Truthfully this is the thing that has already happened and accounts for the present overwhelming public demand for removal of the taxes.
The American Soybean Association appreciates the fact that the average consumer does not know and perhaps does not care whether margarine is made from domestic or imported oil in view of the common experience that it meets high standards of purity, cleanliness, nutrition, color, and taste.
Pearl Harbor created the most severe emergency in the history of the United States in many vital ways. Not the least of these, as to ihe successful prosecution of war, was the shortage of fats and oils created by the Jap's seizure of the Far East. The expansion of the soybean acreage and the soybean handling and processing industry since Pearl Harbor constitutes one of the outstanding achievements in the whole history of man's efforts to feed himself. In 2 years our growers made this Nation for the first time in recent history selfsufficient as to edible fats and oils. At the same time soybeans made possible the extra protein feed so vitally essential to our wartime and postwar food programs.
Considering the uncertainties of the future, we submit to you the proposition that such an essential segment of our agricultural production, as the soybean industry has proved itself to be, should be kept strong.
We have asked the secretary of the American Soybean Association to follow with his statement which goes into greater detail in explaining and supporting the position of our growers which I have just outlined.
The CHAIRMAN. Would your association object to adequate regulations, if they do not exist, to make misbranding difficult and unlawful to the end point that the consumer knows what he is buying ?
Mr. WALLEY. Well, the matter, as a consumer, for instance, let us take the farmer viewpoint. We buy fertilizer. I defy any farmer to take a sample of 2–12–6 or old 0–20–0, and look at it and tell which is which. We depend upon the labeling in everything we buy. That is right. We will not object.
The CHAIRMAN. Do you object to labeling, branding regulations if they are adequate ?
Mr. WALLEY. We see no reason for objection. The CHAIRMAN. So that the consumer would know what he is getting
Mr. WALLEY. That is right. That is the common practice and we would certainly approve of it.
Now, I will ask Mr. Strayer to present his paper.
STATEMENT OF GEORGE M. STRAYER, SECRETARY, AMERICAN
SOYBEAN ASSOCIATION, HUDSON, IOWA
Mr. STRAYER. I would, sir.
My name is George M. Strayer, and my home is at Hudson, Iowa. I am a farmer and a seed producer, and I am secretary of the American Soybean Association. I grew up on a farm and I acquired this set of overgrown hands by milking a herd of cows every night and every morning for a period of years. I feel that I know the problems of the dairyman for I have been one of them for a period of years, and I today maintain a herd of about 20 milk cows on that farm. In my small town there is located a cooperative creamery which 5 years ago made about 3,000,000 pounds of butter per year. Last year that creamery produced only about 1,700,000 pounds of butter as the result of diversion of milk into more profitable channels. I sell butterfat to that creamery, and I contribute to the advertising fund of the lowa Dairy Industries Council, for I believe that pure wholesome dairy products are worthy of advertising.
Mr. Walley has already told you why the American Soybean Association, representing soybean producers, is interested in the proposal to remove the restrictions and taxes on margarine. He has told you that repeatedly, since 1941, the American Soybean Association has gone on record favoring the repeal of all Federal and State restrictions on the sale of margarine made from domestically produced fats and oils. In my section of Iowa the dairyman is also a soybean producer. Both commodities come from the same farm, and it is my observation that the average farmer in that section does not support the position taken by the dairy leadership. The farmer believes that all products on his farm should have a free and open market-that taxing his soybeans to subsidize his butterfat is foolish and nonsensical.
Corn is the principal crop which we raise on our farms, the most of which is used as feed for livestock. The next crop in importance is our soybean crop. The relative importance of these two crops has changed drastically within the past few years, corn maintaining its supremacy but soybeans climbing from nothing 25 years ago to second place among all crops in the great Midwest area within that period of time.
Iowa, as you no doubt know, ranks fifth in the number of dairy cows on farms but ranks first in the production of creamery butter. Other dairy States, such as Wisconsin, Minnesota, and New York, have long since discovered that there are more profitable markets for their products than butter, even with butter at the high prices it has been the past few years. "Let me quote you figures from a typical group of northeast Iowa farms, where they are selling dairy products to creameries for the production of butter; to cheese factories for the production of cheese; to evaporators for the production of evaporated milk; and milk pools where the product is used as fluid milk.
