DAIRYMEN'S LEAGUE COOPERATIVE ASSOCIATION (INC.), Senator CHARLES L. MCNARY, Senate Office Building, Washington, D. C. MY DEAR SENATOR: You very kindly suggested that, inasmuch as I could not remain for the purpose of appearing on the Federal Farm Board hearing Saturday, November 28, the Dairymen's League Cooperative Association might be permitted to prepare and present to the committee a statement of our position in this matter. This statement was not prepared at that time inasmuch as I had expected to give oral testimony, but I am inclosing herewith such a statement which I hope can still be received by the Senate Agricultural Committee in this matter. Thanking you for your courtesy, I am, very sincerely yours, FRED H. SEXAUER, President. PRESENTMENT TO THE SENATE AGRICULTURAL COMMITTEE, BY FRED H. SEXAUER, PRESIDENT DAIRY MEN'S LEAGUE COOPERATIVE ASSOCIATION (INC.), NEW YORK CITY, N. Y., DECEMBER 3, 1931 The Dairymen's League Cooperative Association is a Capper-Volstead type of cooperative organized under the laws of the State of New York. It has 47,790 members, each under contract with the association. Each member must be a producer and each officer must be a member. The contract provides power to the association to sell, or handle and sell the milk of the members, collect the proceeds of sale, deduct expenses and capital and distribute remainder under pooling arrangement to members. These members are located in the States of New York, Pennsylvania, New Jersey, Connecticut, Massachusetts, and Vermont. The milk of these members is sold in over 100 markets within this territory, including such cities as New York, Newark, Jersey City, etc., in the metropolitan area; and other cities such as Poughkeepsie, Catskill, Kingston, Newburg, Hudson, Albany, Schenectady, Troy, Utica, Oneida, Syracuse, Auburn, Rochester, Jamestown, Geneva, Batavia, Buffalo, Niagara Falls, Tonawanda, Binghamton, Elmira, N. Y.; Scranton, Wilkes-Barre, Erie, Pa.; and many other towns and cities. Over 300 handlers of milk purchase some or all of their supplies from the association. The volume of milk handled or sold from April 1, 1930, to April 1, 1931, was 2,793,866,326 pounds, and the total volume of sales was $80,165,183.60. Distributors and handlers of milk purchase from the organization and milk is delivered direct by members to plants of distributors, at 419 plants. In addition thereto, members deliver to plants of the Dairymen's League Cooperative Association, operated by the association, to the extent of 240 plants. The milk is sold to distributors and handlers for various purposes including fluid delivery to consumers in bottles, for manufacturing into cream and manufacturing into by-products, such as powder, condensed and evaporated milk, butter, and cheese. Such milk as distributors and handlers will not purchase, the Dairymen's League Cooperative Association handles through its own plants and either manufactures it into by-products, sells it to others or distributes through its own distribution agency direct to the consumer. The distribution facilities of the association distribute approximately 6,000 cans of milk and 600 cans of cream per day. The finances for the purchase of the plants, distribution facilities, etc., are furnished by the members in the form of loans which are made through authorized deductions of a percentage of the milk check each month, for which a certificate of indebtedness is issued at the end of the year. When the certificate becomes due it is paid by deductions from the then members, thus rotating the capital under the plan as originated by the Department of Agriculture. Capital as thus provided has amounted to $33,955,353.44, of which $17,980,538.72 has been returned through maturing certificates or retirement of certificates before maturity, leaving a net capital furnished in this way of $15,974,814.72. The organization has operated as the Dairymen's League (Inc.), since 1907, and as the Dairymen's League Cooperative Association (Inc.), since April, 1920. During that period cooperative marketing underwent all the changes from indictment of officers to declaration of favor by the public through enactment of the Federal farm aid act. The above statement is made only that the committee may have some idea of the size of the organization and the problems that confront it. The Dairymen's League Cooperative Association, individually and as a part of the National Cooperative Milk Producers' Federation, definitely went on record prior to the passage of the Federal farm aid act, as follows: [Telegram] APRIL 19, 1929. Hon. JOHN D. CLARKE, Member of House Agricultural Committee, House Office Building, Replying your wire. Our major objection is that bill as written shifts to cooperative associations all of odium that will result from failure of stabilization corporation to do anything that will afford appreciable relief to agriculture. Unjust for Government to shift this burden onto shoulders of cooperatives. Believe stabilization corporation is doomed in advance either to insolvency or to high degree of impotence. Should it become insolvent fact will be broadcast with generous statements that farmers can not manage big business even with assistance of Government. If stabilization corporation operates so as to avoid losses then such operation will not result in any material raise in price level of farm commodities, the most it could do being possibly to cause fluctuations in prices to be little less violent. These objections being to fundamentals of bill, we take it House committee would not consider entire rewriting of bill along materially