another by this Government. The point is, however, that the value of importations of commodities which compete directly with domestically produced commodities is about the same as those which do not compete with our own production. Viewed in this light, it may be said that our net gains from any imports of agricultural commodities are negligible. Those that are competitive, and which therefore to a considerable degree act as replacements for American products, just about balance our imports of commodities which cannot be produced in this country. This is not to argue that we should not have these complementary imports. We most assuredly should have them, since they contribute in no small fashion to the well-being of our people. However, in consonance with the teachings of free-trade theory, we should export that which we produce most effectively, and import that which we cannot produce efficiently or at all. We must rely for our net gains as a nation, with regard to our foreign trade, on the principle that we will export those commodities which we can produce effectively in competition with other nations, and import those commodities in which they have a sound competitive advantage-not an advantage due to artificial manipulation of their currency or from labor earning bare subsistence wages. VI. RECOMMENDATIONS I have pointed out heretofore that the administration has requested that the act under which dairy product imports are being adequately controlled, namely, section 104 of the Defense Production Act, as amended, be allowed to expire as of June 30. The administration apparently bases its recommendation concerning allowing section 104 to lapse on the thesis that section 22 of the Agricultural Adjustment Act, as amended, and section 8 of the Trade Agreements Act, as amended, is sufficient to handle the problem. Assistant Secretary of State for Economic Affairs, Mr. Harold F. Linder, so testified before the House Subcommittee on Agriculture which is now investigating various phases of the dairy industry in this country. Secretary of Agriculture Benson, in his testimony before the same committee, did not go quite so far. While he recommended that section: 104 be allowed to expire, he stated that section 22 needed to be strengthened. We, in my organization, and in the Dairy Industry Committee, do not believe that section 22, as it now stands, furnishes adequate protection. The procedure involved is quite lengthy and time consuming. Under section 8 of the Trade Agreements Extension Act, emergency powers in controlling imports of perishable commodities can be invoked. Nevertheless, it is our view that both provisions of law suffer from one fatal defect. They permit very wide discretion to the Secretary of Agriculture and the President. While in many instances, it is desirable to have a considerable degree of administrative discretion in applying broad powers granted by the Congress, here we are dealing with the survival of the most important agricultural enterprise in the United States, both from the point of view of income it contributes to farmers, and from the standpoint of the nutritive aspects of the diet of the consuming public in this country. In such circumstances, we think the Congress should make the application of quantitative import controls mandatory upon the administration whenever it appears that imports are operating or will tend to operate so as to render ineffective our domestic agricultural programs, or so to unduly increase the costs of such programs. There should also be some effort made to centralize the administration of section 8 of this act, and section 22 of the Agricultural Adjustment Act, as amended. As both acts stand now with regard to this matter, considerable interagency negotiation, and numerous actions by the President, will be involved in the administration of the subject provisions. Even with the best of intentions, the process will either be too time consuming, or in the case of emergency action, open the way for numerous interagency disagreements as to policy and the degree to which imports should be controlled. We think the Congress should establish the upper limit of imports that will be permitted when there is a program in operation under any of our domestic agricultural laws, and lower levels of imports left to determination by the administration under the current provisions of section 22. The proposals to amend section 8 set forth in H. R. 4294 are very good as far as they go. However, for the reasons set forth above, we think this committee might well go further in amending section 8 in an effort to assure adequate import controls over agricultural commodities which are operating under Department of Agriculture programs, pending the completion of the study to be undertaken by the President's commission, and full-scale revision of our foreign tradelaws. In addition to the study commission which it is reported that the President is going to appoint in the near future, it is to be noted that, when the Secretary of Agriculture extended the dairy price support program for another marketing year at levels equivalent to 90 percent of parity, he did so only on the basis that, during the coming marketing year, the dairy industry would analyze their problems and try to develop a more effective long-range program, one which would involve less Government interference in the operations of the market, and which would result in less drain on the Treasury. The dairy industry gladly accepted this suggestion of Secretary Benson, and has started work on the project. In view of this, it seems to us that the administration would be in a much more sound position, in asking for a continuation of the present legislation without change, if it approved a maintenance of the status quo all down the line. By this is meant, maintain section 104, or failing this, materially strengthen section 22 and section 8, until the studies now under way by the President's Commission on Foreign Trade, and the work of the dairy industry pointed toward developing a more sound long-range program, are completed. In closing this statement, I would like to furnish this committee with a summary of the results of the work of the Dairy Industry Committee's subcommittee on import control. Inasmuch as we represent all features of manufactured dairy products, perhaps such information will be of some guidance to the committee in its deliberations. In any event, it will suffice to show the committee what these representatives of manufacturing milk producer and the manufactured dairy product field think is involved in developing a sound importcontrol program that is properly coordinated with our