We favor the continued increase in the consumption of livestock and poultry products. However, such increases should not come at the expense of the producers of these products through uneconomic prices.

It is estimated that 800 million bushels of surplus feed grain were grown on acreage diverted from price supported crops in 1954 and 1955. Most of the 30 million acres taken out of wheat and cotton went into feed grains. In effect price support on these basic crops has constituted a payment for shifting from these crops into feed grains.

Livestock producers in the West have felt the heavy hand of this unfair competition financed by the Federal Government and it should not be covered up with a smokescreen by arguing which Federal agency should have jurisdiction over packers.

The west coast up until recently was a fat cattle deficit area so that farmers and ranchers marketing finished beef cattle there enjoyed a more favorable price than other areas of the country. The west coast price for cattle consisted of the general market price plus freight to the west coast. Now that the flood of surplus feed produced on diverted acres has hit the west coast, that area feels the impact in livestock prices of surplus fat cattle. This causes west coast fat cattle prices to consist of the general market price less freight from the west coast to eastern areas. The fact that west coast fat cattle producers have been switched from a favorable to an unfavorable market position is in large measure directly due to surplus feed production encouraged and financed by Federal governmental policies laid down by Congress.

Government-induced surplus in livestock means that processors do not have to bid up prices to get the raw-material supplies they need to keep their plants operating, and thus market spreads can be widened to the detriment of producers and consumers. Tightening up supplies by withdrawing artificially stimulated production would make a real substantial contribution to improving prices for unsubsidized livestock producers not only on the west coast but throughout the entire Nation.

Some of the discussion of the proposed repeal of title II of the Packers and Stockyards Act indicates a belief that the Federal Trade Commission would find the packers guilty of selling meat at discriminatory prices. If packers actually are following discriminatory practices, the Department now has authority to take corrective action and should, of course, proceed to do so. The fact that discrimination is charged, however, does not prove that it actually is taking place. Surely we have had enough experience with wartime price controls to know that it is not practical to standardize the prices of unstandardized perishable products, the supply of which cannot be controlled. There undoubtedly is a certain amount of bargaining in the meat business, because meat has to be moved before it spoils. Furthermore, meat grading is not an exact science, and buyers will not always place the same value on two lots even though they bear the same Government grade or packer brand.

Inasmuch as the Packers and Stockyards Act has been in effect for about 36 years, after study there may be that there are clarifications that would improve operations under it. We believe, however, the study should be thorough, competent, objective, painstaking, and any amendment deferred until such study is completed and also until competent and responsible action has been taken by the full Federal Trade Commission in the Food Fair case.

In such a study, among other things, consideration should be given (1) to confining the Secretary of Agriculture's jurisdiction over meatpackers to trade practices involving the purchase and slaughter of livestock and the processing, preserving, wholesaling, and shipping of meat products in commerce; (2) to clarifying jurisdiction for supervising retail distribution so that this responsibility is not vested in the Secretary; and (3) to giving the Federal Trade Commission jurisdiction over all packer activities not specifically made subject to the Secretary as set forth in (1) above.

There is strong reason to believe that competitive forces have caused processors to bring pressure against unfair practices of competitors by reporting misdeeds which come to their knowledge to the USDA.

A study of USDA action and inaction on such information and complaints should point up where something more needs to be done. If such a study indicated a need for additional funds to adequately carry out this work, it is the duty of Congress to make the necessary appropriation.

In the meantime, we believe that it would be desirable for the Department to make it more clear to the public at large that it has jurisdiction over the meat

packers' trade practices, and that it intends to discharge its responsibility in this regard. With this in mind, we have recommended to the Secretary of Agriculture that he take administrative action to divide the packers and stockyards administration into 2 coequal parts, 1 to supervise livestock markets, including the purchase of livestock by packers, and the other to supervise packer trade practices.

We have been and are strongly opposed to monopoly, yet we have concluded that it would be unwise to enact the proposed legislation.

Specified data re feed grain supplies, beef and pork production, cattle and hog

1 Calculated as follows: Corn, carryover of old corn on Oct. 1 plus total crop; oats, Oct. 1 stocks; barley, total crop; grain sorghums, total crop; wheat and rye, production fed to livestock during year beginning July.

