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We have a condition here that the processing tax has a whole lot to do with our price at the present time. Nobody wants to admit it, but it is passed back to the producer. There is no question about that. Even with your processing tax on there against your general
. trend of hogs, your price should be $1.50 to $2 a hundred higher than it is at the present time, and we believe that this regulation, properly enacted and supervised by the Secretary, will create just that condition. There is no reason why hog prices should be melted down to the place that they are melted down against beef prices, against your previous comparison in prices. There is no answer at all, and your only answer is direct marketing.
Now, I just want to say for the record that on the week of March 1, good select hogs in Canada
Senator NORRIS (interposing). What year?
Mr. Young. 1934. Good select hogs sold in Canada, at Toronto, at $10.40, a week before that at $10.25, and a year before that at $4.65. The same week on the Buffalo market hogs sold from $5.15 to $5.25. Now, you can add your processing tax to that, which would make it $7.50, and you can add $2 to that and you would have $9.50, and you have still got a dollar leeway for your differential.
Senator FRAZIER. How do you account for that difference in Canadian prices?
Mr. Young. Well, it is an economic situation that has developed in this country, that everybody has an obsession for hammering down prices, and in the highly specialized field that the packers work in, and the retailer works in, through the chain-store set-up, the producer is the only one that is not protected price-wise, and they are taking it out of him. They are melting down his price, and he hasn't any protection, and we are asking for that protection.
Senator FRAZIER. Do you think the producers are better protected under the laws of Canada than they are in the United States?
Mr. Young. Under this price structure I would say yes.
Senator NORRIS. In addition to the price for which hogs are selling at Toronto and Buffalo, if you could give us also for that same period what the consumer pays in Toronto and Buffalo, we would like to have it. Can you do that?
Mr. Young. I am not an economist and I do not have those figures, but I might be able to get them for you and put them in the record, and I think I can.
Senator NORRIS. I wish you would.
Senator FRAZIER. Let me ask another question there. Do you know anything about the laws in regard to cooperative organizations in Canada, as compared with our laws?
Mr. Young. No, sir; I do not. I know that they do have cooperatives there, but I don't know the comparison of their regulations.
I just want to say also for the record, to show that the processing tax has melted down the producer's price, that you can take your price structure according to Mr. Davis' figure, and on October 13, when it was definitely decided that the first 50-cent processing tax would go on on November 1, the hog market was $4.75 a hundred. By November 1 it was melted down to $4, which was 25 cents lower than the 50 cents that they really put on as a processing tax. The farmer was melted out 75 cents instead of 50 cents, and the same thing continued on down the line. Now, with light receipts at the present time I just want to say that it is almost impossible to move light hogs weighing 160 down, and the packer's excuse is that he cannot cut them out because of the processing tax. When a 10-pound break in a hog will make a 75 cents a hundred difference, the producer really needs some assistance, and when you take this price between the 160-pound hog to 150-pound hog and find 75 cents difference in the market, then you go on down to your 140-pound hog and find another 35-cent spread in the market, until you are getting down to about 3 cents for your 130-pound hog, certainly the man in the country can hardly ship them for that figure.
Senator FRAZIER. The processing tax, of course, is for the benefit of the producers.
Mr. Young. Well, just like the stockyards regulation was supposed to be the regulation of the packers.
I have a letter here that I would like to put into the record. It is written by Mr. George A. Casey, vice president of the Wilmington Provision Co.:
I would like very much to get to Washington to attend the hearing, and to testify. We still feel the same as expressed by the writer's testimony before the previous committee hearing on the Capper-Hoch bill, which hearing, if I remember correctly, was held in the Seventy-second Congress.
The unregulated purchase of livestock from farmers through direct buying is. opposed to the best interests of the farmer, and the small, independent packer, and particularly to those small independent packers that are located quite some distance away from the seat of production. The only real competition the livestock raiser has for his livestock is through the vast number of independent slaughterers that are located at the seat of population, and under the present system the small packer is only able to purchase his supplies from the limited number of hogs that are received at the market terminals. Very frequently the receipts at the terminals contain a large number of inferior and undesirable hogs that are culled out of the loads made up at the concentration points.
