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sumed in large quantities. It is a good product. It is preferred by millions of our people. There will always be a demand for it from those who can afford to buy it. But it is very likely, in the light of all the evidence we have available today, that quantity butter production will be largely limited to those areas in the United States where local conditions, markets, transportation facilities and other factors are most favorable. In these areas, due to these favorable factors, butter is not a low-end product as compared with other milk uses. But for the country as a whole and for the dairy industry generally, butter has been in the recent past, is now, and will most probably remailn the least profitable use of the product of the cow.
To the extent, therefore, that antimargarine laws officially encourage uneconomic butter production they are definitely injurious to the dollar and cents interests of dairy farmers. Conversely, to the extent that repeal of the antimargarine laws would stimulate the diversion of milk from butter to more profitable markets, it should prove definitely beneficial to dairy farmers.
Of course, the more milk that is diverted to butter manufacture the less there will be available for fluid milk and whole milk such as ice cream and cheese which, unlike butter, utilize all the nutritional value of the whole milk solids. Generally speaking, in butter manufacture, the butterfat alone is used and the rest of the milk is fed to livestock, converted into nonfat dry milk powder, or thrown away.
W. A. Wentworth, vice president of the Borden Co., who can scarcely be charged with hostility to the dairy industry, pointed out in an address to the Minnesota Ice Cream Association in December 1947, that if we had attempted to produce enough butter in 1947 to make the per capita consumption of 10 years ago possible, it would have been necessary to divert 1342 billion pounds of milk from whole milk uses to butter manufacture.
“If this 1342 billion pounds were to come from the supply for some other dairy products,” he said, “it would take more than all of the milk which will be made into whole milk cheeses this year (1947) or it would take 80 percent of the milk which is being made into both ice cream and evaporated milk in 1947.”
The real interests of the dairy industry do not lie in attempts to protect and stimulate the butter market with discriminatory legislation against margarine or by any other artificial means. Such "protective” meansures as this antimargarine legislation have been woeful failures. The decline in butter production alone, while under this spurious protection, should be sufficient proof of this fact. To take one example, per capita butter consumption in 1901, the year in which the most drastic of the antimargarine laws—the 10 cents tax on yellow margarine—was enacted, was 19.9 pounds. But, despite this drastic legislation, per capita butter consumption in the United States has never been that high since. In 1947 it was 11.2 pounds, little more than half of what it had been in 1901.
The real interest of the dairy industry lies in expanding its whole-milk markets, particularly fluid milk. Not only is fluid milk the most profitable market for the dairy farmer but it is by far the most desirable for the country as a whole. There is no substitute for fluid milk. It is the finest and cheapest food in the world.
It has already been clearly shown that it is possible for the fluid- and whole milk markets to expand while butter production is declining. As a matter of fact, as we have seen, this is exactly what has been occurring in recent years.
Recently a prominent dairy farmer, Merritt Nash, wrote in the Western Dairy Journal:
butter is not a practical or economically sound article to force upon the consuming public as the sole source of spread for their bread. During these times when as never before we should be conscious of the great and dire need for conserving the fast dwindling resources of our great Nation it seems almost unbelievable that my fellow dairymen, almost to a man, will stand up and fight against the idea of adjusting our thinking and our policies to fit a changing world's requirements.
“This is a day of specialization, a day when that individual or that industry or that country which is best suited to the production of a given product should devote their main energies to that line in which they are best equipped to serve their fellow men. This, in the end, will be the most profitable for all. When it comes to the production of fluid milk, the lacteal secretion of the dairy cow, we have been graced by God with one of the most remarkable manufacturing plants imaginable, the dairy cow. Let us promote the tremendous possibilities of this little wonder * not by clinging to a
byproduct such as butter, a fast falling star, but by emphasizing a new and profitable price stabilizer
fluid milk.” Mr. Nash asks this question of his fellow dairymen : “Why don't we marshal our forces and launch a great campaign to sell fluid milk, for example, in the manner in which Coca-Cola, the Pepsi-Cola, the beer, the liquor, the sparkling waters, and the ginger ale, etc., people sell their products in such tremendous quantities?”
I know there are those in the dairy industry who say that such a campaign would be impracticable. I think we are at least entitled to answer : How can you know until you've tried it?
But the possible means of expanding the dairy industry's fluid- and wholemilk markets, with a consequent increase in cow numbers, in income, and general economic welfare in that industry, are by no means limited to an advertising campaign. There are, as many dairymen have pointed out, many restrictive or wasteful practices the total effect of which is to make milk more costly to consumers without increasing returns to individual dairymen. Of course, these wasteful and restrictive practices are by no means confined to the dairy industry. However, I think that farsighted leaders in the dairy industry will agree with Mr. Nash that the future of their industry lies in expanding as much as is possible the most profitable and desirable uses for milk products. For reasons which have been stated and restated butter, save for certain areas, is not one of these products.