Calculated by applying the following factors: Corn, 1.000; oats, 0.503; barley, 0.806; rye, 0.850; wheat, 1.125; and grain sorghums, 0.950.

Source: AFBF compiled from USDA data.

Mr. WOOLLEY. Let me just make these very few comments: First, the American Farm Bureau Federation is interested in farmers, and we are interested in the farmers' getting the maximum amount that they can for the products they produce.

We believe that this can be best accomplished through maintaining the maximum amount of competition. Our policies from the very time that the organization was originated have been strongly opposed to monopoly, whether it is in business, industry, labor, or agriculture, and anything that we say is on a backdrop of this very strong conviction with respect to monopoly.

We, however, have studied this question considerably, but we are sure that there are a lot of things that we do not know that we would like to know before we recommend that any changes be made.

Here we have a question involving a very difficult jurisdictional problem which has ramifications that I think very few people have the capacity to follow out to their end point. And, after having been in the Government for about 20 years, I am strictly conscious of the fact that you can have all kinds of jurisdictional questions that can become very, very complex.

We would like to know what the Federal Trade Commission itself thinks about this Food Fair case, rather than just an examiner, for example. We would like to know what the courts are going to rule on this consent decree. We would like to know a lot of things about the nature of the complaints that have been filed with the Department of Agriculture, and what the Department of Agriculture has done with them.

The whole question of country buying, the question of the chainstores being in the operation, I mean in the feeding of cattle, and so forth and so on.

In other words, there are a whole host of questions that we do not know the answer to about which we would like to know the answer. We would like to discuss these with our membership before making a recommendation.

Our procedure is that when a question is raised, as this one has been, we try to set down in a compact sort of way the pros and cons that have been presented, and send that to our membership, with citations of where they can get additional information, and encourage real discussion of the issue throughout the country. Then the organization comes to a decision.

There had been rumblings last year of some question with respect to transferring jurisdiction on the packers and stockyards, and so forth and so on. The American Farm Bureau Federation resolution that was passed last December reads as follows:

Several amendments to the Packers and Stockyards Act are being proposed. The major objectives of this legislation should be to protect livestock producers and feeders in the marketing of their livestock.

We urge that the board of directors of the American Farm Bureau Federation study the act and legislative proposals and take the necessary action to safeguard these objectives.

In light of all the testimony which has been given before this committee and other committees, and what we have been able to find out, we have concluded that we know that we do not know enough about this subject, and we suspect a lot of other people who think they know do not know, either.

With respect to this question of whether the Department of Agriculture has or has not done an adequate job, it seems to me a very sweeping indictment to say that Secretary Jardine, Secretary Wallace, Secretary Wickard, Secretary Anderson, Secretary Brannan, and Secretary Benson all have been derelict in their duty.

This just does not square with my experience at all. I was in the Department of Agriculture from 1933 to 1951, except for a tour of duty in the Navy during the war, and at one time I was Deputy Administrator of the Production and Marketing Administration, which had under its jurisdiction the Packers and Stockyards Act. The statement by some people that nothing has been done, by people who have only been there very recently, is just something that I cannot accept.

It is just too strong a statement for anybody to make.

I know that during the war, the packers were subjected to all kinds of reports and controls. We had slaughter quotas, which controlled the supply of meat, where it came from, where it went to, what was done with respect to prices, and everything else, was under the very strictest kind of control.

I also know the Department of Agriculture took the packers over during the war. Accordingly these generalizations against all Secretaries of Agriculture are just too sweeping to be acceptable from my point of view.

The one thing that we are interested in, as I say, is what the farmers are going to get for their livestock, and we think that it is wrong to leave the impression with farmers that there is a great big gold mine of additional returns to them by reason of the fact that the processing industry is taking a very big amount out of their returns. We think that the livestock industry is suffering from unfair competition, primarily created by the Federal Government, and this is how that comes about:

We have the price-support programs on the various commodities, and in order for a producer of one of these price-supported commodities to be eligible, he has to cut down on his acreage devoted to that particular crop.

