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THE FARMERS COOPERATIVE CREAMERY ASSOCIATION,

Keosauqua, Iowa, May 15, 1948. STATEMENTS TO BE SUBMITTED TO THE SENATE FINANCE COMMITTEE IN FAVOR OF

CONTINUING, WITHOUT CHANGE, THE PRESENT LAWS REGULATING THE MANU

FACTURE, DISTRIBUTION AND SALE OF OLEOMARGARINE Submitted specifically in behalf of the interests of milk producers of southern

Iowa, also, in behalf of the economic interests of both butter and oleomargarine consumers of this entire Nation as a whole

I, C. M. Reeve, general manager of the Farmers Cooperative Creamery Association as Keosauqua, Iowa, president of South Iowa Cooperative Creameries Association, and a director of the Dairy Products Marketing Association, representative of farmers' interests in the dairy industry of these United States, do. hereby present the following prepared statements for most serious consideration.

These statements shall be most abbreviated for each member of the Senate Finance Committee knows full well that the golden cream color of butter is now its only trade-mark, since oleomargarine manufacturers have adopted butter culture flavor and aroma.

Oleomargarine manufacturers are intent upon adopting the trade-mark color of butter only for the reason that they want to further imitate butter, take away more of the demand for butter and without restrictions, sell their oleo (colored golden cream yellow) for more nearly the price of butter.

If present restrictive taxes are lifted, the price of oleomargarine will not be any cheaper in relationship to butter prices but will very soon be relatively higher. White oleomargarine will disappear from the market. Consequently, "the poor man's friend," as “oleo" is called by some, will have double-crossed the presuming public and the so-called poor man.

The effect of discarding the regulatory oleo tax laws would damage the dairy industry, consequently our national economy, far beyond calculations, because the dairy industry is already in a very serious condition over the entire Nation by reason of an unbalanced market relationship following imposed wartime regulations. This statement is true in Southern States where the dairy industry has been contributing more and more to economic advancement as well as in Northern States as confirmed by the Arizona Farmer and I quote, “a combination of unfavorable prices for fluid milk as imposed by Federal control, high feed, and labor costs has caused many dairymen to sell their herds."

The dairy industry has for the past 5 years suffered restrictions of trade, so it is no exception, if pro-oleo legislators contend that present Federal laws are in restraint of trade which of course, to dairy interests, is merely a "cry of wolf” to gain an objective.

I thank you kindly for your attention and I only wish I might have appeared in person before current congressional committee hearings that have had to do with present oleo regulations, Sincerely,

FARMERS COOPERATIVE CREAMERY ASSOCIATION,
C. M. REEVE, Manager.

GEM VALLEY DAIRYMEN'S COOPERATIVE ASSOCIATION, INC.,

Thatcher, Idaho, May 14, 1948. Sen. EUGENE D. MILLIKIN, Chairman, Senate Finance Commission,

Washington, D. C. DEAR SENATOR MILLIKIN: Received your answer to telegram regards oleomargarine bill now in Finance Committee.

It is only natural for dairy industry to be against any legislation which will hinder the industry. We have no objection to oleo going tax-free if it is under conditions which will not allow for it to be passed off as a substitute for butter.

Let oleomargarine take its rightful place as a vegetable oil spread with a color of its own, and not the yellow color which has been the trade-mark of butter since time immemorial.

We have received reports also, that some of the conditions surrounding the processing of margarine from its source are not as sanitary as they might be. Therefore, the industry requests that if oleomargarine is to be placed on the market as a spread for bread, that the same be subjected to the rigid inspection at the source and on through the processing as is applied to butter manufacture and to the making of all dairy products. The Food and Drug Administration should be given full power to make these inspections and should be just as strict with them as they are with the dairy industry.

It is the hope of all in the dairy industry that you and the other Senators who represent us in the making of laws to the betterment of all, will carefully consider all aspects of this matter and do nothing which will jeopardize the future of the dairy industry. Yours very truly,

Manager, Gem Valley Dairymen's Cooperative Association.

GENERAL DAIRY EQUIPMENT, INC.,

Minneapolis 14, Minn., May 17, 1948. Senator EUGENE D. MILLIKIN,

Senate Office Building, Washington, D. C. DEAR SENATOR MILLIKIN: In considering the oleomargarine question, I believe there are certain factors in addition to the one of taxation which should receive your attention in order to avoid, if the tax is removed, a situation that will undoubtedly result in what appears to be a rather clear case of discrimination against butter.