How much more whole milk is needed by our people as a whole? Despite an increase of more than 40 percent in consumption of whole milk dairy products in 1947 as compared with the prewar 1935-39 average, we were in 1947 about 79 pounds per capita short of the Agriculture Department's recommended health goal. To fill this nutritional gap, whole milk production would have had to be increased 11,300,000,000 pounds. At the 1946 rate of milk production per cow—4,891 pounds-an additional 2,320,000 dairy cattle would have been required. Other nutritionists have suggested even higher milk production goals as desirable and necessary for a healthy country. Estimates of the number of additional dairy cows needed to achieve these goals runs as high as 6,100,000.
Almost everyone will agree that all proper measures should be taken to fill this health goal. The great dairy industry would not only benefit in dollars and cents through the expansion of the whole milk markets, regardless of how much butter might decline, but the health of the whole country, particular of our low-income groups, would be greatly benefited.
Is such an expansion of milk production possible?
The United States Department of Agriculture, in its publication Dairying in War and Peace, published last year, estimates that if high production of industrial and agricultural products continues, an annual milk production of "140,000,000,000 pounds or more” may be expected by 1955. At the risk of being repetitive, let me say again that an increase in our total milk production to this extent–20,000,000,000 pounds over our present level-does not necessitate an increase in butter production or depend upon it in any way. Total milk production increased approximately 20,000,000,000 pounds from 1936 to 1946, while butter production was decreasing nearly 700,000,000 pounds' or almost one-third.
The dairy industry through extensive educational campaigns stressing the nutritional importance of fluid and other whole milk products, through wider use of modern milk production and distribution techniques, and through removal of some of the repressive and unnecessary State and local trade barriers, can help itself to achieve this goal.
The importance of expanded whole milk consumption from a health standpoint alone should make every Member of Congress and other legislative bodies conscious of the need to enact whatever proper legislative measures that might be necessary to maintain and expand milk production and consumption-particularly in times of economic stress when the need for healthful food is particularly acute among our less fortunate families.
I emphasize this point because one of the contentions which we hear so often from opponents of margarine tax repeal is that the dairy industry must keep its butter market at all costs in order to have a refuge for “surplus” milk in times of depression when the demand for whole milk products fall off.
Any decline in national income adversely affects all industries. However, in view of the trends to which I have called attention, I am of the opinion that the sale of milk products other than butter would continue relatively high even in the event of a business slump. Furthermore, milk is so important to the national health that it seems to me that Government should take steps in time of depression to maintain milk production and consumption at a high level.
I have no idea as to the specific steps but the dairy industry has had timely assistance from Government in the past and a wise and constructive program should be worked out--if adverse business conditions return-without too much difficulty. But this program should not include punitive legislation aimed at a product competitive with butter. This kind of program, in the long run, injures everyone, dairymen included.
The following table compiled from official USDA statistics, shows how greatly these subsidiary whole milk markets have expanded in recent years in contrast with butter--and indicates, I think, a number of more satisfactory outlets than butter for so-called surpluses of milk-whether caused by seasonal fluctuations in production or by possible decline in demand due to economic depression.
Annual average, 1935-39.
-pounds_- 2, 237,000,000 1946...
-do---- 1,526, 000, 000 1946 decrease..
31.8 In conclusion, I shall only say that I hope there will be no delay in the repeal of the Federal antimargarine laws. I hope that even some of those Members who, in the past, have sided with the opponents of repeal, will realize that whatever justification there might have been for these restrictive taxes in the past, there is none today.
These laws have always been wrong in principle, undemocratic, partisan, penalizing one group of American farmers for the alleged benefit of another, one food product in favor of another. They are antipathetic to the traditions and practices of our free-enterprise system and to the traditions and practices of a free people.
And now the last vestige of "justification” is stripped from them. It is perfectly clear that they have never accomplished their purpose. They have not protected the da industry or even butter production. They have only injured the farmers who produce the ingredients of margarine, the grocers who sell margarine, the housewives who want to buy margarine.
The dairy industry is in no danger of disruption or injury from the repeal of the antimargarine laws. The tale of the terrible destruction that would be wrought in that industry if these laws are repealed is mere verbiage-offered without substantiation of any sort, without evidence of any tenable kind. It is a "snow" job that melts away as soon as it encounters the light of facts. I hope all of us now will recognize this bugaboo for what it is.
I hope even the most partisan butter proponent will admit the justice of margarine's cause and that the American people will get from this Congress what they are so insistently and overwhelmingly demanding-outright and prompt repeal of the Federal antimargarine laws.
The CHAIRMAN. Thank you very much, Mr. Peters.
The CHAIRMAN. Next we have Milo K. Swanton, executive secretary of the Wisconsin Council of Agricultural Cooperative.
STATEMENT OF MILO K. SWANTON, EXECUTIVE SECRETARY, WIS
CONSIN COUNCIL OF AGRICULTURAL COOPERATIVE, MADISON, WIS.
The CHAIRMAN. Proceed, Mr. Swanton.
