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CCC and section 32 purchases of dairy products by program years, since Apr. 1, 1951

[In millions of pounds)

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1 Purchase contracts in large containers plus scheduled deliveries in small containers in each period.

2 Excludes 5,200,000 pounds of butter and 86,700,000 pounds of cheese purchased in March and contracted for resale back to the sellers in April.

3 Deliveries.
+ Partly forecast.
3 The decrease from 1962-63 is mainly

accounted for by increased exports directly from commercial stocks under the payment-in-kind program. Such exports are estimated at 220,000,000 pounds in 1963-64 compared with 24,200,000 pounds in 1962-63.

Net Government expenditures on dairy price support and related programs by fiscal

years, beginning July 1, 1951

[In millions of dollars)

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CCC purchase and other costs (processing, repackaging, transportation, storage, and handling), less proceeds from sales (including sales to sec. 32).

: CCC reimbursements to military agencies, Veterans' Administration and other participants.
3 Amount of payment-in-kind certificates issued by CCC on exports of nonfat dry milk.
* Sec. 32 expenditures for purchases from CCC and direct purchases in the market.
NOTE.—Excludes Government costs of activities under titles I and II of Public Law 480.

Support levels and prices of manufacturing milk and butterfat under the milk and

butterfat price-support program, beginning Apr. 1, 1951

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1 Except as noted the figures listed are the actual percentages of the parity or parity equivalent prices published near the end of March before the beginning of the marketing year. In some cases the announced percentages, based on forward estimates of parity, were slightly different.

: For 1951 through 1961-62 the average prices indicated are for manufacturing milk (the 3-product series). Beginning in 1962-63 the average price indicated is for manufacturing-grade milk. * Price increased effective Apr. 18, 1956. * Price effective Apr. 1-Sept. 16, 1960.

Price effective Sept. 17, 1960-Mar. 9, 1961. • Price effective Mar. 10, 1961. 7 11-month average of adjusted prices. • 11-month average.

Secretary FREEMAN. The permanent legislation, which is on the books, has been there for a long time and calls for at least 75 percent of parity supports on dairy commodities based on the manufactured milk price, which is about $3.14. This is the minimum level and continues.

During the last year, and the figures can be put in the record, the amount of carryover in butter, in cheese, and dry milk, has been substantially reduced. It has been reduced because, first, production was down about 1 percent, primarily in my judgment, because of a very heavy drought year.

Second, because of both commercial and concessional sales, we sold 90 million pounds of butter, for example, mainly to Western Europe, because of the drought conditions over there, which was quite unusual, and moved over 170 million more pounds of butter products under Public Law 480. So our stocks have been significantly Iessened, but the problem of overproduction in dairy, in my judgment, continues.

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Dairy products: Total utilization of price-support purchases in domestic and foreign outlets, and stocks, 1950–63 1

[In millions of pounds]

153.9 43.4

27.5

90.1 28.1

160.1 152.7

128. 2 96.7

143.2 222.8

131.2 10.9

Utilization:

Domestic
Foreign-

Total.
Uncommitted stocks.

27.5

197.3
27.3

366.0

224. 9

118.2
256.8

312.8
263.7

208.1

? 142.4

31.1

16.1

60.1

46.2
80.4

Utilization:

Domestic
Foreign-

Total.
Uncommitted stocks.

Total
Uncommitted stocks

318.2
202.7

206.2
50.1

61.4
40.2

195.8
431.8

985. 2
97.2

1 Data based on contracts executed. Does not include purchases specifically for sec.
32 but includes transfers from CCC to sec. 32 account.

2 Total is less than sum of individual items due to inventory reduction, including claims
actions, rejections, and returns to sellers.

3 Includes 69,600,000 pounds of uncommitted butter in the form of packaged butter, butter oil, and ghee, 1962; 17,000,000 pounds, 1963.

· Excludes payment-in-kind exports for 1962 and 1963.

In terms of correcting

it, the recommendations made by the President are at this status. The pay excess plan which you know is a proposal which would no longer permit the blending of class 1 and class 2 price which encourages more production, but which would continue for the producer his share in the given milk order of the class 1 milk, and he would be paid for it at the class 1 price and would be paid at a class 2 price for additional production, thereby discouraging additional production which is stimulated when he is permitted to blend these prices.

This base excess plan has passed the Senate and is pending before the House committee. In the Senate, a proposal to apply the payments system to reduce production was brought up on the floor by Senator McCarthy from Minnesota and did not pass.