Under the present Federal food and drug standards, the addition of butter flavoring, preservative, and vitamins A and D is permitted in the manufacture of oleomargarine. On the other hand, if butter manufacturers increase the natural vitamin content of butter by the addition of vitamins A and D or if they add preservatives to guard against improper refrigeration, such butter is subject to seizure and condemnation as an adulterated food product.

Oleomargarine, I understand, is made from refined and melted animal or vegetable fats, milk solids less the butterfat, salt, vitamin concentrates, preservative, butter flavoring, and with or without coloring, depending upon whether or not the required tax is paid.

Butter, on the other hand, must be made from cream without any refining of the butterfat; it cannot contain any added vitamins, and no preservative may be used.

If butter is subjected to any process by which it is melted, clarified, or refined and made to resemble genuine butter, which is a process very similar to the one employed in the manufacture of oleomargarine, the product itself must carry the words "renovated butter” depressed into the product not less than one-eighth inch deep, and the package must also be labeled “renovated butter.” However, the addition of vitamins or preservatives is not permitted. The manufacturer of renovated butter is required to procure a special-tax stamp at a rate of $50 per annum and is taxed at the rate of one-fourth of 1 cent per pound.

Inasmuch as oleomargarine, by the use of butter flavoring, of milk solids less the butterfat, and now the proposed general use of the natural yellow color of butter, must be considered to be a butter substitute, it would seem only fair to require that the product itself as well as the package be branded with the words "oleo” or “oleomargarine” in the same manner as is now required of renovated butter. This requirement would serve the public interest equally as well as it has done in the case of renovated butter.

If the manufacture and sale of colored oleomargarine is permitted without the present penalty in the form of the tax, then it seems hardly justifiable that butter and renovated butter should be restricted in the use of preservatives and vitamins whereas oleomargarine is not. I believe that the use of these should. be prohibited in oleomargarine in the same manner as the present restrictions apply to butter and renovated butter. Very truly yours,

GENERAL DAIRY EQUIPMENT, INC.,
H. L. SOLIE.

ILLINOIS DAIRY PRODUCTS ASSOCIATION, INC.,

Chicago 6, Ill., May 12, 1948. Hon. EUGENE D. MILLIKIN, Senate Finance Committee,

Senate Office Building, Washington, D. C. DEAR SENATOR: Your wire of May 11 received. The position of the dairy industry of our State with reference to the oleomargarine-butter controversy is a rather simple and clear-cut one. Our experience over these many years leads us to feel keenly that the matter of a clear-cut establishment of identity of the product is the most important factor. As a matter of fact, our people would agree that this is the only position we have complete right to take in the issue.

Over a period of many years the butter industry has argued that the yellow color is the one most important distinguishing item with reference to butter. Over a period of years manufacturers of oleomargarine have been able to make their product resemble butter in many respects. As you know, this has gone so far that manufacturers of the product are now forbidden to use a preservative and add flavor elements which the manufacturers of butter are prohibited from doing. Naturally this has come about for one reason; that is, the improvement of sales of the product.

All of this ties into the one statement made above; namely, that we feel it would be disastrous to the dairy industry and that it would have an effect upon the general economy of the country if all restrictions were to be removed from the manufacture of oleomargarine and free opportunity to make the product resemble butter in every respect were given. This matter of the identity of the product is the very lifeblood of the butter industry.

If Rivers' bill could be so amended as to give butter the protection of its natural color, yellow, practically all of the arguments which have been made would be settled once and for all. Cordially yours,

M. G. VAN BUSKIRK,

Executive Secretary,

STATEMENT BY HARVEY W. BROWN, INTERNATIONAL PRESIDENT, INTERNATIONAL

ASSOCIATION OF MACHINISTS BEFORE THE SENATE COMMITTEE ON FINANCE, DEALING WITH VARIOUS Bills PERTAINING TO TAXES ON MARGARINE, MAY 17 AND 18, 1948

As head of an organization representing over 600,000 members, and if the familiies of these members be included, some 2,000,000 people, I would like to add my voice to the popular demand now sweeping the country that all penalizing taxes on margarine be repealed, but particularly the 10-cent tax on colored margarine.

