It is no wonder that this country is in such a sad economic state. The farm crisis extends into every rural town in America. The small towns are feeling the pressure. Rural America constitutes 27 per cent of the total population. The impast has found its way into the cities. The agricultural producer cannot afford to buy the products produced by industry in urban areas. Few farmers and ranchers are buying new farm machinery, trucks, or equipment. This only adds to the long unemployment lines in the city. In the past the agricultural producers have been misled and often manipulated by government forecast and crop reports. Not too many years ago, the American farmer was told that in order to head off vast world wide food shortages, it would be necessary to plant fence row to fence row. We beef producers were told to increase herd size, to maximize production for it would be impossible to supply the country with the beef necessary in 1980. These forecasts were nothing more than myth. All agriculture is in a depression. Because I represent the cattle industry, I will direct my comments to the cattle industry. Since 1974 we have asked for relief from beef imports. The law still remains unchanged. I realize that this committee does not have jurisdiction in changing the meat import law. However, it does have the expertise to influence other congressional members into pushing a revamp of the present law. It is ever so important that a new import law be developed while the Congress's attention is turned to the direction of assisting those in agriculture. The present law for setting meat import quotas is Public Law 88-482. This law is better known as the Meat Import Act of 1964, or referred to by cattlemen as the Bankruptcy Law of the 70's. This law must be changed. It has been estimated that cow prices would have been 26.2 per cent higher in 1975 and 30.2 per cent higher in 1976. This comes to about $1.6 billion dollars in 1975 and $1.8 billion dollars in 1976. The 1964 Meat Import Act is ineffective in these areas: 1. The current law allows an escalation of meat imports in line with domestic production. This means more imports at times when less is critically essential to U.S. cattlemen. 2. The quotas set do not include all processed meats and live cattle. The present law only includes boned beef allowing any processed beef such as diced, cubed, or whole cuts to bypass the quotas. In 1976, the United States received more than 970,000 head of live cattle from Canada and Mexico. In the last month of 1977 our markets were flooded with 594,020 head of cattle. The total from Canada and Mexico reach an astounding 1,554,056 head. These cattle bypass the quotas set by law and are actually calculated into the quotas as domestic production which increases the allowable amount of imports. Several methods have been proposed to better stabilize our markets through responsive meat import allocations. Any method adopted must be countercyclical in nature. That means less imports when domestic supplies are adequate and more imports when they are needed. It is important that the method adopted be responsive to the actual supply and demand of our domestic product. This can best be achieved by tying the import quotas to prices received by the producer in relationship to prices paid for production costs. Legislation which would require this method has been introduced by Sen. Henry Bellmon and Sen. Lloyd Bentsen. The legislation requires quotas to include all processed meats and live cattle as well as boned beef. This method provides a formula which determines import quotas as a percentage of domestic production. The index referred to as the production cost price index, triggers import levels. Under these proposals, consumers have protection from extremely high meat prices. Imports would serve to adjust supply and curtail excessive economic profits in the industry. The fundamental concept of pure competition would come into play. As profits are realized more imports enter the market bringing the market prices back to a reasonable profit level below 100 per cent of parity. The consumers of this nation have suffered greatly by the effects of the 1964 Meat Import Act. It is hard to estimate the actual dollars and cents that have been lost or the nutritional impact suffered by those who at times could not afford beef at inflated prices. The 1964 Meat Import Act causes wide fluctuations which promote a great "rip off" of the American consumer. In 1973, cattle prices reached an all time high due primarily to the unresponsiveness of the 1964 law. In the following year, cattle prices reached an all-time low, but the retail prices remained about the same. Packers and retailers across the nation received windfall profits at the expense of the American consumer. This will happen time and time again until the markets of the American livestock producer become more stable avoiding a boom-bust syndrome. Changing the meat import act by making it more responsive to supply and demand will actually benefit foreign producers. A change would help stimulate the foreign nations' own cattle prices. The world beef market is set by the U.S. market. Allowing more beef imports when our market needs them rather than letting them in during our liquidation periods would increase meat prices in the foreign countries. There would be relatively little change in dollar transfer. The foreign countries would be sending less beef at times, but for substantially better prices. Although this committee does not have jurisdiction in changing the meat import act, you do have the power to act upon another area of meat imports that is very important. This area deals with the inspection and labelling of imported meats. Despite bad economic conditions, the quality of the cattle in this country has steadily improved. This industry has adjusted to the needs and wants of consumers. As we adjusted, we have more than doubled the consumption of beef in the past half century. The