"Mr. STALBAUM. Which is a billion half pints.

"Mr. SMITH. A third is a billion, or about 500 million pounds.

"Mr. STALBAUM. In other words, you believe that this would reduce the consumption of milk in the schools about a billion half pints?

"Mr. SMITH. That is about the best calculation of the analysts that have dug into it, Congressman.'

A loss of sales of 500 million pounds of fluid milk by the American dairy farmers is a substantial loss. More serious, however, is the nutritive loss incurred by American children who do not consume that one-half a billion pounds of milk which they had previously been doing.

The United States already ranks 16th in per capita of consumption in dairy products among the 17 major milk producing countries. Only the people of Italy use less. Why now should we turn toward a method of reducing this consumption further? Those who have followed the School Milk Program are well aware of the benefits it has brought. This milk has been good for the children. It has given them nutrition without stigma, and insofar as they were willing to participate, has made them healthier Americans.

Most serious, however, is the change which some have contemplated in the School Milk Program so that Federal funds will be used only to provide milk for the needy, with others paying the full costs of any milk that they would be obliged to consume. This raises a host of questions, particularly as to the determination of those who would be needy, and, therefore, eligible. The only conclusion one can finally reach is that this decision, if it is to be at all objective. can only be determined through a means test of some sort. As one observer succintly stated, "Children would be forced to swallow their pride before they would be able to swallow any milk."

Seriously, I ask each of the Members of this Committee to ponder for a moment, if they were a school administrator, a teacher, or a counsellor, how they would impose this type of means test. Would they try to guess at which children came from poor families? Would they quietly call each one into their office and ask some embarassing questions? Would they ask each child to stand up in the classroom and raise his or her hand if the parents had an income under a certain specified amount? Would whatever procedure is followed have to be held accountable to the officials from Washington? And this last question as to the accountability puts in sharp perspective the contrast between what is now proposed and what we have had operating since 1954.

The surest way to avoid the problems which would be involved in a change to a means test is to make the existing School Milk Program a permanent one, as is proposed in the bill before the Committee today.

The present School Milk Program is about as free of red tape as any such program could hope to be. There is no arbitrary imposition on the children of a dietary requirement. There are also no restrictions on the schools as to whether the milk is served as a mid-morning snack, an afternoon lunch, or if it is as an added available item with the noon hot lunch served under the School Lunch Program. No tests are required of the children as to their ability to pay. If they wish to participate, they merely bring in their few pennies and pay the difference between the school cost of the milk and that portion which is paid by government subsidy. Each school, is, therefore, free to make its own determination as to how it wishes to participate in the program. Each child is free to determine if he or she wants to participate in the program.

And from this rather relaxed approach, we have developed a method of encouraging our school children to drink three billion half pints of milk a year, which perhaps otherwise would not have been consumed at all.

The Washington Post summed up this matter well in an editorial printed on February 4: "The milk and the lunches served a better purpose all these years than merely keeping up farm prices. They were good for children, and the children continued to need them. *** There is a category of subsidies, in which the unit costs are low and the benefits broad, which are properly distributed without a means test. This country can afford to encourage nourishing diets for its school children, even in a year when dairy prices no longer require that support.'

Problems arise in the administration of programs of this type when there is no assurance of continuity. School administrators have expressed to me their concern over the purchase of capital equipment for the School Milk Program if there is a possibility that it could be discontinued.

Mr. Chairman, the School Milk Program because of its success has gained almost universal acceptance. Its benefits are great: and to change, eliminate,

or modify the Program would void the advantages which are being enjoyed by our school children today. Therefore, I support the legislation before you to make the School Milk Program a permanent one, with Federal financing continued at the same per-unit level as provided in the past.

STATEMENT OF JOHN C. YORK, EXECUTIVE SECRETARY, EASTERN MILK
PRODUCERS COOPERATIVE ASSOCIATION, SYRACUSE, N.Y.

My name is John C. York, I am the Executive Secretary of Eastern Milk Producers Cooperative Association, Inc., whose offices are located in Syracuse, New York. The mailing address is Kinne Road, Syracuse, New York, 13214. Our Association is a milk producers bargaining cooperative with a total membership of 10,000 dairymen, whose farms are situated throughout the northeast. The milk of our member-farmers is sold in numerous areas of that section of the country, and particularly in the New York-New Jersey market. We have a vital interest in the continued operation of the children's milk program, and we strongly support the enactment of S. 2921.

The President's budget, which is now pending in the Congress, proposes a reduction of new obligational authority for the milk program from a level of $103 million this fiscal year to $21 million for fiscal 1967. This budgetary cut in the school milk program could result in losses to producers of approximately $4 million in supplying milk under the Massachusetts-Rhode Island Order #1; a loss of $9 million to producers supplying milk under the New York-New Jersey Order #2; and $2 million to producers supplying milk under the Delaware Valley Order #4. Dairymen cannot experience any further cost price squeeze. The present unfavorable prices to dairymen are forcing substantial reductions in milk production and wide spread auctions of dairy farms.

