October 9, 1963
Page 19109
Mr. McCARTHY. . . .
The committee bill is enabling legislation; it is not mandatory. There would be no compulsion except that compulsion which is accepted by two-thirds of the members of any marketing order who decide to impose that kind of limitation upon themselves.
In the same way, the amendment which I propose is in no way compulsory. No individual member would be bound by the vote of any other percentage or any other number of dairy producers -- neither two-thirds nor 50 percent nor 90 percent. Each dairy farmer who might participate under the program provided by my amendment to the bill would be acting solely on his own initiative.
I should like to note the need of dairy producers who are outside marketing orders today.
The most serious limitation in the committee bill is that it provides direct benefits only for producers in Federal order markets. They are a minority of the Nation's producers. As I stated earlier, some 187,000 producers sell in the 83 Federal order markets, but another 600,000 or more dairy producers market outside Federal orders, and these dairymen market more than 50 percent of the milk produced in the Nation. If we were to establish an order of priorities, we should take care of those who are outside marketing orders, who have nothing available to them in the way of protection except the 75-percent support which is in the basic law.
This production goes largely for manufacturing purposes. It does not generally bring the premium prices which are guaranteed in Federal order markets for class I sales for fluid use. The price of manufacturing milk in many areas is that of the minimum price support for this type of milk, which is currently $3.14 a hundred pounds.
I do not believe we should be content with a bill which ignores the welfare of the majority of dairy farmers.
Mr. President, the situation is similar to that which existed in the case of feed grains before Congress enacted the Emergency Feed Grains Act in 1961. The immediate need is for a program to reduce the surplus which undermines the market and to restore some degree of balance to the dairy market. At the same time, there is a need to raise the income of dairy farmers.
The amendment which we propose would provide a program of incentive payments to reduce the surplus and, at the same time, improve the net income of dairy farmers.
The amendment provides for two kinds of surplus reduction payments:
First, producers in Federal order markets who agree to cut back production 10 percent or more would be paid reduction payments of up to $2.50 a hundred pounds on the amount they reduced their marketings. This provision would provide an incentive to make the committee proposal effective. Producers could retain their share of the class I sales, and receive the price agreed upon under the marketing order, and they would be assisted in making the adjustment in cutting their "excess" production, which goes for manufacturing usage.
Second, producers outside Federal market orders would be given production payments of up to 50 cents a hundred pounds on the manufacturing milk they marketed if they agreed not to expand production.
Mr. MUSKIE. Mr. President, will the Senator from Minnesota yield?
Mr. McCARTHY. I yield.
Mr. MUSKIE. As I understand the Senator's amendment, it is directed, in part, to criticism which the Senator makes of the Proxmire bill, in that the Proxmire bill affects only dairy producers who are under Federal marketing orders. Is that correct?
Mr. McCARTHY. That is correct.
Mr. MUSKIE. How many producers are under Federal marketing orders?
Mr. McCARTHY. In the 83 marketing orders now in existence, there are about 187,000 separate dairy producers.
Mr. MUSKIE. Mr. President, will the Senator from Minnesota yield?
The PRESIDING OFFICER (Mr. DOUGLAS in the chair). Does the Senator from Minnesota yield to the Senator from Maine?
Mr. McCARTHY. I yield.
Mr. MUSKIE. I am interested in asking my next question for this reason: The dairy farmers of Maine sell under two different arrangements; under State law there is a Maine price-control feature and dairy farmers who sell under the Maine law have the advantage of the higher price on the market than do the Maine dairy farmers who sell on the socalled Boston market or under a blended price. So I am interested in any amendment -- and I believe the amendment of the Senator from Minnesota is such an amendment-which would improve the lot of both groups of farmers-those who sell in the Boston market under the Federal marketing order and those who sell in Maine under State law. Therefore, I wish to know whether the amendment of the Senator from Minnesota would be of any benefit to Maine dairy farmers who are not selling under the Federal marketing order; and if so, why?
Mr. McCARTHY. I do not know the percentage of milk that is marketed under Maine law and sold as fluid milk; but about 42 percent of milk produced in Maine is marketed under the Federal marketing order. In addition, there is some measure of protection given under the State law; and this would mean that about 60 percent of the milk production in Maine could benefit from my amendment. It is possible that the 42 percent marketed in Federal orders would be eligible for some kind of benefits under the committee bill, although those producers might not respond to it. We believe the bill would put many of them in a position in which they would be hard pressed to decide whether to participate in the referendum and agree to the limitation or not, especially in the absence of the provisions in my amendment, which would provide for a $2.50 reduction payment in addition to the provisions of the committee bill.
