Mr. PIRNIE. Mine is the same as the gentleman's from California. This program as it was launched for the State to participate, particularly, in regard to where a larger percentage of that is by the State. And it does as much good as any other program. So they are maybe penalized for giving enthusiastic support to this program, when at the same time, they are asked to make available funds when there are funds available in the $75 million appropriation. That would be unfortunate if they were to cut back. Then we would find ourselves with expenditures of, we will say, $74 million or less.

Mr. MILLER. This we try to avoid. I will let Mr. Wells answer that, the technical question. This we try to avoid to the best of our ability. Obviously, as stated here before, in many instances we are unable to recapture the money, to reallocate. Yes; I think it is unfortunate. That is something that we attempt to avoid wherever possible.

As stated in the letter to Congressman Roosevelt, there can be no guarantee that any recoupment can be given back because of the administrative problems.

Mr. ROOSEVELT. If it became the policy that you knew you had $76 million or $80 million, then you could make that allocation because you would know that the funds were there.

Mr. WELLS. Let me say this, presently it would be unfortunate if we had to, as I state, discontinue or substantially curtail the school milk program and wound up not spending the $75 million. Yet when you allocate funds to the 48 different State funds and then the States allocate them to schools, each State school lunch director is faced with this same problem within his State of seeing to it certain schools, in effect, hold out or obligate more of the funds while other schools are short.

It is quite true that you get a maximum consumption if you had a program easy to program, but of all of the programs we administer in the Agricultural Marketing Service this is almost the only open-end program that I know of, where you say, "We will reimburse you for each half pint of milk." Actually, we say that is the maximum, not to exceed that on their school lunch funds. They most assuredly have the problem, they must have it in their budget. They don't know how many school lunches they will serve at the beginning of the year, how many surplus commodities they will get. This creates a very difficult administrative problem.

I think we should recognize, as compared to most other Government fiscal programs, this program to date has been one of encouraging increases. And administratively it has been extremely simple. And if you solve the problem this year, then as Mr. Miller pointed out, you have set the stage for a further increase next year and the year after. I think that is the problem Mr. Miller is concerned with, to get out of this present administrative problem. It is a tough administrative problem.

All we can say is that we will do the same and the States will say they will do their best. You then set the stage for a further increase and the year following that.

Mr. PIRNIE. You have some administrative problems in this allocation; and conceivably there will be unused allotments?

Mr. WELLS. As Mr. Miller has pointed out, you solve that problem by setting the stage for an increase the next year and the year after. Mr. PIRNIE. Whether the program should stand on its merits, then you come back to that question, or whether it is simply an agricultural program?

Mr. MILLER. Yes.

Mr. WELLS. We would not spend more than $75 million this year but we would spend more next year and the year after.

Mr. POAGE. Any further questions?

Mr. SHORT. Do I understand this premise correctly that just because Federal funds are not available that the program may not be necessarily curtailed if they run out-it would be up to the State or local school district to provide the funds to carry on the program?

Mr. MILLER. They could do so very readily.

Mr. SHORT. There is no reason why they should not, if it is a desirable program?

Mr. MILLER. No, sir.

Mr. POAGE. Anybody want to answer that question?

Mr. MILLER. I said there is no reason why a State could not participate.

Mr. JOHNSON. With a guarantee that they would be paid for it? Mr. MILLER. Up to the maximum.

Mr. POAGE. Are there any further questions? If not, do I understand that you gentlemen are going to give us some figures showing the cost of the processing and showing just what your processor products cost you?

Mr. WELLS. Yes; we will do our best to do that. I will try to get some distribution costs.

(The information may be found in the table on p. 10.)

Mr. POAGE. Is there anyone else that wants to testify to this bill?
Mr. HEALY. I was scheduled to testify.

Mr. POAGE. Do you want to testify?

Mr. HEALY. Yes, sir. Not necessarily today. I will be glad to come back tomorrow.

Mr. POAGE. We will have to pass this measure sometime soon if it is going to do any good. You have a prepared statement, Mr. Healy. Mr. Murray called my attention to the fact that you have a prepared statement. Would you want to read it?

Mr. HEALY. I would like to talk about it a little bit.

Mr. POAGE. I am going to suggest that Mr. Johnson come back and hold a session this afternoon at 2 o'clock, at which time Mr. Healy will be heard. Permission is granted to insert in the record at this point a statement from Congressman Jeffery Cohelan, and one from Congressman John J. McFall.

