Hot Buttered Trouble

Stacked carton upon carton in cold U.S. warehouses is enough surplus butter (261 million Ibs.) to spread 16,704,000,000 slices of toast, or to butter 8,352,000,000 hot rums.* With more surplus rolling in at the rate of 7,000,000 Ibs. a week, President Eisenhower last week publicly expressed what his agricultural experts have been saying privately for months: something has to be done about butter.

In the Department of Agriculture, specialists have been working overtime on plans for melting the surplus out of the warehouses and onto the toast. Among the possibilities is a "Rexall" or 1-c- sale, in which surplus butter would be sold to consumers for 1-c- a Ib. if they bought a pound or two of newly produced butter at the regular price. Another possibility is a Brannan-like direct-subsidy plan, under which butter would find its price level in the market, and the Government would pay dairymen the difference between that price and a predetermined parity level. Still another: the old New Deal food stamp plan, to distribute the surplus to needy families at a cut rate.

"Blending" the Price. But the plan that was running ahead of all others last week called for a "blended" price. The Government would sell the surplus to dealers at a cut rate (possibly as low as 1-c- a Ib.) and permit them to sell it and newly produced butter to the public at an average price. Thus, if the wholesale price of butter stayed at the present 67-c- a Ib. and the Government let dealers have the surplus at 1-c-, the retail price for all butter would be the average--34-c- a Ib.--plus distribution costs.

The blended price plan, which has ranked high at the Agriculture Department for several weeks, got a new boost last week when representatives of the National Milk Producers Federation called on President Eisenhower to adopt it. The milkmen were escorted by none other than Vermont's Senator George Aiken, chairman of the Senate Agriculture Committee. The blend plan, like each of the others, has its opponents. Among them: some big buttermen, who think that it might permanently undermine the butter price structure.

After last month's furor about whether surplus butter should be sold to Russia (TIME, Jan. 25), official Washington realizes that bargain butter will have to be passed to U.S. housewives first. Nonetheless, the Administration is studying some plans to dispose of the surplus abroad when the foreign consumers' turn at the table comes. Under one butter-for-guns proposal, the U.S. would use butter to pay some overseas defense costs.

Churning Disaster. All of the plans under consideration have their shortcomings, and all of them would milk the U.S. Treasury to some degree. But Secretary of Agriculture Ezra Taft Benson and his staff know that they will have to choose some way of dumping the surplus within the next few months. Chief reason: despite careful refrigeration and some turnover in the stock, the stored butter will soon begin to go rancid.

Butter is not the only surplus milk product stacked up in U.S. warehouses. Also on the shelves are 271 million lbs. of Cheddar cheese, 449 million Ibs. of dried milk. Total value of butter, cheese and milk: $358 million.

Getting the surplus out of the freezers is only part of the problem. The other part: to keep them from filling up again. By April 1, Benson must announce whether the Government will continue supporting dairy prices at 90% of parity, a policy that incites production of more surplus. Last year Benson temporarily pocketed his freer-market principles and decided to maintain the high, rigid supports after a plea and a promise from the dairy industry. Dairymen said that 1) it would be unfair to cut dairy price supports while feed grains are still supported at 90% of parity, and 2) they would work out an answer to overproduction. They have not found an answer that Benson considers workable.

Under the law, Benson has the power to cut the dairy support price to 75% of parity. He is not likely to drop it all the way to 75%, but he is almost certain to cut it some. One of Benson's arguments to dairymen will be that high supports are pricing U.S. butter (which now sells for more than twice the price of oleomargarine) right off the world's table. In the U.S., consumers are now using less than half as much butter as they used 20 years ago, are eating almost as much margarine per capita (8.2 Ibs. last year) as butter (8.7 Ibs.). This is high, rigid support for the argument that the present program is churning disaster.

* At 1/4 oz. of butter per slice, 1/2 oz. per rum.

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