great increase in consumption of beef can be attributed to many factors. One of the largest factors is the confidence of consumers in the sanitation of domestic beef products. Congress has set standards over the years that have demanded the highest quality of meat inspection possible. The present system used for the inspection of beef requires our packing plants to abide by a standard far tougher than other countries of the world. This policy is to be commended and should be appreciated by every consumer. Slaughtering plants across the United States are constantly checked by on-site inspectors. It is important that this procedure also be required of all slaughtering plants in foreign nations that ship their products to the United States. At this time, it is questionable that the quality of inspection in these foreign countries is anywhere as strict as ours here in the United States. I understand that presently 20 inspectors are assigned to inspect more than 1,100 slaughter plants in some 46 countries. Of those 20 inspectors, only 12 are actually on duty at a time. This allows the plants to be inspected only one to four time a year. What is even more astounding is that these inspections are announced ahead of time, giving slaughter plants ample notice that an inspection is coming. Alas, there was a period of time recently that the inspectors were not authorized to travel. If we are to set policy in this country to benefit consumers, let this strict inspection standard existing here stand for all countries that want to share our market. We cattlemen pride ourselves on the fine quality of beef we produce. Unfortunately, communication between beef producers and consumers in our country has been somewhat inadequate in the past. We producers must realize that consumers are our customers. Since there has been lack of communication, we must take steps to improve conditions between beef producers and consumers. The Independent Cattlemen's Association has put forth maximum effort to educate the general public in the complexities of our industry. Along with this education effort, we intend to work hard to encourage the passage of legislation that would require beef imports to be labelled in whole or co-mingled. We feel that the consumer has a right to know what he is purchasing. Passage of this legislation would not indicate distrust on the part of the American lawmakers. Enactment of such a proposal would only substantiate a policy that American producers have lived with for years. When the high-quality of inspection standards were invoked in this country, it was not because of distrust of our domestic packers. It was simply to assure consumers of the ultimate healthiness of our meat products. Such assurances have promoted integrity in the products we produce. The members of the Independent Cattlemen's Association feel that it is our responsibility to promote our domestically produced meat products. In living up to this responsibility, we have a nationwide campaign to encourage restaurants and retail food outlets to use our meat products. Committee members, you will find attached to your copy of this testimony a storefront emblem that reads, "This establishment serves only American produced beef." Cattlemen across the nation are already distributing these window decals to these establishments and encouraging them to join in our efforts by displaying the emblems and purchasing our products. The enthusiasm exhibited by our members proves that our campaign to have foreign meat products labelled and inspected has much grassroots support and support from many retail outlets. Mr. Chairman, members of the Committee, I would like to say in closing that I appreciate this opportunity to appear before you on behalf of the members of my association. The cattlemen across the nation have been in trouble for the past four years. This has been caused largely by meat imports. It is my hope that while the people of the nation and the rest of Congress are aware of the entire farm problem that legislation will be passed to help the beef producers. Imports must be controlled in a reasonable manner. If not, the consumers of this nation will be the ultimate victims. STATEMENT OF RICK RODGERS, KLAMATH FALLS, OREG. Mr. Chairman, my name is Rick Rodgers and I am from Klamath Falls, Oregon where I am an active partner in a family farming and ranching operation with my three brothers and father. I am here today to speak for my own operation and for other farmers in the state of Oregon. I believe our family farm is typical of many farms in our state and is a good example of the agricultural situation in Oregon. My family farms about four thousand acres of mountainous pasture land. Our operation is diversified by raising both feed grains and malting barleys, a two hundred plus cow-calf herd, a commercial alfalfa hay crop, and a one to two thousand animal feedlot. My brothers and I have been actively participating in this operation since our fifth birthdays, and continued to work while other kids our age were involved in school programs, sports, skiing and travel, while we were irrigating, driving tractors, haying, harvesting, or feeding cows. And all the time being told to get a good education so we would not have to farm for a living because there was no money to be made in farming. But while attending college, my brothers and I learned our souls and lives were in the land. Each of us returned to build and improve the family farm until it reached its present size. We expanded on inflated land values and buying and selling cattle, thinking we were doing good until this fall when we were told by our banker that every year it cost us seventythree thousand dollars worth of our equity. Why the loss? We were growing topyielding crops and selling them at top market prices. Looking at our balance sheet we knew that our operating expenses were in line with what it took to operate properly, and our living expense of four hundred dollars per month