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meet the dairy argument on its own grounds. They defend the antimargarine laws because they say they are needed for the protection of dairy farmers.
Have they protected dairy farmers? More specifically, have they protected for farmers who depend upon butter for their livelihood? Let us examine the record.
During the past 50 years, under the protection of the antimargarine laws, butter has been reduced from a major factor in the dairy industry to a decidedly minor one. In 1901, the year preceding the passage by Congress of the most restrictive of the antimargarine laws—the 10-cent tax on every pound of yellow margarine-per capita consumption of butter was 19.9 pounds. In 1947, it was only 11.2 pounds.
In the 10 years between 1936 and 1946, total butter production, including both (reamery and farm manufacture, declined from 2,131,000,000 pounds to 1,500,000,000 pounds. This is a reduction of approximately 29 percent. During the same 10 years, total milk production, for all purposes including butter, increased from 102,410,000,000 pounds in 1936 to 120,276,000,000 pounds in 1946. So we see that while there was more milk available for butter manufacture, the percentage of this milk made into butter during these 10 years decreased approximately one-fifth.
The disappearance of more than 600,000,000 pounds of butter from the market during these 10 years is especially significant because prices for butterfat rose fairly steadily. As a matter of fact, farmers received $548,000,000 from the sale of butterfat at inflated 1946 prices compared to $420,000,000 from the sale of a much larger amount in 1936. But, whereas in 1936 this income from butter was 29.5 percent of the total dairy income; in 1946, it amounted to only 14.7 percent. These facts indicate the chief reason for reduced butter production : It has been much more profitable generally for dairy farmers to sell their product as fluid milk and for whole milk purposes than to sell it for butter manufacture.
But it is not margarine that is driving butter out of the market. Margarine has not occupied that portion of the market vacated by butter which would have occurred if this were the big reason for the drop in butter consumption.
In 1946 margarine per capita consumption was 3.8 pounds, one of the highest on record, yet this represented an increase of only eight-tenths of 1 pound per capita since 1936. During this 10-year stretch butter consumption dropped 5.9 pounds.
The public, on an average, bought about 6 pounds less butter per capita in 1946 than in 1936, but this definite nutritional gap was not filled with a corresponding increase in margarine purchases.
Surely we cannot say that if margarine had been unrestricted, if it had had free access to the market place, more of the gap, or all of it, would not have been filled, to the definite nutritional gain of the American people. For no one today challenges the healthful qualities of margarine.
But even if this happy situation had transpired, it could not be said that margarine drove butter from the market. It is evident that butter has taken itself out of the market. The cost of producing butter is high by comparison with the more profitable uses of milk. Butter must be sold at a comparatively high price to meet the cost of production. These are the reasons for dollar butter and the loss by the butter industry of approximately 40 percent of the market which it had 10 years ago.
This, then, is what has happened to butter and to the income of farmers who depend upon butter for their livelihood under the alleged protection of the Federal antimargarine laws.
But repeatedly the butter lobby has claimed that if the Federal taxes on margarine were repealed it would disrupt the whole dairy industry and have other adverse effects on the national economy and health apparently in this way.
Margarine would become distinctly competitive with butter, forcing butter prices, which largely control the prices of dairy products, to fall to low levels. Milk prices would likewise fall. This would result in curtailment of the production of milk. The dairy farmer would reduce his herds of dairy cattle, losing considerable income, and perhaps many dairy farmers would be driven out of the dairy business. This would also force a shift from livestock toward field crops, which would result in soil erosion. National nutrition would also suffer as a result of the decline in milk production.
Assuming, however, that butter prices would be forced down competitively by expanded margarine production, there is no reason why this should affect the price of other dairy pproducts. It is true that in many sections of the country the price of fluid milk is set by formula and depends in part upon butter prices. But there is no necessity for this. It is the result of a situation that once existedwhen butter production was greater and more profitable as compared with the sale of milk for other purposes—but that no longer exists today. Butter today is a dwindling industry. Its production has fallen fairly steadily for 10 years. It is the least profitable of all the milk outlets. There is no reason why some other milk product should not become the industry's price stabilizer. Many dairy farmers realize this and complain of the continuance of butter as a price fixer for the industry. The report in September 1947 of the Boston Milkshed Pricing Committee, which was composed of a number of outstanding dairy economists, recommended the abandonment of the butter formula for setting fluid milk prices in the Boston market.