Mr. MUSKIE. I have not had a great deal of reaction from Maine dairy farmers on either the bill of the Senator from Wisconsin or the amendment of the Senator from Minnesota, but such reaction as I have had has been favorable to the amendment, and -- I say with all due respect to the distinguished Senator from Wisconsin-rather indifferent to his bill. This is why I am interested in having the Senator pinpoint the distinction between the two.
Mr. McCARTHY. It is my judgment that it would be difficult for participants in the Federal marketing orders in almost all areas of the country to weigh the possible advantages or the possible disadvantages of the referendum being proposed to them. In view of the rejection by the wheat farmers, in their referendum, of the plan offered to themalthough I thought the evidence rather clearly argued for its acceptance in the referendum, in view of the evident advantages -- it is my judgment that in many of the marketing order areas the choice would be such a difficult one that the disposition would be to say: "Let us not bother with the referendum. Let us go on producing as we have been, for the blended price."
The purpose of our amendment is to provide an incentive for cutting production. This would be true in the case of those producing under Federal marketing orders. The amendment provides surplus reduction payments to assist them. The committee bill does provide some incentive for reduction in the marketing order areas, but the amount would depend upon the price determination; and the decision would be a very difficult one to make, I believe.
In addition to the effect on production for sale outside the marketing order areas, my amendment provides two other incentives: One is an incentive to hold the line, and not expand production; the other is an additional payment to those who reduce their production to 95 percent of their historic base.
Mr. MUSKIE. As I understand, both groups of dairy farmers in Maine would be provided with an incentive of some kind, under his proposal, to cut production or at least to hold the line.
Mr. McCARTHY. That is correct. Under the committee bill, if two-thirds of the dairymen producing under the Federal marketing order agreed to allocate the class I share of the market, this restriction would be imposed upon the other one-third.
But outside of that, those who are interested in participating under the program provided by my amendment would find no compulsion of any kind. If a dairyman wished to expand his production or if a newcomer wished to go into the dairy industry, he could do so freely, and he would receive only the present price support, which is 75 percent of parity. If, however, a current producer agreed to maintain his present level of production, the amendment would give him an incentive payment of 20 cents per hundred pounds for manufacturing milk simply because he held the line; and if he agreed to produce only 95 percent of his base, he would be paid surplus reduction payments of approximately 40 cents a hundred.
Mr. MUSKIE. I thank the Senator from Minnesota for his explanation.
From the point of view of the taxpayers, I understand that the result of the Senator's amendment would be to cut the current surpluses of milk, to reduce the cost to the Government, and to increase the net increase of dairy producers. Is this a fair evaluation?
Mr. McCARTHY. It should be the objective of both the committee bill and of my amendment to the committee bill. The estimates are that under the committee bill the costs would be reduced approximately $26 million or $27 million, on an annual basis.
Mr. PROXMIRE. The first year.
Mr. McCARTHY. That would accompany an increase of approximately $7 million a year in dairy income. The estimates are that the committee bill and my amendment would reduce the Government's cost approximately $37 million a year, and the net income of the dairy farmers, both those under the marketing orders and those outside the marketing orders, probably would be increased by $150 million.
Mr. PROXMIRE. Mr. President, will the Senator from Minnesota yield?
The PRESIDING OFFICER (Mr. HART in the chair). Does the Senator from Minnesota yield to the Senator from Wisconsin.
Mr. McCARTHY. I yield.
Mr. PROXMIRE. Mr. President, I should like to comment on the remarks of both the Senator from Minnesota [Mr. McCARTHY] and the Senator from Maine [Mr. MUSKIE].