The 10-cent tax is so discriminatory and so specious a tax that it has no place on the Federal statute books, altogether apart from the burden it imposes on that section of the population, which unable to buy butter at three times the price of margarine, must, by force of circumstances, buy margarine. As a tax on a food still within the reach of the low and moderate income groups, it is as oppressive a tax, sales or otherwise, as can be imagined.

The notion that margarine is inferior to butter, from a nutritive point of view, and that therefore the public must be protected against it, has long ago been proven false. J. W. M. Bunker, as long ago as 1927, in a study on the health values of fats, put the matter in the American Journal of Public Health as follows:

"Beef fat excreted in the milk of a cow is no different in its origin from beef fat which is retained within the animal, although the chemistry of butterfat and oil differ somewhat. Each is a suitable food. The vegetable oils, also, such as olive oil, palm oil, cocoanut oil, peanut oil, cottonseed oil, and others are all suitable foodstuffs. The digestibility of the various animal and vegetable fats is high."

Discussing facts and fancies about food fats in the same journal in 1941, A. J. Carlson of the University of Chicago said :

"All the scientific data on the digestibility, flavor and color of the dietary fats show clearly that there is no significant difference in digestibility between animal and vegetable fats and that the acceptability of those fats in regard to color and flavor is a matter of past conditioning of the individual and of no other significance in nutrition.”

More recently Carlson, in a study of some 250 children, 2 to 17 years of age, extending over a 2-year period, during which about half of the children studied were served margarine and about half butter, came to the conclusion that there was no perceptible difference in the blood characteristics of the children, nor in their growth and weight.

Summing up the results of the study Carlson says:

"Whether the greater part of the fat of the diet is derived from vegetable or animal sources has no effect on growth and health as shown by changes in height and weight and health records of children observed over a 2-year period.

“During a 2-year period the health of 267 children was uniformly good so far as serious illness is concerned, regardless of whether margarine or butter was the source of the greater part of the fat in the diet.

"If there is a growth factor present in butter which is not present in margarine, there is no evidence in the present study that such a factor plays any important part in the growth of children as determined by increases in height and weight.

“Margarine is a source of table fat in growing children, as determined by a 2year study. Children readily accept margarine as a table spread when it is colored and served in pats (The Journal of the American Medical Association, February 7, 1948, vol. 136, pp. 388–391).”

The tax on margarine is not only a tax on that part of the population least able to bear it, but is a stumbling block to dietitians, including the United States Department of Agriculture, in their effort to improve the nation's diet. It is not the butterfat in milk that is its most important constituent, particularly since the butterfat can be replaced by margarine if reinforced with vitamin A, but the minerals in the milk, especially calcium. The Assistant Secretary of Agriculture told the House Agricultural Committee on October 6, 1947, that his Department would like to see the per capita consumption of milk, or its equivalent in milk products, increased to 1,014 pounds per year. The Department's moderate cost diet now allows only 653 pounds, the Department's low cost diet allows 546 pounds, while the city worker's family budget, set up by the United States Department of Labor, allows only 423 pounds. This, in all cases, is besides butter. The point is, if people were not discouraged from using margarine there would be more whole milk to go around.

With a fuller realization of the value of fluid milk, a shift from butter to margarine is slowly developing anyhow. Fifty years ago, at about the turn of the century, the consumption of butter ran around 2012 pounds per person per year, now it is around 1112 pounds. In 1901 the consumption of margarine amounted to about 112 pounds per person per year, now it is around 412 pounds. The tax is not only retarding the shift, but is imposing an unnecessary expense on the public in making it, not only to the extent of the tax, but, indirectly, through increased prices of milk and its products.

The price of milk in large consuming centers is tied to the price of butter, or is otherwise fixed through monopoly practices in accordance with what the market will bear. With the price of butter at a point only the high-income groups can reach, the price of milk and other milk products tends to be correspondingly high, monopoly practices or no monopoly practices. The tax thus feeds the high cost of living at a particular vulnerable spot.

To realize just what pegged prices for milk and milk products mean in the cost of living of the average city family, including workingmen's families, it is only necessary to bear in mind that, in 1946, the average city family of two persons had an income of about $2,000 a year, and the average city family of four persons had an income of about $3,000 a year. In March 1946, the cost of food alone, in the city worker's family budget of the United States Department of Labor, ran from $792 a year for a family of four in Cincinnati to $854 in Seattle. By June 1947 the Cincinnati cost jumped to $1,000, and the Seattle cost to $1,094. In September 1947, the low-cost diet of the United States Department of Agriculture cost $725 for a family of four and the moderate cost diet $1,011. The point is that, at current prices, milk and milk products absorb too large a share of the total amount available to low-income families for food.