(The statements are as follows:)

STATEMENT OF HON. JOHN C. MCFALL, 11TH DISTRICT OF THE STATE OF CALIFORNIA

Mr. Chairman, I appreciate this opportunity to appear today in support of legislation to increase the authorization for use of Commodity Credit funds to encourage consumption of milk by schoolchildren.

If your committee does not take favorable action, I am advised that the school milk program will be cut off in California and other States next month. The school milk program is one of the very best of the many agriculture support programs, particularly as it relates to the health and well-being of children who otherwise would not have the opportunity to obtain an adequate supply of milk.

Most of the schools in the 11th District of California now participate in this program and many have told me of the specific good it does in case after case, particularly in the poorer districts. A side effect is the help the program gives our dairymen.

I am told that participation in the school milk program in California has developed according to the following pattern, which demonstrates its approval and acceptance: 1956, $4,014,284; 1957, $5,412,500; 1958, $5,952,650; 1959, $7,211,352.

According to estimates as recent as 10 days ago it will require some $7,892,289 to carry out the support program in California throughout the balance of the school year, or some $650,000 more than is now available.

I understand that the administration favors holding the national program at the current $75 million annual level this year and again in fiscal 1960. I strongly urge you to act today to approve an $80 million program for both of these years.

Among those who have asked to have their voice heard here today in support of the increased program are: B. W. Gripenstraw, district superintendent, Oakdale Union School District; Virginia Ferguson, Star Route, Hickman; Mrs. John R. Thompson, Roberts Ferry School, Hickman; W. A. Gustafson, secretary, board of trustees, Orestimba Union High School, Newman; Mrs. Hollis Warner, Star Route, Hickman; Forrest L. Brown, district superintendent, Riverbank School District, Riverbank; Ivan Larsen, district superintendent and principal, Patterson Union High School, Patterson.

STATEMENT OF HON. JEFFERY COHELAN, SEVENTH DISTRICT OF THE STATE OF CALIFORNIA, ON BEHALF OF H.R. 5247, FOR ADDITIONAL FUNDS FOR SPECIAL MILK PROGRAM

Mr. Chairman and members of the committee, thank you for giving me a moment to advise of my support of legislation calling for additional funds for the special milk program for the balance of this fiscal year.

The value of this program is shown nowhere to a greater extent than in the State of California. I am very anxious that young people in my State and in all other States have the opportunity to participate in this program. They will not continue to do so, unless new funds are provided.

James N. Fulmor, of the Dairy Industry Advisory Board of the State of California Department of Agriculture, advised me by letter March 12, 1959, as follows:

* * * for maintaining the health of our youngsters, it seems essential that California be allotted the funds needed to complete our moral obligations for the remaining part of the school term."

Mr. Fulmor's office advised that the State department of education estimates that another $680,936 will be needed to carry the California program through June 30, 1959.

On March 13, 1959, Mr. L. A. Maes, of the Alameda County Milk Dealers' Association, advised as follows:

"We understand that present funds would run out May 9, 1959. The amount required to continue the program through June 30, 1959, is $1,110,000. Subsequent to the request for the above amount, a special allocation of $430,000 was made by the Department of Agriculture, reducing the amount required to ap proximately $681,000."

Gentleman, I understand that the legislation before you today would provide additional funds in the amounts referred to in the letters I have cited.

May I very simply urge favorable action on this legislation by your committee. Thank you.

Mr. POAGE. The committee will stand in recess until 2 o'clock this afternoon.

(Whereupon, at 12:15 p.m., the committee recessed, to reconvene at 2 p.m. of the same day.)

AFTERNOON SESSION

Mr. POAGE (presiding). The committee will please come to order Mr. Healy, you have a statement?

Mr. HEALY. Yes, sir.

Mr. POAGE. You may proceed.

STATEMENT OF PATRICK B. HEALY, ASSISTANT SECRETARY, NATIONAL MILK PRODUCERS FEDERATION, ACCOMPANIED BY N. J. POST

Mr. HEALY. I would like to introduce Mr. Post, who will participate with me in this statement, and ask your permission to file the statement which I have and to comment on some of its highlights. Mr. POAGE. Without objection you may have that privilege. (The prepared statement is as follows:)

STATEMENT OF PATRICK B. HEALY, ASSISTANT SECRETARY, NATIONAL MILK PRODUCERS' FEDERATION

Mr. Cooley, members of the committee, my name is Patrick B. Healy. I am the assistant secretary of the National Milk Producers Federation. Our offices are at 1731 I Street NW., Washington, D.C.

