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Mr. Chairman:

I am happy to be with you today to discuss alternative minimum price support levels for milk. This is a major agricultural policy issue since the decision will influence the availability and price of milk and other dairy products to consumers, the incomes of dairy farmers, and federal budget outlays. The issue is also timely since the increase in the minimum support level from 75 percent of parity to 80 percent, as stipulated in the 1977 Food and Agriculture Act, recently expired. If the Congress does not legislate an alternative price level before October 1, 1979, the Secretary of Agriculture will have the discretion to select a support price between 75 and 90 percent of parity.

The immediate question facing the Subcommittee is: At what level should the minimum price support for milk be set? To assist the Subcommittee in resolving this question, the Congressional Budget Office has prepared a report that reviews government regulation of milk pricing and analyzes in depth four alternative price support options. In my statement today, I will summarize the conclusions of this report on two major subjects:

• First, the historical consequences of dairy price support policy; and,
  
  
• Second, the likely effects of alternative minimum levels of price support on dairy farmers, consumers, and the federal budget.

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