The United States Department of Agriculture allows the equivalent of 1,016 quarts a year for milk and its products for a family of four in its low-cost diet, and the equivalent of 1,196 quarts in its moderate cost diet. This is besides the amount allowed for butter, which could be taken out in the form of margarine. At 20 cents a quart, this means a milk bill of $203 a year for the low-cost families, and $239 for the moderate-cost families. This further means that if the lowcost families really used the amount of Milk the Department of Agriculture considers necessary, they would be spending 28 percent of their total food budget for milk and milk products, and the moderate-cost families, 24 percent.

This is altogether too much for essentially one item in a food budget. If the margarine tax no longer boosts the price of this item, because of the height already attained, it certainly helps to keep the price from falling.

Average weekly factory earnings in 1947 amounted to about $49 a week. This meant about $2,500 a year. The city worker's family budget of the United States Department of Labor, for all purposes including food, ran well over $3,000 a year for a family of four in June 1947. The difference between the income and the cost of the budget only shows how unfair the tax really is. It falls on those least able to pay it. The Department of Labor budget, in fact, allows only margarine in its diet, while the low-cost diet of the Department of Agriculture calls mainly for margarine, even if it allows a small amount of butter.

WRITTEN TESTIMONY SUBMITTED TO COMMITTEE ON FINANCE, UNITED STATES SEN

ATE, PREPARED BY J. S. QUIST, EXECUTIVE SECRETARY, IOWA CREAMERIES ASSOCIATION, INC.

This brief against passage of the Rivers bill, H. R. 2245, is submitted by J. S. Quist, executive secretary of the Iowa Creameries Association. Mr. Quist served with the extension service, Iowa State College, from 1918 to 1945, as a county agricultural agent, State 4-H Club staff member and State county agricultural agent at large. During this period he was active in emergency food production work during World Wars I and II. Since February 1946 he has been executive secretary of the Iowa Creameries Association.

This organization is composed of the local creameries of Iowa, both the cooperatives and those independently owned. The officers and directors of these creameries are nearly all farm dairy producers. The local creameries of Iowa in 1946 churned 170,138,485 pounds of the total 207,987,261 pounds of butter produced by creameries in Iowa. The local creameries serve as processing and marketing agencies for the milk and cream produced by about 160,000 Iowa farmers.

This petition to the Finance Committee of the United States Senate urging them to defer action on H. R. 2245 until the emotional reactions of the public has subsided and the impacts of such legislation is fully realized.

Only two aspects of the impact the passage of the Rivers bill will have will be listed in this statement.

I. Permitting the unrestricted sale of butter imitations will seriously affect the agricultural economy of the North Central States, and indirectly of the entire Nation.

The attached map gives the 1946 butter production for the States of Michigan, Ohio, Indiana, Illinois, Wisconsin, Minnesota, Iowa, Missouri, Kansas, Nebraska, North and South Dakota. It will be noticed that 23 percent of all butter produced was in the first five States named and 57 percent in the latter seven States listed. Of all butter produced in the United States, 80 percent was made in these 12 States.

Milk cows are a part of the farm business for most farms of this area. On many farms the only enterprise is dairying.

Approximately 80 percent of all creamery butter made in Iowa is exported to the large consuming centers outside our State. Nearly 60 percent goes to the markets of New York, Boston, Philadelphia, Buffalo, Detroit, and Chicago; also large shipments are made to the west coast.

Aside from Chicago, the markets for Iowa's surplus dairy products are long distances from the places of production and processing. Of all dairy products, butter alone can be shipped long distances and stored efficiently so as to reach the far markets and be available for leveling off the seasonal production fluctuations.

Facts do not substantiate the recommendations that Midwest creameries should market milk and cream in dairy products other than butter. Many of Iowa's creameries are equipped to manufacture milk and cream into any product. Minnesota and Wisconsin are even better equipped.

The following table for the years 1946 and 1947 show how the States of Minnesota, Wisconsin, and Iowa have had to depend on butter in their dairy

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