It seems clear today that butter is no longer a desirable price stabilizer for milk products.
Moreover, butter is not the most satisfactory outlet for so-called seasonal surpluses of milk-or depression surpluses. The new dried whole milk industry and the greater expanded evaporated and condensed milk and ice-cream industries offer more profitable outlets for so-called surpluses of fluid milk.
No evidence is given that repeal would result in the curtailment of milk production, and little can be found, because the more butter produced the less fluid milk is available; and the less butter the more fluid milk. The reduction of butter production and the increase in fluid milk and whole milk uše means more income for the dairy industry as a whole.
Since the milk which did not go into butter would go into fluid and whole milk channels, there would be no need for reducing the number of dairy cattle.
If a decline in milk production occurred, national nutrition would suffer. But an expansion of fluid milk production would be the more likely consequence-if margarin competition were sufficient to effect a decline in butter production, and that is a large “if.” The diversion of milk from butter to fluid and whole milk uses is actually to the nutritional interest since these outlets, unlike butter, utilize all the nutrients of milk.
The other reasons which have been given over the years to justify this discriminatory, un-American legislation are merely rationalizations for this real purpose of protection-which, as we have seen, does not protect. Most of them are so patently false today that they deserve little consideration by serious-minded men. However, because they have been repeated so often, I think we must discuss them briefly.
I do not need to tell the committee in detail about the interest which the cotton farmers and the soybean farmers have in this issue. The cotton producers have been discriminated against for years and this discrimination has cost them millions upon millions of dollars. In market value cottonseed oil is more important than the three other products of cottonseed, meal, linters, and hulls combined. Ordinarily oil provides more than 55 percent of the market value of all four products, and for the first 9 months of 1947 margarine alone took 32.5 percent of all the cottonseed oil consumed in this country and was the biggest single use for the oil.
The price of cottonseed, from which the sharecroppers and other small cotton producers get the bulk of their spendable income, depends primarily on the price of oil. It is all too obvious that the Federal and State restrictions which restrict the use of cottonseed oil are a drop upon price. This matter is of vital importance to the South and the entire Cotton Belt.
Similarly it is of vital importance to the soybean areas which, incidentally, center in the Middle West. Almost as much soybean oil as cottonseed oil is used in the production of margarine and the story is similar to the story of cottonseed.
It also is of vital importance to the consumers of the country and to the housewives who waste time and food in coloring margarine. One can buy margarine a litle cheaper if he colors it himself. He can save 10 cents. Is not that ridiculous? A man can buy margarine uncolored, take it home, and let his wife have the trouble of coloring it, to save 10 cents.
Finally, a vital principle is involved, one which transcends any of the other factors which I have mentioned. There is no reason to discriminate against margarine in favor of butter. This wrong is an ancient one, and we should wait no longer to rectify it.
I repeat, therefore, that I hope the Senate Finance Committee will permit this issue to come before us in such a way that Senators may express themselves directly upon it. If we do that, and if the facts are known, I have no fear of the result in this body.
Mr. RIVERS. I will be glad to procure anything you gentlemen desire on anything to which I have referred in this paper.
Senator BARKLEY. Would the price of oleomargarine be materially reduced to the consumer, the housewife, if this tax were removed ?
Mr. RIVERS. I do not know, sir. I think it would, but the fact that one food product is taxed for the benefit of another makes it highly un-American, and certainly unfair.
Senator BARKLEY. I am not talking about the money involved.
Senator BUTLER. I think the answer to that was given by Mr. Wiggins that the total tax collected amounted to about 1 cent per pound, so it perhaps would be reduced, if you reduced all taxes, the price would be reduced perhaps 1 cent a pound.
Mr. RIVERS. The colored margarine sells for a straight out and out 10 cents a pound higher.
