solids. Similarly, the 12,500,000 pounds of dry buttermilk solids imported represents approximately 900,000 pounds of butter and 11,500,000 pounds of nonfat dry milk solids. Quotations for imported 28.5 percent butterfat dry whole milk and 12 percent butterfat dry buttermilk solids have been obtained for June and August 1952 and February 1953 13 and compared with the average bulk price of the nearest comparable domestic product for May and July 1952 and January 1953." We have translated these prices into terms of gross return to the manufacturer per 100 pounds of manufacturing milk having a fat content of 3.90, and a nonfat solids content of 8.953 percent (Feb. 1953 average). A point of reference was obtained by calculating a similar value for milk based on the support-purchase program for butter and nonfat dry milk solids. TABLE I.-Comparison of gross return to manufacturers for dry whole milk and dry buttermilk solids when sold at varying prices in terms of 100 pounds of manufacturing milk of Feb. 15, 1953, average composition Gross returns calculated on basis of 3.90 percent butterfat and 8.953 percent nonfat solids milk. The ratio of price of butterfat to nonfat solids was maintained constant and was established at the existing ratio of 5.366 which was calculated from published prices of butterfat and manufacturing milk for Feb. 15, 1953, in agricultural prices. Basic calculations appear as appendix F-I. We find from these calculations (see table I) that 100 pounds of manufacturing mill will return to the manufacturer $4.62 if he had made butter and nonfat dry milk solids and sold it all to the Government under the 1952 support program. Under the current program his return would be $4.48. In May of 1952 domestic dry whole milk was selling at an average price of approximately 402 cents per pound, which represented a return per 100 pounds of manufacturing milk of $5.44. Imported dry whole milk was selling at 29 cents per pound which represented $3.63 return per 100 pounds of milk. In January of 1953 domestic dry whole milk averaged approximately 374 cents per pound, and imported 35 cents per pound in returns of $4.97 and $4.71, respectively. Thus, during the period May 1952 to February 1953, the American manufacturer was forced by competition from imported dry whole milk to drop his price almost 24 cents per pound, or a reduction of almost 50 cents per 100 pounds of milk processed into dry whole milk. Meanwhile, the imported product has consistently maintained prices well below the domestic market, and until recently, below the minimum returns possible under the existing support purchase program. The competition resulting from imports of dry buttermilk solids is even more severe. Our domestic dry buttermilk solids is sold on a guarantee of 4.5 percent butterfat. The imported product varies from 8 to 20 percent butterfat. Comparisons of the returns per 100 pounds of manufacturing milk based on a 12 percent butterfat dry buttermilk solids shows $3.10 in May 1952 and $3.30 in February 1953. Considering the fact that the 1952 support purchase price re 13 See appendix F-2. 14 See appendix F-2, averages obtained from U. S. Department of Agriculture, "Evaporated, Condensed, and Dhy Milk Reports." turn was $4.63 per 100 pounds of milk, it is obvious that it was to the advantage of either the dairymen or the user of dairy products to use as much of these imported products as possible and sell our own production from our own milk to the Government under the support program. Reductions of the value of 100 pounds of milk from $4.63 in 1952 to $4.48 in 1953 does not materially change this picture. Further substantiation of the effect of imports on our dry whole milk production is shown by the fact that overall production of dry whole milk declined 32,500,000 pounds from last year. This decrease meant that over 250 million pounds of fluid whole milk was diverted to other dairy products, probably resulting in the additional production of 10,700,000 pounds of butter and 23 million pounds of nonfat dry milk solids. We therefore submit that the importation of dry milk products has the same effect as the importation of fluid milk from which these products are made. We further conclude that the importation of dry milk products during periods of sufficient or oversupply of dairy products results in (a) depresssion of domestic markets; (b) diversion of fluid milk supply to products purchased by the Government for support purposes; (c) discourages the manufacturer and the dairy farmer; and (d) must ultimately curtail production. EFFECT OF IMPORTATION OF DRY MILK PRODUCTS ON THE SUPPORT PROGRAM It has been stated that during 1952, 37 million pounds of dry whole milk and 12,500,000 pounds of dry buttermilk solids were imported. It was further shown that these amounts are equivalent to approximately 13 million pounds of butter and 38 million pounds of nonfat dry milk solids. It must not be forgotten that butter and nonfat dry milk solids were purchased by the Commodity Credit Corporation in carrying out the support program. When the 37 million pounds of dry whole milk and the 12,500,000 pounds of dry buttermilk solids were imported, it was the same as permitting the importation of 13 million pounds of butter and 38 million pounds of nonfat dry milk solids which are now embargoed. Since these importations were added to a domestic supply that was already sufficient, the net result was that the Government bought 13 million pounds of butter and 38 million pounds of nonfat dry milk solids more than it would have purchased had dry whole milk and dry buttermilk solids been completely restricted. We can only conclude that the importation of dry milk products during periods of sufficient or oversupply of dairy products results in (a) a diversion of fluid milk supply to products purchased by the Government for support purposes and (b) places unwarranted burdens upon the taxpayer. IMPORTS AGAINST EXPORTS 15 Such countries as Sweden, Denmark, Netherlands, and New Zealand have challenged us to defend our position on imports when we