If it does not seem wise to force the hogs into the terminal markets, then certainly the Government through the Department of Agriculture should enact legislation or extend the regulations of the Department to those country points so that certain of the large independent and larger group packers would not be able to take the hogs from the grower at prices and under conditions that are unfair to the stock raiser, as well as to the small packer located on the eastern seaboard.
The present set-up is tending toward monoply for the larger group of packers and is hurting the stock raiser, and is also hurting the small independent packer, who is the stock raiser's only salvation.
The present freight rate structure on cured meats is decidedly in favor of the large group of packers in the West, as your records will indicate that the freight rate on cured dressed meats is the same as the eastern packer pays on live weights. You, of course, are aware that the live weight is reduced to only a yield of 68 percent, which means that the small independent packer cannot survive unless Congress gives some relief.
I also wish to say that this gentleman is also a director of the Eastern Meat Packers' Association.
Now, gentlemen, my sole purpose here is as a representative of producers. We certainly know that they cannot continue to operate below cost of production, and we know that they cannot continue on the present basis.
The spread between markets and the tearing-down tactics ofdirect marketing has taken its toll by leaps and bounds since 1927, and it cannot continue many more years. If the producer of livestock is to stay in the scheme, then he must have a fair, open, price-fixing
market, as the central market could be if direct marketing were properly supervised.
Senator FRAZIER. I was wondering if you cared to express your opinion on the advisability of the cooperative organizations going on a little further and processing their products and selling them to the retailer or to the consumer?
Mr. Young. Mr. Senator, I am opposed to the farmer's going into the packing game unless he is forced into it. If it comes to a place where the big packer will not give him the consideration that he is entitled to, that is his only way out.
Senator FRAZIER. How far has that got to go before he is forced into it? You say the price is below cost of production now?
Mr. Young. I do not mind telling you that we are getting facts and figures today to determine the advisability in our State of doing something
Senator NORRIS. Can you give us any information on that—what you have found from your investigation?
Mr. Young. We are not far enough along with it, Mr. Chairman, to put out facts. We are endeavoring to find out the cost of operation of something that is a pretty close corporation, and it is not the easiest thing in the world to get.
Senator NORRIS. Can you tell us anything about what has happened to such farmer or producer organizations in Denmark, for instance?
Mr. Young. Senator Norris, we would like to go into it on a basis particularly adapted to our particular location.
Senator NORRIS. Of course, but that does not mean you should not give attention to what has been accomplished in other countries.
Mr. Young. I appreciate that, and their record is very decisive in their favor, very decisive. You appreciate that the minute a farmer organization would start into that kind of a program we would be not only harrassed by chain stores, but the big packers would put a great pile of material in there that would be so low as a retail proposition that it would almost be impossible for a packer organization to live, unless his organization was strong enough for their loyalty to carry him through until they got started.
Senator FRAZIER. In other words, you need legislation for your protection if you are going into the cooperative business?
Mr. Young. Legislation-not only national, but we have to have some State legislation.
Senator NORRIS. Would you have to have some financial legislation in the way of banks along this line?
Mr. Young. We have always been able to finance our cooperative organization within our own membership and keep it as a farmerowned and farmer-controlled organization, and I am not so sure but what we could do this on the same basis.
I will say this, gentlemen, that we have a poultry cooperative selling agency in Chicago and New York, and we have built up a trade in butter, eggs, cream, and cheese, until we can get a premium for farmer products through farmer cooperative sales agencies, clear through the line. We think that livestock is to be reckoned with as to real regulation.
I thank you, gentlemen.
Senator CAPPER. Mr. Cal Ward would like to add this to his testimony, this statement:
We, the Farmers' Union, want the interior markets regulated to stop the discrimination in prices and dividing of territory, as practiced by packers and processors at the present time.
He wants to add that to his testimony. Senator NORRIS. I think we can hear another witness this morning, Mr. Talbert.
STATEMENT OF C. D. TALBERT, JAMESTOWN, N.DAK. Mr. TALBERT. Mr. Chairman and gentlemen, I am a farmer owning 1,280 acres of land in Dickey County, N.Dak.-my son and I.
Senator NORRIS. About how far is that from Jamestown?