Senator BUTLER. His statement covered all taxes collected.
Mr. RIVERS. Any margarine now that is colored, you pay 10 cents a pound tribute on that.
Senator BARKLEY. So that the 40 cents that you referred to, if that is the price, includes that 10 cents?
Mr. RIVERS. What is that?
Mr. RIVERS. No, sir; that is not colored. Colored margarine sells for around 50 cents a pound.
Senator BARKLEY. That part would be reduced by whatever the tax is.
Mr. RIVERS. That is right, sir. I believe you must remember that butter is colored about 8 months out of the year. Winter butter has no color. It is white. The color does not exist in dried food.
Senator BARKLEY. There is no tax on uncolored butter?
Senator BUTLER. I just wanted to ask the Congressman if he could assure us who come from the butter States that you would not be prosecuting us pretty soon for trying to imitate oleo.
Mr. RIVERS. I do not think the butter industry has any market on colored buttei.
Senator BUTLER. You made the statement in your statement, quoting the chemical firm. You gave that long analysis. One statement was to the effect that they included 17.9 percent of milk in order to give it body and favor, and then the balance of the statement lauded the quality of margarine above bụtter, and I was just a little fearful that maybe the next mess we will find ourselves in would be being prosecuted for trying to imitate margarine.
Mr. Rivers. I will tell you, sir, in New York State we got some figures on it, and less than 1 percent—and there is not any better dairy products in the Nation than come from New York—of the farmer's income comes from butter. I predict, sir, in all deference to you that the day will come when butter will be a delicacy because there is no money in it, only in a very few States in the Nation. The money is in these people who manipulate the prices. The farmers will make more money off of cream or whole milk and canned milk and for cheeses and for ice cream than they can out of the cream for butter.
Senator Wadsworth told me that he sells 1,500 quarts of milk a day, and he not only voted for this thing, but has spoken for the removal of this unfair and discriminatory tax.
Senator BUTLER. Butter is only one byproduct of milk.
Mr. RIVERS. Just one, that is right, sir, and I think the day will come when there will be no money in it.
The CHAIRMAN. Thank you.
The CHAIRMAN. Senator J. William Fulbright, of Arkansas, is the next witness.
STATEMENT OF HON. J. WILLIAM FULBRIGHT, A UNITED STATES
SENATOR FROM THE STATE OF ARKANSAS
Senator FULBRIGHT. I have some figures in response I believe to the question of the Senator from Kentucky that last year butter was approximately 1,400,000,000 pounds production; margarine, 725,000,000 pounds.
Mr. Chairman, I testified before this committee some time ago, and I have a statement that I believe is a rather thorough covering of this subject from various angles which I would like to present for the record, and not read. It is quite long.
The CHAIRMAN. We will put that in the record.
Senator FULBRIGHT. I will give my attention this morning to one particular aspect of the problem relating to the question of the possible fraudulent sale of margarine, if that is agreeable to the chairman.
The CHAIRMAN. Proceed.
Senator FULBRIGHT. Before I proceed, just as a matter of interest, regarding that further question, there is one little paragraph I would like to read.
The CHAIRMAN. Is this the statement which you wish incorporated in the record, or another statement?
Senator FULBRIGHT. This one relating to frauds is one I would like to read.
The CHAIRMAN. You will supply the large statement to the reporter.
Senator FULBRIGHT. I will do that. It is practically the same as the one I gave before the committee before.
(The statement referred to is as follows:)
STATEMENT OF SENATOR J. W. FULBRIGHT, BEFORE THE SENATE FINANCE COMMITTEE,
MAY 17, 1948 For 62 years the Federal antimargarine laws have been on the statute books.
I do not think it will serve any useful purpose to debate whether they were justified at the time they were first passed in 1886. The argument used was that some such laws were needed to safeguard the public from fraud and to safeguard the health of the public. At that time, margarine was not the nutritious product that it has since become. Even so, the Congress should not have used the taxing power to hit at margarine and could have dealt with the situation more directly by pure-food laws. But the arguments used in 1886, or in 1902 and 1931 when the Federal margarine laws were amended and strengthened, no longer apply. They are relics of a day when there were few or no pure-food laws, when both margarine and butter were frequently manufactured under unsanitary conditions, and when trade practices were not so enlightened or so subject to public regulation and perusal as they are today.