different lines and even if they should would be inexpedient to attempt to make any suggestions by wire. Our other and less important objection is to provisions for loans to cooperatives. Believe that inadvertently Scrivener has failed to give Farm Board authority to make loans to cooperatives upon security of their present assets. Believe there should be provisions that as far as possible will prevent loans being made or refused because of political influence. Believe there should be express mandate to Farm Board that in making loans preference should be given to cooperatives that do not join in owning and controlling stabilization corporation inasmuch as those who do so join have stabilization corporation that is their marketing agent financed by Government loans. If your committee finds our suggestions as to loans well taken you can undoubtedly easily rewrite these provisions. Judge Miller and Mr. Slocum expect be in Washington Monday and can be reached at Washington Hotel. The law was passed, however, and as the law of the land, has had our hearty support except as to that provision which we from the beginning felt was unworkable. The association was agreeably surprised and pleased with the selection of the men who were appointed to administer the law. In discussing the attitude of the Dairymen's League Cooperative Association toward the Federal farm aid act and the Federal Farm Board it is necessary to analyze how nearly it had in the two years of its operations lived up to what was expected of it. To some of us who have analyzed the act from the standpoint of practical experience in cooperation and marketing there seems to be no question but that it has been of material benefit in many of its operations. Within the limited scope of its powers we believe many of its activities have been as beneficial as could be expected from an act that naturally is not perfect and is administered by able but not superhuman men. This organization pointed out before the act was passed some of the points wherein we thought it to be weak. With the ablest of administration those weaknesses still remain. Theoretically, the act was designed to place the producer of agriculture upon an economic parity with industry. The vehicle for such accomplishment, presumably, was cooperative marketing organizations. To anyone familiar with cooperative marketing, such a theory must have contemplated a long-time program. Therefore, the measure of success that must be placed upon the Federal Farm Board's activities in strengthening cooperatives must be a measure of slow sound building. From this viewpoint we feel the Farm Board has been successful. Three factors enter into its program: Moral support; financial assistance; planning assistance. Moral support.-The recognition, by the Congress of the United States and the President, of the cooperative-marketing movement as a sound economic program and one of definite assistance to agriculture is, without question, of material benefit to any cooperative organization. The particular indorsement, then, of a governmental agency such as the Department of Agriculture or the Federal Farm Board is also of material assistance. The pronouncements made by the heads of such agencies or institutions can not but be of great help in molding men's minds toward the soundness of this movement. No one can successfully deny the fact that the Farm Board has created more widspread, and, except where private privilege has been hurt. more favorable public attitude toward cooperative marketing. Financial assistance.-Banking circles' knowledge regarding cooperatives has been comparatively limited, and there is some evidence of business pressure being brought to bear upon banks to withdraw financial support from cooperatives. This would be considered highly unethical if used against business, other than cooperative. Financial assistance in the form of loan provisions has, without doubt, assisted cooperatives in meeting such pressure. INCREASED AMOUNT OF MONEY RECEIVED BY PRODUCERS OVER WHAT THEY WOULD HAVE RECEIVED HAD THE CONDENSING PRICE GOVERNED FLUID PRICES AS IN 1910-14 00 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 Producer financing of cooperatives has been difficult. This is a mild statement and is obviously true when the 13 years of agriculture's depression are surveyed in comparison to the two years of business depression just past. The commitment of $4,000,000 made to this association has been of assistance, not because a real financial need which could not be met elsewhere has existed up to the present, but the confidence, gained from the knowledge of the availability of that fund at a moment's notice, has strengthened the association's position in the markets to the material benefit of the association's members and, with them, all producers in the area. To the present moment only $450,000 of this commitment has been actually taken, but again let us repeat, its instant availability has had the effect of placing us in a position equivalent to having such a cash position. Planning assistance. The Farm Board to us represents a wonderful planning medium through which agriculture can correlate its efforts, provided too much political pressure does not hamstring its efforts. Much can be accomplished through Farm Board leadership, through educational clearing houses, when and if that part of agriculture represented by proprietary interests is willing to plan with that part representing producers without demanding such control that producers' interests as represented by cooperatives are lost sight of or jeopardized. A case in point is the