domestic farm policy. Over the long run, we feel that legislation must be enacted that will represent a reasonable correlation of our farm-policy goal-which as we understand it is to secure parity prices for the American farmer, and our foreign policy goal pointed toward expanding our foreign trade. We believe that the time has come when the present conflict in these goals can and must be resolved. If the current conflicting policies should continue, in time one of them will have to fall. We think that this result can and should be avoided. For the last 6 months, a group of us in the manufactured dairy products field have been working together in order to develop a program for control of imports of agricultural commodities which will serve as a vehicle for the reasonable protection of the American farmer insofar as such protection is needed to attain the goal of domestic legislation designed to secure parity prices for farmers, and at the same time, to correlate our domestic farm-policy goal and foreign-policy goal. This group is composed of representatives of the American Dry Milk Institute, the American Butter Institute, the National Cheese Institute, the Evaporated Milk Association, and the National Creameries Association. It therefore represents practically all of the major manufactured dairy products and most of the producers of milk and butterfat whose output is used in manufactured dairy products. After a great deal of work, and discussion of the problem with other organizations, Government officials, and Members of Congress, we have developed a proposal that we think will (1) offer adequate protection of the American farmer with regard to the programs set up for his benefit under legislation designed to secure parity prices for agricultural commodities, (2) represent at least a step along the road to bringing about correlation between our domestic farm-policy goal and our foreign-trade-policy goal, and (3) thereby bring an end to the conflict between our domestic farm policy and our foreign-trade policy.. Our proposal, which we wish to offer to this committee for its consideration, provides for amending section 22 of the Agricultural Adjustment Act, as amended. We propose that a new paragraph be added to section 22, which would provide that imports of any agricultural commodity or product thereof be limited to a normal level during any period for which a program was in effect under any domestic farm law designed to support, directly or indirectly, the price of such product. We suggest that normal imports be defined as the preceding 5year average of such imports, and that imports be limited to this level until prices of the supported commodity reach parity and remain there for 3 consecu tive calendar months. After prices had remained at such level for such period, imports could come in without being subject to quantitative limitation, although of course the tariff laws would still apply. If prices sank below parity, then import controls would again be applied. If it were desired to limit imports more than that provided by the normal average or base, then the authority of section 22 as it is now could be invoked. Our proposal makes it mandatory for the Secretary of Agriculture to limit imports to the 5-year period preceding the marketing year for which a program for any commodity is in effect. Application of more rigid controls would be at the wish of the Secretary and the President, pursuant to current provisions of section 22. We believe that our proposal has a great deal of merit. We think it is nonsense to develop farm price-support programs, and then to permit uncontrolled imports to pour into the country, thereby contributing vastly to the cost of the program, resulting in our domestic farm programs becoming worldwide in scope, increasing costs to an astronomical degree, and in the end causing such a revulsion of public opinion that the farm program would be discontinued. The proposal we have made is set forth in detail in appendix B. While we suggest the 5-year average as the norm of permissible imports, I might state that it is the principle involved of relating controls on imports to the achievement of parity prices which interests us most. If some better base period can be developed under this principle, we would most assuredly accept it. I pass this recommendation to the committee, with the request that you study it, and if possible, develop a bill along the line suggested and try to have it enacted by the Congress. Mr. Chairman, it has been a pleasure to appear before your committee. I appreciate your courtesy, and if my organization can be of assistance to your committee, please call upon us. 1940.. 1941. 1942. 1943. 1944. 1945. 1946. 1947. 1948. 1949 1950. 1951. 1952 1953 APPENDIX A TABLE 1.-Milk cows and milk production on farms, United States, 1940-53 1 Excludes milk sucked by calves and milk produced by cows not on farms. Preliminary. Source: Reports of the Bureau of Agricultural Economics, U. S. Department of Agriculture. TABLE 2.-Per capita civilian consumption of specified dairy commodities, 1935–52 [Pounds per capita] Source: Reports of the Bureau of Agricultural Economics, U. S. Department of Agriculture. 8 Total cheese, and includes cheese made from the milk of goats and sheep. Total cheese, and includes cheese made from the milk of goats. 10 Total butter, and includes butter made from the milk of sheep and goats. Source: World Production of Dairy Products, Second Quarter, 1952, Office of Foreign Agricultural Rela tions, U. S. Department of Agriculture, Sept. 22, 1952. TABLE 4.-International trade in dairy products in specified countries, 1951 [In thousands of pounds] 2 None reported. 119,097 3 435 (2) (2) 115 160, 199 (2) (2) 38 1,600 3 $1,300 3 $1,100 381,000 3 % 100 31.000 3.500 3 750 119 (2) 4,021 4, 293 435, 105 (2) 31.200 $700 3 700 3 900 (2) 3 600 21,295 114, 436 3 66,000 $ 21,000 323,000 $ 50,000 3 600 3.900 38.500 3 400 3 500 (2) 3,600 (2) 75 33, 100 35.000 3117, 000 348,000 (2) 3 21,000 3 11,000 3 1,300 3 5,800 1,700 (2) 681 386,800 88 19 5,806 1,266 20 11, 136 3 6, 200 2 167, 209 43, 470 7, 127 12, 621 3 1,509 10, 028 3,898 3 1, 100 3.800 3 10,000 1,309 42, 564 5,985 19, 082 2,832 2,985 $34, 500 41, 304 7.442 2, 709 24,000 44, 897 '70, 864 1,063 17, 628 (2) 485 8,993 $ 2,476 3,989 504 7,531 82 3 500 3 2,400 3 1,700 3 1.600 3 33.000 3 2, 100 3 12,000 3 39,000 (2) $6,000 3.900 *Based on incomplete data or exports by country of destination, as reported by major supplying countries. Source: International Trade in Diary Products Declines in 1951. Office of Foreign Agricultural Relations, U. S. Department of Agriculture, Aug. 4, 1952. 32604-53-10 |