Mr. SWANTON. I am Milo K. Swanton, executive secretary of the Wisconsin Council of Agricultural Cooperative, and I am also a farmer living on and operating a livestock and dairy farm and for more than 20 years I have been a grower of leaf tobacco in Wisconsin.
I merely want to summarize some of the major oleo arguments which have been answered by previous people who have testified.
The CHAIRMAN. Mr. Swanton, do go right ahead. Mr. SWANTON. Major oleo arguments answered by factual evidence: Argument 1: Repeal will lower prices of margarine, cutting cost of living, especially for low-income families.
Rebuttal: Over 95 percent of the oleo purchased in the Nation is taxed at only one-fourth cent per pound. Opinion poll shows tax is no deterrent to use, that 68 percent of people now use oleo.
Argument 2: Consumers demand yellow oleomargarine.
Rebuttal: Opinion poll shows only 38 percent of people insist on yellow oleo; 62 percent say the color is unimportant.
Argument 3: Dairy farmers are not really interested in the oleo-tax question because fluid milk sales are more profitable than butter sales.
Rebuttal: Over 1,176,000 dairymen depend on butter as the most profitable outlet available to them. For millions more farmers producing fluid milk and other dairy products butter is the “gold standard."
Argument 4: Repeal of taxes, they say, will increase total farm income by increasing demand for cottonseed and soybean oils for margarine.
Rebuttal: When a consumer buys butter the dairy farmer gets 76 percent of the sale price. When a consumer buys oleo the farmer gets 31 percent of the sale price.
Argument 5: Repeal of oleo taxes will not create wholesale fraud because proper labeling and packaging will prevent.
Rebuttal: An independent, impartial survey of 153 restaurants in major cities throughout the country showed that one out of three was serving customers oleo, claiming it was butter. According to pure food and drug law administrators, their machinery is inadequate to prevent Nation-wide fraud.
Argument 6: Oleo tax discriminates against the industry and discourages the sale of its product.
The CHAIRMAN. Mr. Swanton, I did not get the impression from the witness today from the Pure Food and Drug that they consider their machinery inadequate. Am I in error on that?
We had a witness this morning from the Pure Food and Drug and at least from him I did not get the impression that he believes their enforcement machinery is inadequate under the present law. If I am wrong on that, I would like to have my memory refreshed.
Mr. SWANTON. Well, it was my impression that his testimony indicated that as far as the chemical components and from a standpoint of nutrition, they were not in a position alone to do it without the aid of the Internal Revenue Department.
The CHAIRMAN. I see what you mean.
Mr. SWANTON. That is, at the present time you have the Federal Food and Drug Administration on account of the tax provisions; you have the policing made possible through the activities of the Internal Revenue Department.
The CHAIRMAN. I have gotten a general impression out of the hearing that as between all of the existing enforcing agencies it is working very satisfactorily.
Nr. SWANTON. As the law stands at the present time.
Mr. SWANTON. Yes, however, as far as the testimony given by the Federal Food and Drug Administration, if the taxes were taken off you would not then have the policing machinery of the Internal Revenue Department which would take away the present provision which we feel helps to make the status quo.
The CHAIRMAN. That was made clear by the witness.
Mr. SWANTON. Rebuttal: Oleo sales have more than doubled since 1941.
Argument 7: Retail outlets for oleo are limited because of high license fees.
Rebuttal: Oleo is now sold in 265,000 stores, an increase of 100,000 outlets since 1941.
Argument 8: Consumers are virtually unanimous in their demands *that oleomargarine taxes be repealed.
Rebuttal: Opinion survey shows public lacks information on the subject. For example, 45 percent do not know that there is any tax on oleo; and only 3 percent know that the tax on white oleo is onefourth cent per pound.
Argument 9: Yellow is the natural color of oleo; present law requires manufacturers to bleach out the color.
Rebuttal: Armour Research Foundation reports that oleo made from soybean oil is naturally gray-green, while oleo made from cottonseed oil is offwhite. Bleaching is to remove undesirable colors ond offensive odors and tastes.
Argument 10: Repeal of oleo taxes will permit yellow oleo to sell at the price of white.
Rebuttal: Recent survey shows that in cities where yellow oleo is sold, its price is as much as 27 cents per pound higher than white oleo, although the tax is only 10 cents.
Gentlemen of the committee this outlines briefly some of the arguments presented by the oleo people and the answers as we see them coming from those who have testified before your committee. I want to say in conclusion that as a farmer milking cows and producing on an average of about 150,000 pounds of milk
on our farm which goes primarily into the city, fluid milk, and Swiss cheese, not a pound going into butter, nevertheless I like a majority of the 178,000 farmers in the State of Wisconsin and elsewhere whose milk is not going into butter see in this proposal a danger sign as has been outlined by those who have testified previously.
The danger of a battle of substitutes along the whole front against the dairy industry, filled milk, filled cream, filled ice cream and yes, filled cheese.