enjoy such large export markets. In 1950 we exported 62,550,000 pounds of dry whole milk; in 1951, 69,130,000 pounds; and in 1952, 42,536,000 pounds. These data further show that over 90 percent of our exports have been to Central and South America, Japan, and the Philippines. In the maintenance of these markets, we are in an extremely vulnerable position as we may not be able to compete against foreign prices in these areas. The magnitude of our export markets for nonfat dry milk solids has been grossly exaggerated. For the years 1950 to 1952, inclusive, the statistics show that we exported 395,100,000 pounds of nonfat dry milk solids,10 but the commercial exports amounted to only 105,700,000 pounds' 17 of which 56,800,000 pounds were exported to the West Indies and Central and South American countries and 20 million pounds to Japan where much of this amount is used for reliquification for American troops. It is to be noted that the great bulk of our commercial export markets is confined to the traditional United States export markets of South America, the Philippines, and Japan. Our position regarding imports is not incompatible with our commercial export trade. We are not competing with the major exporters of dry milk products except in areas which are continually short of dairy products and in areas which have been historically our export markets. 15 See appendixes B-I, B-II. B-III, and B-VII. 32604-53 -55 Potentials of American export markets It was requested that we give consideration to the potentials of our export markets; to the possibility of expanding these markets and developing additional export markets for nonfat dry milk solids and dry whole milks. As has been pointed out, our major markets are South America and Central America for dry whole milk and Central America, Japan, and Israeli for nonfat dry milk solids. (a) Dry whole milk.-Our largest single market for dry whole milk, Venezuela, has reduced its purchases from us to a little more than 32,500,000 pounds in 1952 from 43 million pounds in 1950.18 During this same period, Canada increased her sales in Venezuela from 2,100,000 to 7,800.000 pounds." Our loss of sales to Canada undoubtedly was largely due to differences in price. Factors other than price, however, must be considered to understand the overall reduction of imports in this market. Venezuela has a small but growing dairy industry of her own. Although not capable today of supplying sufficient milk for her needs, Venezuela is interested in encouraging the development of her own dairy industry. This may be the reason for her consideration of changing her local production tie-in for duty-free dry milk from 10 units to 5 units of duty-free dry milk prod ucts for each 1 unit of locally produced dry-milk product purchased by the importer. Unless a tie-in is made, dry-milk products are subject to a duty of 0.5 bolivar per gross kilogram or approximatley 7 cents per pound. In Salvador, Honduras, Costa Rica, Ecuador, and Bolivia our exports have either increased or remained reasonably uniform over the past 3 years. In all other countries of Central and South America and the West Indies they have declined. The overall drop in exports into these areas from 1950 is in excess of 15 million pounds.20 Meanwhile Canada, Australia, and New Zealand have shown increases of over 6,400,000 pounds in the same areas. Sweden does not report any shipments into these areas. Detailed data regarding the Netherlands and Denmark are not available." Europe is no longer a market for imports of dry whole milk. Instead, she has become an exporter. Individually, certain European countries still are importing dry whole milk, but these requirements are being supplied by European nations, while in the case of England from the Commonwealth nations. Asia and Africa have both decreased their imports of dry whole milk from the United States markedly from 1950. The largest drops in stable markets were in the Philippine Islands and the Belgian Congo. Export data from foreign exporting countries do not indicate that these markets have been lost to other production. (b) Nonfat dry-milk solids.-The export picture of nonfat dry-milk solids is compl.cated by the large amount of foreign sales through the Commodity Credit Corporation. It is not entirely possible to separate the commercial exports from CCC sales. The total commercial exports are fairly well established; however, the exports to individual areas and countries cannot positively be separated but reasonably close approximations can be made. During 1952 Mexico, Israeli, and Japan were our three major commercial export markets. Each of these markets showed increased purchases of our commercial exports during the period 1950 to 1952; but in the case of Japan the total imports in 1952 were materially lower than 1950 due to heavy importat on of CCC inventory during 1950. On the other hand Israeli imports have increased overall from 1950 to 1952, and appears to be an established commercial export market." The Commodity Credit Corporation programs through UNICEF and direct sales to foreign governments have served to introduce nonfat dry-milk solids in a number of areas. This has resulted in development of substantial commercial markets such as Greece, Israeli, India, and Japan. Certainly a part of the overall increase of commercial exports from 1950 to 1952 must be credited to the CCC program. (e) Potential competition for our export markets.-In considering the potential competition from foreign production in our existing export markets, the production statistics of the major exporting nations are of importance. In 1951, the only year that we have complete information, Denmark, Netherlands, Sweden, Canada, Australia, and New Zealand produced approximately 179,500,000 pounds of dry whole milk and 145,500,000 pounds of nonfat dry-milk 18 See appendix B-VII. 19 See appendix G-III. 20 See appendix B-VII. 21 See appendix G-III. See appendix B-VIII. 23 See appendixes G-I and G-II. 23 solids, or a total of 325,000,000 pounds of dry-milk products. Consumption of dry-milk products for these same countries (except for New Zealand, as data are not available) during 1949 amounted to only 152,000,000 or less than half the 1951 production. 