In the first place, I stress the point that under the committee bill there will be no loss. Under my bill, if those in the marketing orders do not want them, they will be in the same position as the one they are in now, for they do not have to approve allotments. They will have a choice, whereas at present they do not have one. Representations have been made to me from every section of the country-from New England, from the Northwest, from the South, the Middle West, and the East-by dairy farmer representatives who insist that their farmers are enthusiastic in wanting the committee bill. only an hour ago, I heard from a gentleman in New York who told me that on the basis of the study made by the Grange, they found that an overwhelming majority of the dairy farmers want the bill the committee is reporting. On that basis, if they really want this bill -- and those representatives know their farmers quite well -- the chances are they will vote for allotments in the referendum, and that will be bound to help the dairy farmers who are not in the marketing order areas, and it will be bound to have the effect of reducing the production of excess milk. Therefore, it is sure to help the farmers in Maine who are producing manufacturing milk, because they are in competition with those in marketing order areas who produce the excess milk, and they are bound to be benefited. Any substantial reduction in the production of manufacturing milk will improve the price. The ones who have registered their position are the ones who under the marketing orders would be directly and immediately affected.
I support the amendment of the Senator from Minnesota [Mr. McCARTHY]. I believe it is a good amendment. However, I wish to emphasize my belief that there is merit in the committee bill; and if the McCarthy amendment is not adopted, I believe there will still be sufficient merit in the bill to recommend its approval.
Mr. MUSKIE. As I understand the difference, the McCarthy amendment would add to the bill some additional incentives.
Mr. PROXMIRE. That is correct. There is now an incentive, under the bill; but the Senator from Minnesota makes an excellent case for his point that there are no direct incentives for all dairy farmers to reduce their production. There is an incentive for farmers who produce 50 percent of the Nation's milk to reduce Production but not for all dairy farmers in a State to reduce. The amendment of the Senator from Minnesota provides that incentive.
Mr. MUSKIE. In Maine the division as between dairy farmers who sell under the Maine law and those who sell under the Boston law on the Federal level is such that the first group has had greater influence over the years with respect to the Maine law than the second group has had. The first group is a little larger than the second.
I am interested in knowing the extent to which the Senator from Wisconsin has heard from dairy farmers outside the Federal marketing orders -- from Maine, New England, or other areas of the country -- and what their reaction has been.
Mr. PROXMIRE. The vast majority of farmers in both Minnesota and Wisconsin are outside the marketing order. Their position has been one of very strong support for the McCarthy amendment. That is what they are interested in. By and large, they are not particularly interested in the committee bill, because those farmers would not be directly and immediately affected by it. Most farmers in Wisconsin who are in marketing order areas are very enthusiastic about the bill. I believe that if the situation were explained to the other farmers, they would be enthusiastic for both bills. I think they would benefit indirectly.
Mr. MUSKIE. I appreciate the enlightenment which both of my distinguished colleagues have given me on these measures.
Mr. McCARTHY. Mr. President, under the terms of the amendment which we are proposing, producers outside the Federal market orders would be given production payments of up to 50 cents per hundred on the manufacturing milk they marketed if they agreed not to expand production. The amendment also provides that the Secretary could establish different levels of payments. He could make one level of Payments at 20 cents per hundred for those who hold the line and do not expand their marketings of manufacturing milk, and he could offer a higher level -- 40 cents per hundred-for those who agreed to cut back by 5 percent.
Under the amendment both types of payments would be for a limited period, until April 1, 1965. The program would be entirely voluntary. Each farmer could choose to enter or not. It would involve no referendums. As I indicated, no farmer would be compelled to respond to the program by virtue of a vote of two-thirds of his fellow dairy farmers, 50 percent of them, 30 percent, or 99 percent, but each would make his own decision. Anyone who wished to go into the dairy industry or to expand his present operation could do so and receive price supports under existing law.
The Department of Agriculture in its views and estimates, said:
At the same time, should legislation provide only for class I base plans in Federal orders, the results would be so limited that neither the necessary reduction in total national milk production nor the muchneeded improvement In total dairy income would be achieved.
The Department has also reported on the bill which I introduced -- S. 1961. If the amendment we intend to offer were adopted, the program would then be the same as provided in this bill.
The Department has given its approval to this bill. In the report Secretary Freeman stated that the passage of my bill would –
First, increase the income of dairy farmers; second, reduce Government costs; and, third, reduce Government stocks of surplus dairy products.
It could be added that it would not have the immediate effect of raising prices to consumers in any way. It could be anticipated that it would have the effect of reducing the cost of dairy products to the consumer. The Secretary said that it could also lead to improvement in the performance of milk marketing orders by reducing the incentive to market milk in excess of the quantities needed for fluid purposes.
Thus, passage of S. 1961 would be a decided improvement over the present situation.