The Federation is made up of cooperatives whose membership is dairy farmers. Therefore, the Federation speaks only for producers. At the present time, there are over 800 dairy farmer cooperatives in the Federation with a combined producer-membership of over 500,000 families.

We want to thank you for this opportunity to appear before the committee and support efforts to assure adequate financing for the special milk program for children.

Since its inception in 1954, the program has continually progressed—a real tribute to congressional leadership and cooperation among Federal, State, and local agencies, school officials, and parents. Reference to program statistics shows that the objectives set by the Congress are being realized-more milk is being consumed in schools and in child-care centers and summer camps and, therefore, the acquisition of dairy products by the Commodity Credit Corporation has been directly decreased. This means that more children are getting more milk in school than ever before. It means that costs for purchasing and storing dairy products under the price-support program are lower. It means that more children are developing the habit of including milk in their diet. It means that children, through this program, are improving the nutritional level of their diets. It means that CCC purchases of dairy products will be less, thereby decreasing the depressing effect Government stocks have on producer prices.

During each of the past 3 years the program has shown significant increases in school participation and in milk consumption. This year, the number of schools participating increased 5 percent over last year, which was 7 percent over the year before. The number of one-half pints of milk consumed over this same period went up from 1.9 billion to an estimated 2.1 billion this year, if the current level of program activity continues for the remainder of this year. Program progress and needs can best be shown by the attached table showing, by State, the increase in the number of outlets and the number of one-half pints of milk reimbursed during November 1958 compared with November 1957. How ́ever, any restriction developing in the program now would not only slow its progress this year but would have a negative effect on program operations during

succeeding years. All estimates of participation and plans for increasing program activity by State and local school officials would be modified to the point where program activity could become static with virtually no progress possible. This is contrary to the original objective of the program.

A cutback in progress now because of inadequate financing could mean not only decreased nutritional improvement for children participating, but increased Government purchases and storage of dairy products. The question is, therefore, shall we continue to utilize the proved mechanics of this program to make better nutrition available to a vulnerable segment of our population through this constructive use of our abundance, or should we depend on Government purchase and storage programs?

The fact that the special milk program has made it possible to move this quantity of milk through normal channels of trade and at more favorable producer prices, adds support to the merits of the program. A fuller realization of the significant contribution the program is making toward lessening the amount of Government dairy product purchases, thereby tending to lessen the threat of Government-owned products on the commercial market, is made when we are mindful of three basic facts in the current dairy picture. No. 1-the estimated annual excess milk production over commercial needs is only 3.5 percent. No. 2-it is axiomatic in our industry that some excess production is needed to meet unexpected needs. No. 3-the twice daily harvest of our production and the daily marketing plus the factor of perishability intensifies the adverse effect a small percentage of excess has on the bargaining position of dairy farmers. Dairy farmers are very much aware of this situation just as the purchasers of their raw product are aware of it. It is understandable, therefore, that we would place great emphasis on programs such as the special milk program which has resulted in a broadening of the base of consumption.

Information developed by the U.S. Department of Agriculture from reports of program needs in the various States shows that 38 States will be required to make revisions in their programs this year unless adequate financing is made available. The attached table gives this information by State. The indicated need to maintain the program for the remainder of this year at the level desired by the various States is $3,378,569.

In view of the tremendous strides being made in the program, the momentum generated under the program, the increasing annual school enrollment, from 33.2 million in 1954 to 39.1 million in 1959, and the importance of assurance to school officials that if the program is to continue, it will be adequately financed, we support H.R. 5413, 5414, 5430, 5433, 5487, 5600, and 5613. These bills are designed to accomplish this purpose. We respectfully suggest that the Congress authorize the expenditure of an additional $5 million for the remainder of this fiscal year or a total of $80 million for the entire fiscal year; $85 million for the fiscal year 1960; and $90 million for the fiscal year 1961. We recognize that these are authorizations and their use depends on programs progress. We again want to express our appreciation to the committee for its demonstrated interest in this and other matters of concern to dairy farmers. In their behalf, we thank you.

(The second table referred to above may be found on p. 10.)