For February that group of farms received an average price of 97 cents for butterfat going to creameries for butter production; $1.17 for butterfat going to evaporators; $1.21 for butterfat going to cheese factories; and $1.21 for butterfat going to be sold as fluid milk.
You can see why these farmers would much prefer to sell the dairy products from their farms to manufacturers who use all of the milk product rather than to manufacturers who can utilize only the butterfat content of the milk. This feeling is shared by other dairymen and today there is not enough butter produced to supply the demands of the consuming public.
Butter is still too cheap compared with the price of other dairy products, and yet it is too high priced for many people to buy. Proof of this lies in the fact that between 1934 and 1947 the per capita consumption of butter shrank from 18.3 pounds to 11.9 pounds. We farmers in that great midwest area must produce soybeans in order to have adequate supplies of protein feeds with which to maintain the health and productivity of our cows and other farm animals. We would therefore like to see the soybean oil from these beans not compete with but rather supplement the fat supply which the housewives of our Nation need.
It is my observation that the pressure for maintenance of current margarine taxes does not come from the man who milks the cows, but rather from the man who makes and handles the butter. I would like to voice the opinion that if the members of the Finance Committee will inspect closely the communications they have received supporting the current margarine legislation they will find the major portion of them have come from the middlemen of the dairy industry—not from the men and women who milk the cows.
In the average American farmer there is an inherent sense of fair play. He sees the folly of the present discrimination, and he knows that the consumer is paying the bill once, and the producer is paying it a second time. He does not believe in class legislation on any farm product.
Gentlemen, those of you who are familiar with the price structure in the fats and oils industries of the United States know that many fats and oils are interchangeable in usage, and that there is a definite relationship in price between them; whenever the lard market fluctuates, cottonseed and soybean oil do likewise. Whenever butter moves
upward or downward, other oils and fats move in proportion. The usage and the price of one oil cannot be separated from the other oils which find usage in the same foods and industries. They are all tied together and must be considered as a group. The oil buyer buys the oil which he can secure at the lowest price and which is adapted to his needs. Thus, the price of any one edible oil immediately affects the prices of all other competitive oils. The price of soybean oil affects the price of corn oil, cottonseed oil, peanut oil, lard, and all other edible fats.
Margarine is the second largest user of soybean oil in America today. Only vegetable shortening uses more. About 20 percent or one-fifth of our soybean oil goes into margarine, but that one-fifth wields great influence on the price received for the entire production because it is a high-value usage and tends to raise with it the price structure of the entire industry.
From every bushel of soybeans the processor makes two commodities. One is soybean oil, of which he extracts from 8 to 10 pounds per bushel. The other is soybean oil meal, of which he obtains about 45 pounds per bushel. The prices which the processor obtains for the oil and the meal determine the price which he can pay for soybeans. When the processor must take a lower price for his soybean oil he must either raise the price of meal or lower the price which he can pay for soybeans. He has no alternatives.
A high value usage for soybean oil, such as margarine, enables the dairy farmer and the general livestock feeder to buy soybean meal at a lower price and still maintain adequate supplies. Without that higher price for the oil the production of soybeans would go down and the meal would not be available for livestock feeding.
We must make a choice. If the range country of the west wants protein; if the poultry producer of the Northeast wants protein; if the dairyman of Minnesota and Wisconsin wants protein; if the swine producer of Illinois or Iowa wants protein, then we must provide high value uses for a major portion of the soybean oil. If we do not, then we will not have the protein.
High value usage means food usage. Margarine is the logical field for expansion, for the per capita consumption of table spreads in the United States is at an all-time low, and the mere return to former consumption levels would require millions of pounds of soybean oil. Butter is not available to fill the needs for table spreads, and it is doubtful if our agricultural economy can ever again support butter production on a basis comparable to that of the 1930's. Margarine is the alternative. It is made from vegetable oils which are cheaper in price because of lower production costs, and which utilize to much greater advantage the land and labor resources of our Nation. One acre of land will produce three times as many pounds of edible fat through soybeans as through the production of butterfat. One hour of labor on that same farm will produce fully 10 times as many pounds of edible fat through soybeans as compared with the same amount of time with dairy cows.
Pearl Harbor found us with our supplies of two major commodities shut off by the Japs. One was rubber. The other was vegetable oil. The Government of this Nation spent millions of dollars of tax money replacing the rubber. Many millions of dollars of taxpayers' money