While we recognize that S. 2921 is not an appropriation bill, yet its introduction has been occasioned by the proposed budgetary action. By the same token, the enactment of S. 2921 would, once and for all, settle the question of the level of appropriations for the children's milk program. S. 2921 would authorize an appropriation of not less than $110 million for fiscal 1967, not less than $115 million for fiscal 1968, and $120 million for each succeeding fiscal year thereafter. This Committee is of course fully aware of the proposed budgetary action, and of the storm of protest and anguish which the proposed cut has engendered not only among dairy farmers, but even more so among school officials, schoolchildren, and citizens from every walk of life. The pages of the Congressional Record echo the voices which have been raised in every corner of the land.

Milk producers supplying the New York City area have had a quarter of a century of experience with the Federally-sponsored children's milk program. A program of this type was first introduced in New York City in 1940 and was known as the "School Milk Program", and more popularly, as the "Penny Milk Program". Children in schools paid one cent for a half-pint of milk. The Federal payment which made this possible, came from funds appropriated by Section 32. From New York City the program spread to other sections of the country but it was suspended during the period of World War II.

The Children's Milk Program now in operation was authorized by the Agricultural Act of 1954. Through this enactment, the Congress gave permanence to the plan. To distinguish this program from the earlier 1940 program, the Department of Agriculture gave it the name of "Special Milk Program".

The importance which the Congress placed on Federal assistance to increasing the consumption of milk by children of school age is indicated in its declaration of policy in the Agricultural Act of 1954. The Congress stated: "The production and use of abundant supplies of high quality milk and dairy products are essential to the health and general welfare of the Nation".

The Agricultural Act of 1954 provided that the children's milk program be financed from funds of the Commodity Credit Corporation. This was changed by the Agricultural Act of 1961, which provided that the program be financed by regular appropriations, and authorized the appropriation of "such sums as may be necessary to enable the Secretary of Agriculture. . . to encourage consumption of fluid milk by children in the United States."

Aside from this historical background, there are a few facts which we feel need re-emphasizing for the record:

(1) For the calendar year 1965, the estimated distribution of milk under the Special School Milk Program was 3,093 million half-pints. This is equivalent to 1.66 billion pounds of milk.

(2) The total consumption of fluid milk in the United States for 1965 is estimated at 60 billion pounds.

(3) On that basis, the school milk distribution represents 2.8 percent of the total.

(4) The average U.S. price for January 1966 for milk for fluid consumption is estimated at $5.57 per hundredweight. The average price of milk for manufacturing grades was $3.58 per hundredweight. The difference was $1.99. This difference of $1.99 represents the loss to dairy farmers when milk is shifted from fluid consumption to manufacturing uses.

(5) Unless the milk program is continued on the existing basis, the loss in income to dairy farmers would amount to approximately $26 million.

(6) None of the computations above make any allowance for the possibility that some school children, when denied milk at Government subsidized prices, would drink milk bought at regular prices.

(7) About 37 million children are enrolled in schools and institutions where the special milk program is in operation.

In spite of all the talk about a shortage of dairy products this year, the fact is that the contrary is true, and that before the year is out, there will be a surplus of dairy products. The United States Department of Agriculture will then find it necessary to enter the market and buy up the surplus consisting of Cheddar cheese, butter and skim milk powder-under the price-support program.

Purchases of dairy products by the Department of Agriculture during 1965 under the support program, amounted to, on a milk fat basis, 5.6 percent of total production, and, on a solids-not-fat basis, 10.6 percent.

Total milk production in the United States this year is expected to be only 2 percent below 1965. Accordingly, the surplus which the Department of Agriculture will have to buy under the price support program will still be around 3 percent of production, on a milk fat basis, and 9 percent on a solids-not-fat basis. The conclusion to be drawn from this is that any reduction in the consumption of fluid milk by school children will lead eventually to higher purchases of manufactured dairy products, at a cost of about $4.50 per hundredweight of milk equivalent. Accordingly, the government may gain very little by cutting back on the children's milk program.

For the dairy industry, however, the reduction in the scale of operation of the children's milk program will prove to be an unsettling factor in the fluid markets. The Department of Agriculture itself has in the past given voice to this factor. In a publication issued in June, 1965, entitled "Milk and Milk Products in the Nation's Schools", the writers said: "The marketing of increasing quantities of milk through schools has contributed to stabilization of the fluid milk market during the past decade.. The fluid whole milk consumed during 1962 in all schools, public and private, at noon or other times, was valued at $312 million".

As a final word, we call the Committee's attention to the following statement made by Secretary of Agriculture Freeman on June 1, 1965, on the occasion of the beginning of the month of June as Dairy Month: "The Special Milk Program is another instance of expanding a market for milk by pricing it within the range of most children. Over 3 billion half-pints of milk will have been served under this program by the close of the current school year *** yet, good as the school records are, they are not good enough."

Yes, they were not and are not good enough. That is why we favor the enactment of S. 2921, and urge that this Committee report the bill out favorably. I should like to thank you, Mr. Chairman, for permitting me to come here and express our views.