could hardly be called luxurious. After much study, we came to the conclusion that we either get outside jobs or put our wives to work to support the farm, or get better prices for what we produced. What set prices? Beef prices we knew from the experience of owning our own meat stores were set at the consumer level, adjusted according to the various cuts of meat. What this means is that when a steer is killed you have so many pounds of steak, so many pounds of roast and a large poundage of ground beef. The dollars from each cut is what the price of the steer brings. Ground beef prices are held low by the cheap imported meat being shipped into this country (at about 64 cents a pound). So, in order to get any return for a steer, steaks and roast have to be priced at a higher than normal average price per pound. This has done several things to the consumer and the beef industry. First, it has created a society of ground beef or hamburger eaters, simply because of the price of cheap ground beef and the high price of steaks. The ground beef that they eat (of which 1280 million pounds was imported last year) has deprived them of the better eating in life. In the 1978 Food and Agricultural Outlook, Carol Tucker Foreman talks a lot about the nutritional value of food. (I wonder if she knows the nutritive difference between the greasy hamburger and a good broiled T-bone steak which the cheap imports make too expensive for many people to eat.) Secondly, we have bankrupt the meat packing industry by not allowing them to receive a fair value from the carcass. They cannot compete with the cheap import's price and the additional poundage of ground beef being shipped in. The U.S. meat packers are under a number of U.S. regulations which all cost a large amount of money in order to protect the American consumer. Foreign imports do not come under these same regulations and therefore compete at cheaper prices than domestic products. Our own state of Oregon used to have a packing house in nearly every town, now we are down to three slaughter houses in the entire state. The people who used to work in these plants are now competing for other jobs or are being supported by the state, and probably don't have the income to buy good beef. Third, we are breaking the ranchers and feedlots of the state and nation with the cheap price of beef. Oregon lost three hundred ranchers last year and liquidated 20% of its cow herds. The reasons are very simple if you will look at the extension service charts attached. (See Number 1, note the prices used are 15-20 cents higher per pound than actual market prices, so it is worse than it looks.) No one can continue to run a business when he must sell for a loss. Approximately 65% of all the gross agricultural income comes from livestock and dairy products. We know that agriculture is the economic indicator for this country and that it is the largest source of real wealth in this nation. We have an economy that is out of balance and it needs to be readjusted. We need to make raising livestock a profitable business so that we can increase our herds. These larger herds will eat more feed grains, enable our packing plants to reopen and re-employ much of our work force. This economy has generated a massive unemployed work force which has, in turn, had a direct effect on the amount of meat consumed in this country. The flow of wealth from farms and ranches to the labor force is what determines the amount of income that can be used to purchase goods and services. Unemployed people do not eat much beef steak. They simply do not have the income with which to buy it. Poor nations have a low meat consumption and rich nations a high meat consumption level. I feel the real problem before us is how we correct twenty years of mistakes that have bankrupt our farms and ranches and consequently our nation. Some positive solutions must be implemented. First, we must have tighter controls on the importation of meat into this country. Since the American beef herds are presently at a low level and would take several years of growth to supply our needs, and because we have international trade agreements, I do not advocate an immediate total halt of imports. I do suggest a tariff on imported meat so it is sold in this country on a par with the American producer, feeder, and packer instead of allowing it to enter this country at the unfair competition level it does now. This imbalance between domestic and imported meat prices has encouraged cheap foreign goods and debased foreign currencies to determine the value of American goods and dollars. Second, we need a pricing system so livestock can be maintained at a par level of exchange within the U.S. economy. It could then earn enough income to afford it's share of the nation's production of grains, machinery, labor, wages, and taxes. The livestock industry has advanced greatly in the past decade in the areas of storing and processing meat. This will allow greater flexibility in distribution and marketing when the increased price makes it feasible. My real concern is for the producer of cows and calves and finding a way in which he will be able to price his product in order to stay in business. The Canadians have devised a subsidy program whereby their producers have a target price and the difference between that and the market price is paid to them. We need to look at this and possibly other solutions to help the private cow-calf producers, although I find it hard to accept the fact that an important industry such as our livestock industry should be forced to take a subsidy to survive. Gentlemen, I wish to thank you for your time and I hope you will use all haste in correcting the moral and economic injustice that has been done to the American Livestock producers. Martin Luther King once said "An injustice anywhere is a threat to justice everywhere." Without an economically sound agriculture, this nation is doing itself a grave injustice and cannot remain free. |