That same proposal is pending before the House committee and has not been acted upon. It would apply particularly to the manufacturing milk areas and would envisage payments to farmers who held or reduced their production, based upon the volume of their production. This legislation, therefore, is pending and it has not been active recently because the attention is focused more directly in both the House and Senate on cotton and wheat in the past few weeks.

BUDGETARY CONSIDERATIONS

Mr. WHITTEN. Following up the points Mr. Michel has made with regard to other commodities, is your budget recommendations based on proposed change in the legislation?

Secretary FREEMAN. They are based on the assumptions that this would pass and a reduction in the amount involved in the dairy program of $30 million.

Mr. WHITTEN. Now, in the event that legislation should not pass prior to our actions, do you and the President intend to send us a budget estimate down to make adjustments? Or if we finance these programs without new legislation, will we have to exceed the budget ?

Secretary FREEMAN. In this instance, I think this committee in its wisdom has recognized it is pretty hard to "cross the t's and dot the i’s" in terms of these commodity programs where we are in a position that the Secretary of Agriculture has to maintain the prices at this given level and the chairman well knows through the Commodity Credit Corporation and as such, this estimate is made for budget purposes, but there are wide variations which are not within my control.

Mr. WHITTEN. I point out again that the law requires you to support commodities under certain conditions. Another law says if you do it without money you are in trouble. So I would presume that the Congress would bail you out of the difficulty if the Corporation began to run short of funds.

Secretary FREEMAN. I think you probably would be able to do more than that, Mr. Chairman.

Mr. WHITTEN. We on this committee could come near doing it if we had a budget estimate to match it against. But we will cross that bridge when we get to it.

Turning now to the next problem area, we are developing these problems fairly well by questions and I am giving you a chance to supply full information.

I couldn't help but think that your prepared statement, where you didn't touch on any of these problems, reminds me of the fellow with all these problems who thought if you just ignored them, they might go away.

So I couldn't help but think in your prepared statement, these problems are so very serious, maybe you thought if we just ignored them they might go away, but we are filling it in now.

Secretary FREEMAN. Mr. Chairman, you have been needling me quite consistently about my prepared statement. I am sorry you don't think more of it. Might I say

Mr. WHITTEN. I think it is very good insofar as it goes. But it is a mighty short road.

Secretary FREEMAN. May I say I would like the record to show, and the chairman's points have been very appropriate, that this committee and those people who are concerned with agriculture are well aware of these problem areas in these commodities. But in the changes that are taking place in agriculture, the solutions are not exclusively to be found around these commodities but also in the other areas—trying to bring about a reallocation of our resources in rural America, and to alleviate poverty. These are new and pioneering efforts and I know of this committee's interest in them. I am very grateful of your support and tolerance in connection with them, and I felt that you would be interested in a full report on them. I was sure that the other items could be dealt with more accurately, and with a saving of your time, because you know so much about them anyway, by asking questions to refresh your memory and to bring you up to date, that we could expedite the important work of this committee.

Mr. WHITTEN. Thank you, Mr. Secretary. I think that your answer is certainly appropriate and, I am sure, correct.

SUGAR PROGRAMS

Now, the next problem that the President in his formal message pointed out related to sugar, and I quote from the message:

The rise in sugar prices in 1963 reflected a reduction in world supplies. The Cuban crop was about one-half the pre-Castro level. Europe had two poor sugarbeet crops. But the fears voiced last year that the United States would be unable to obtain sufficient sugar proved groundless. Action by the Department of Agriculture assured sugar users an adequate supply and helped halt the price increases that attended heavy buying in anticipation of shortages.

However, the experience of the past year-and the fact that foreign sugar quotas expire at the end of 1964-highlight the need for some action at this session of Congress to assure ample supplies of sugar to consumers at fair prices.

I recommend the removal of marketing restrictions on the sale of domestically produced sugar during the calendar year 1964. This legislation will relieve the pressure on world market supplies at a time when these supplies are short.

The effectiveness of our present arrangements for foreign sugar procurement are under intensive study. On the basis of this study I shall-early in this session-make recommendations for remedial legislation.

Apparently the recommended legislation has not yet come down
Secretary FREEMAN. That is right.

Mr. WHITTEN. I think it well at this point in the record that you trace the history of the sugar situation, the law, and how it was carried out, and what changes the Castro situation and Cuba has brought about. We want the record to show the information that led the President to believe the statements that are here.

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