24 Thus, based on the statistics available, it can be seen that the major exporting foreign nations are producing about 50 percent of their production for export. Under these conditions, we can expect competition for our export as well as our domestic markets. So long as there are major price differentials between United States and foreign production, we cannot hope to maintain our old export markets or develop new. RELATIVE IMPORTANCE OF TOTAL VOLUME OF IMPORTS OF DRY-MILK PRODUCTS The total amount of dry-milk products imported is insignificant in comparison with the total amount of dry-milk products produced. In 1952, the year of our largest imports, the 37 million pounds of dry whole milk and the 12,500,000 pounds of dry-buttermilk solids amounted to only 4.95 percent of the total production of all dry products of milk; 0.11 percent of the total amount of milk solids nonfat, and 0.54 percent of the amount of butterfat used in manufactured dairy products during 1951. But when we look at the other side of the picture we note that 37 million pounds of dry whole milk is almost 44 percent of the total production of dry whole milk and the 12,500,000 pounds of drybuttermilk solids represents almost 25 percent of the total dry-buttermilk solids production. From the standpoint of the manufacturer and the producer who are dependent upon the best possible markets for these products, these imports are of serious concern. As shown in table II, the total value of the imported dry-milk products are insignicant when compared to the total export-import trade between the United States and the major importing countries. TABLE II.'-Total dollar value of all imports of dry milk products, 1950-52, from the major importing countries Comparing these dollar values with the total import-export business which these nations do with the United States 28 the amount of dollars which they obtain from these imports is insignificant to the whole. The total poundage and total dollar values are quite small in relation to the same totals for the international trade of an individual country or to the same totals for the world international trade. In fact they are so small that we have difficulty in understanding how they could possibly be a threat to the national economy of any nation or how they could be reasonably used by any country to precipitate problems in foreign relations. We are aware that they have been so used. It is admitted that the import restrictions on the dry products of milk may work a hardship on the individual dairymen in a foreign country, but we hasten to point out that if these products are permitted to come in, they work a hardship on our dairymen and more dairy products will have to be bought under the support program at the expense of the taxpayer in the United States. We do not believe that it is an oversimplification of the problem to state that the question to be resolved is "which dairymen are we going to hurt—our own or those in a foreign country?" 24 See appendix G-IV. 25 See appendix D-I. 28 See appendixes E-I and E-II. Those countries which are now exporting dry-milk products to the United States, and some of these have protested against the restrictions imposed by the United States, have never had a historical market for these products in this country. If complete import restrictions are placed upon all dry products of milk, this country cannot be accused of depriving them of an established market. Admittedly, if complete import restrictions of these dry-milk products are imposed, they will be deprived of the development of a new market in the United States. We have no objections to this country being a new and expanding market for products from foreign lands when needed and wanted. We submit that in the case of the dry products of milk we do not need those of foreign origin as we now are producing enough to satisfy our own domestic economy. CONCLUSION The American Dry Milk Institute respectfully submits that so long as the Government is purchasing nonfat dry-milk solids under the support program and so long as the Government has inventories of nonfat dry-milk solids that these are evidences that there is an adequate production and a sufficient supply of dry-milk products to meet the needs of our domestic requirements. We further submit that the importation of any dry milk product during periods of national sufficiency cause undue hardship upon the dry-milk industry, the farmer-producer and an unwarranted burden on the taxpayer. Therefore, the American Dry Milk Institute respectfully requests this subcommittee to consider the necessity of enacting permanent legislation restricting the importation of any and all dry-milk products when our domestic production is sufficient for domestic needs. In support of our contention we have made the following points which are substantiated by the data presented: 1. Importations of dry-milk products has the same effect on our total dairy supply as the importation of fluid whole milk and at this time such importations are unwarranted and aggravate our domestic economic problems. 2. Importations of dry-milk products diverts a portion of our milk supply to the manufacture of products purchased by the Government under the support program thereby increasing the Government's inventory and placing added burdens on the taxpayer. 3. The elimination of imports of dry-milk products is not incompatible with our commercial export trade. We are not competing with the major exporters of dry-milk products except in areas deficient in dairy products and in areas which have been historically American export markets. 4. The total value of imported dry-milk products is insignificant to the total export-import trade between the United States and the major importing countries. Control of such imports may hurt a small segment of the population of the countries of origin. No controls will hurt the United States dairyman. |