failure of a dry milk clearing house, which so far as can now be seen, failed to materialize when the proprietary groups found the cooperatives insisting upon an actual control as specified in the Federal farm aid act rather than a nominal control which they, the proprietary group, were willing to grant. The provision for stabilization has not been used in any product with which we are intimately connected. However, we see no reason to change our position from the one adopted in 1929, which was, that we were opposed to stabilization, unless Congress can find some way to provide disposition of the product purchased for stabilization purposes whereby the loss when accruing is absorbed other than through dissipation of the revolving fund or through losses by cooperatives. Without the stabilization provision the benefit of the Farm Board can only have been the indirect benefit that may have occurred through cooperatives it has assisted through building of public good will or financial assistance. If this be a point, then we wish to submit the following graph as a proof of the assistance rendered the Dairymen's League Cooperative Association (Inc.), which, if the premises are correct, shows that as an organization the Dairymen's League Cooperative Association has benefited its members to the extent of over $107,000,000 during the past 11 years and during the years 1929, 1930, and 1931 the benefit has been materially greater than during previous years. The above graph shows very clearly the benefits in dollars of the selling plan of the Dairymen's League Cooperative Association (Inc.). The upper heavy line represents prices paid producers since 1910. The lower heavy line is the Western Condensery price. The dotted line shows what producers would have received had they been paid on the basis of the pre-war, preorganization spread between condensery and fluid prices. Since 1921 the league classified price plan plus pooling of proceeds has maintained an average fluid price level of 482 cents per 100 pounds above the Western Condensery average. This means $107,200,000 added to league producers' checks up to March 31, 1931, and many more millions to other producers, who benefited by the marketing policies of the league. Details of the above by amounts per year are shown in the following schedule: We do not, of course, give to the Federal Farm Board the full credit for this, but we are glad to tender to them through this statement our acknowledgment of appreciation for the assistance they have given. This benefit in terms of average member has been approximately $300 per year, or $3,300 per member during the life of the cooperative. For the record I offer a statement by Mr. Charles W. Holman, secretary of the National Cooperative Milk Producers' Federation, Washington, D. C. THE NATIONAL COOPERATIVE MILK PRODUCERS' FEDERATION, Hon. CHARLES L. MCNARY, Washington, D. C. MY DEAR SENATOR MCNARY: Inasmuch as I am compelled to leave the city to-night, I can not avail myself of your kind invitation to appear before the committee and make an oral statement representing the views of the member organizations comprising the National Cooperative Milk Producers' Federation with respect to agricultural legislation this winter. In lieu thereof I am inclosing a statement for the record of the hearings. Sincerely yours, CHAS. W. HOLMAN, Secretary. STATEMENT OF CHARLES W. HOLMAN, SECRETARY OF THE NATIONAL COOPERATIVE MILK PRODUCERS' FEDERATION The National Cooperative Milk Producers' Federation is now in the sixteenth year of its existence and for more than 10 years has had its national offices at 1731 Eye Street. Its membership as of this date consists of 56 associations and central sales agencies representing subordinate groups comprising every branch of the dairy industry that is cooperatively owned by farmers. All of its member organizations are farmer-owned and farmer-controlled, and either are incorporated under cooperative laws of the respective States in which they operate or they adhere carefully to cooperative business practices under the rigid control of their by-laws. These member organizations to-day market all of the milk and the dairy products of approximately 360,000 farm families. Following is a list of the member organizations of the federation and their office addresses: Berrien County Milk Producers' Association, Benton Harbor, Mich. Cedar Rapids Cooperative Dairy Company, Cedar Rapids, Iowa. Challenge Cream and Butter Association, Los Angeles, Calif. Champaign County Milk Producers, Champaign, Ill. Chicago Equity Union Exchange, Chicago, Ill. Connecticut Milk Producers Association, Hartford, Conn. Cooperative Milk Producers Association for San Francisco, San Francisco, Calif. Cooperative Pure Milk Association of Cincinnati, Cincinnati, Ohio. Dairymen's Cooperative Creamery of Boise Valley, Caldwell, Idaho. Dairymen's League Cooperative Association (Inc.), New York, N. Y. Grays Harbor Dairymen's Association, Satsop, Wash. Illinois Milk Producers' Association, Peoria, Ill. Indiana Dairy Marketing Association, Muncie, Ind. Inland Empire Dairy Producers' Association, Spokane, Wash. Inter-State Milk Producers' Association (Inc), Philadelphia, Pa. Land O' Lakes Creameries (Inc.), Minneapolis, Minn. Lewis-Pacific Dairymen's Association, Chehalis, Wash. Lower Columbia Cooperative Dairy Association, Astoria, Oreg. McLean County Milk Producers' Association, Bloomington, Ill. Maryland and Virginia Milk Producers' Association, Washington, D. C. Maryland State Dairymen's Association, Baltimore, Md. Miami Valley Cooperative Milk Producers' Association, Dayton, Ohio. |