It is not my purpose to review the whole long history of this controversy, but it will be helpful, I think, if we consider briefly exactly what margarine is, the arguments used to justify its drastic regulation--and it is more 'drastically regulated than any other food product, and the reasons that these arguments have lost today whatever validity they may once have had.
WHAT IS MARGARINE?
Margarine has been made in Europe since the days of Napoleon III, and in the United States since 1874.
The original product was made largely of beef fat which technically is known as oleo oil, hence the name "oleomargarine.”
The name oleomargarine, indicating the use of oleo oil, is today a misnomer and its use should be discontinued. Ninety-eight percent of the fats and oils used in margarine today are vegetable, but under the archaic law of 1886 the product must still be labeled officially as oleomargarine. The more accurate name is margarine. It is made almost entirely today of domestic vegetable oils—largely soybean and cottonseed, with small amounts of peanut and corn oil being used.
An cfficial definition and standard of identity was adopted by the United States Food and Drug Administration in 1941 under the Federal Food, Drug and Cosmetic Act of 1938. Under it, margarine has a minimum fat content of 80 percent; the actual average figure for 1947 is slightly more. The standard requires fortified margarine to contain a minimum of 9,000 U. S. P. units of vitamin A per pound. But 99 percent of all margarine now is fortified with 15,000 units of vitamin, the content always being shown on the label. Margarine fortification is endorsed by the American Medical Association and leading nutritionists.
The only basic difference between margarine and butter is that margarine is vegetable fat, butter an animal fat product. They are equally nutritious. Each offers about 3,300 calories per pound. The amount of vitamin A in butter varies according to seasonal and other factors; while in margarine it is maximum and uniform the year round. Both products are equally digestible.
Report after report by medical associations and nutritional scientists declare margarine to be a nutritious, high-quality food.
For example, the report on margarine by the New York Academy of Medicine States :
“From a nutritional viewpoint, when it is fortified with vitamin A in the required amount, oleomargarine is the equal of butter, containing the same amounts of protein, fat, carbohydrates, and calories per unit of weight. Moreover, since the minimum vitamin A content of enriched oleomargarine is fixed, and the amount of this vitamin in butter may range from 500 to 20,000 units per pound, enriched oleomargarine is a more dependable source of vitamin A than is butter. Since it is a cheaper product than butter, fortified oleomargarine constitutes a good vehicle for the distribution of vitamin A and fats to low-income groups and should therefore be made available to them. Under the standards set by the Food and Drug Administration, oleomargarine is as clean and sanitary a food as butter. The two products are likewise equal in digestibility. Their relative palatability is a matter of individual taste.”
A report on margarine by the Food and Nutrition Board of the National Research Council states:
“The present available scientific evidence indicates that when fortified margarine is used in place of butter as a source of fat in a mixed diet, no nutritional differences can be observed. Although important differences can be demonstrated between different fats in special experimental diets, these differences are unimportant when a customary mixed diet is used. The above statement can only be made in respect to fortified margarine and it should be emphasized that all margarine should be fortified.”
Perhaps the most significant study of the relative nutritional qualities of margarine and butter was that made by three University of Illinois scientists, the results of which were published in the February Journal of the American Medical Association. In my opinion, this study explodes the contention that butter contains some mysterious and highly beneficial growth ingredient not present in margarine.
Three distinguished scientists of the University of Illinois College of Medicine Drs. Harry Leichenger, George Eisenberg, and Anton J. Carlson-conducted a 2-year study of 217 children in two separate orphanages-one group of which had butter in its diet and the other margarine. This study showed no difference in the effects of the fats on growth and health.
I call your attention to the following conclusions of the three scientists :
"Blood studies showed there were no significant differences between the margarine or butter groups.
"The children in the margarine group experienced a high degree of good health during, the study and in comparing their health to those in the butter group it appears to have been much better.