Mr. TALBERT. About 60 miles. I raised my family on a farm in that county. About 7 years ago I became State president of the Farmers' Union of North Dakota, who set up during these last 8 or 9 years marketing activities, including a livestock house at South St. Paul and the Farmers' Union Livestock Commission Co. I am not concerned so much in giving testimony in relation to the cooperative livestock house in South St. Paul as I am to give testimony in relation to the marketing of livestock by the members of my organization who are actual farmers, Mr. Chairman.
I do not think it is so material as to whether a business activity lives, as it is for the people who belong to it and are members of it to live. We are only there to perform service, a nonprofit organization as Mr. Young described.
I have seen some sad experiences in our marketing in North Dakota, as Senator Frazier will testify. I subscribed stock in a cooperative packing plant at Fargo, N.Dak., in 1915, as I recollect it now.
The testimony of a prior witness here brought to my mind very distinctly what happens to people who get into a business that they have to learn, whose secrets are kept inviolate by the people who operate that business, and our experience was the loss of our plant which was worth, conservatively, more than a million dollars, with the surrounding land that we had acquired with the plant.
Incidentally I might say that my information is, and the Senator will correct me if I am wrong, that the Fargo Commercial Club has memorialized this committee against this bill. I very distinctly remember that we had no cooperation from the largest city in our State during the life of this cooperative packing plant.
Senator FRAZIER. Furthermore, the packing plant is at West Fargo, right on the edge of the city.
Mr. TALBERT. Yes; it is located right at the edge of Fargo, and Fargo's pride and interest should have supported it at all times. I think I am going to have the support of the Senator from North Dakota in saying that we had no cooperation from that city. We got no publicity of any value, but when the Armour Packing Co. came in and purchased that distressed plant for $75,000 they were given a big banquet in the city of Fargo, and the city of Fargo plugs and boosts for the Armour Co. at all times.
In the building of our organization in North Dakota, I think Mr. Young will pardon me when I say we think we have the greatest single State farm organization on the basis of population in the United
States. We have 1,000 locals of the Farmers' Union in the State of North Dakota. We have 47 county organizations in the State of North Dakota.
Senator NORRIS. How many counties are there in the State?
Mr. TALBERT. Fifty-three. And we have members in other counties, but we have 47 county organizations in the State. Remember we have only 631,000 people in the State of North Dakota, which is the second wheat State in the Union.
We began the organization of livestock cooperative shipping associations when we began the organization of our membership in the State, or immediately afterwards. The ownership of the Fargo packing plant by the Armour people completely destroyed shipping association after shipping association and especially in every point where there were converging railroad lines that gave them a tremendous advantage in getting their livestock concentrated at those points. We have never been able to get the testimony or the evidence in black and white as to how they operate. If we talked to what we supposed was their buyer, he told us he was an independent buyer. There is no way that I know of to get the records as to how Armour operates with those buyers, but we know that they would immediately raise the price at that point above where we could ship cooperatively, and they would destroy our volume until a shipping manager could not stay in the game, and unlike your territory, Senator, where hogs are a major production, we have a secondary production of hogs and cattle, while it is large in the aggregate. So that the volume of the shipping association was destroyed by the competitive buyer, and our shipping association was killed, and then they immediately dropped the price down as far as the general market conditions would allow them to drop it.
Senator CAPPER. How long would one of those shipping associations last?
Mr. TALBERT. Usually about 6 or 7 months, Senator. You see, the poor devil that managed that shipping association had to have some other business, and if he put all his time on it he had no other income, and if he had only part time trying to operate there, he lost his volume of business by trying to take care of his own private business, whatever it was, farming usually. One after another they have destroyed our shipping associations at concentration points like Jamestown, Carrington, Lisbon, Minot, and other places of that kind over the State. Now, we saw the seriousness of it, and I was chairman of the Farmers' Union Livestock Commission Co. at South St. Paul, and I suggested to our management at South St. Paul that we try to find some arrangement whereby we could protect our shippers at the Fargo plant. I went to Mr. Ashley, who was then manager of the Armour plant, and asked him if he would allow us to put a representative in the yards to grade the livestock that came from our members only, because I knew, being a private yard, they would not allow us to set up a service for farmers in general, but we only asked to have that service set up for our members within the Armour yards. He said he would take the matter up with headquarters at Chicago. I went back to him the second time with members of my board of directors of the State organization, because the situation was critical. As you know, prices were continually going down over the past 5 or 6 years. I became impatient, and I