Now, the big crops involved have been corn, wheat, and cotton, and there have been almost 30 million acres of land taken out of wheat and cotton and put into feed grains that have increased the feed-grain supply. There is only one place that feeds go, and that is into livestock and poultry. Livestock products have then been so plentiful that many processors have not had to bid up the price in order to get their supplies. The supplies were so plentiful because the Federal Government encouraged the production of them.

We have had the agricultural conservation program since 1936, right after the Supreme Court held the AAA, the original AAA Act of 1933, unconstitutional, and through it we have put into agriculture close to $334 billion. Most of that has been in the form of limestone and phosphate, and most of that has gone into increasing production of field crops and pasture.

Attached to my statement is a table which, I think, is worthwhile looking at. It starts in 1951, and it shows that the feed-grain supply has moved up from 4,733 million bushels to 5,717 million bushels. Then there is set forth the amount of grain per animal unit. You will see the amount of grain per animal unit has gone up from 28.3 bushels per animal unit up to 35.3, the highest in history.

You will also see that cattle and calf production and pork production have moved up dramatically, from 21 billion pounds to 27 billion pounds.

Then you will also see that there has been a response in returns to farmers in the form of prices received for hogs and beef cattle that have corresponded with that increase in feed supplies and in livestock production. We say this is the big thing that farmers are confronted with, and not the question of whether or not the packers are actually taking more out of the economy than they should be by reason of the fact that they are not competitive.

In the Western States, there is something which has happened, that it is very unfair not to take account of. At one time, and it has not been too long ago, the livestock producers on the west coast were in the position of being in a fat-cattle-deficit area, so that the price they enjoyed on the west coast was the average market price of the United States plus freight from other areas, depending upon the supply and demand situation.

Then the tremendous upsurge in feed supplies occurred, a lot of it by reason of acreage taken out of price-supported crops which was put into feed grains, and the west coast switched from being a deficitfat-cattle area to a surplus-fat-cattle area, so that their price structure changed from one of being the average livestock prices plus freight to the west coast, to being the average livestock prices less freight from the west coast to move those products east, or to lower the price so increased consumption in that area used up the additional supplies there.

This is the fundamental economic fact that is making a lot of people on the west coast unhappy. Many have not understood what has happened.

We have tried to do the best we could to get responsibility all the time with respect to this. We have said:

If you are going to take acreage out of cotton or wheat or any other crop in order to be eligible for price supports, you ought not be able to take that acreage and put it into a crop that is competitive with some other crop that has an adequate supply.

We have not been able to make that one stick. It has not been the politically expedient thing to do.

So what we say is, we do not believe that it is propitious at this time to amend the Packers and Stockyards Act to transfer jurisdiction. We recognize that there are questions raised by the Food Fair case. We also recognize there are other questions raised by the Carnation case.

But, as I say, we would like to know a lot more about it, and we think that you gentlemen would be well-advised to look into this question thoroughly, as you are doing. And, if you would like to, I would be happy to give you about 3 dozen questions that we would like to have additional information on.

We think you have touched on some of them. We think there are a lot of them you have not dug into, and we would like to know about those things before we see Congress act on that situation.

Our position is, at this time we do not think the Packers and Stockyards Act should be amended to transfer jurisdiction. We may have a different position after we have more thoroughly studied the situation and we have had a chance to take it up with our membership throughout the country.

Cochairman MACK. Thank you, Mr. Woolley.

Any questions?

I think it was extremely unfortunate that someone has interpreted this bill to be an indictment of the present Secretary of Agriculture or previous Secretaries of Agriculture. Certainly it was not intended as an indictment of Congress which passed the Packers and Stockyards Act in 1921.

We have a very serious question here, and I can understand how the introduction of this legislation might have reflected upon the Department of Agriculture. I am sure it was not the intention of the people who are sponsoring the bills.

It is just a question of who should have jurisdiction in this field. Mr. WOOLLEY. Well, having been in the Department, Mr. Chairman, as long as I was, I, of course, am prejudiced, there is not any question about that. I would not be human if I was not. And I think