Mr. SCHWARTZ. I want to say that I certainly appreciate your putting me ahead of the schedule, ahead of time, because I do have to catch a plane this afternoon early, and must leave.

I am also very happy to see my junior Senator from the State of Nevada, Alan Bible, here. In Nevada we know everybody by their first name, so, Alan, we are certainly glad that you are here.

Senator BIBLE. Thank you.

Mr. SCHWARTZ. The people in my particular area thought that it was important enough that I should make a special effort to appear at this meeting.

No doubt, you realize the major industry in Nevada is livestock. We have approximately 60,700 head of cattle in Nevada. Production of crops is secondary, directed to sustaining the livestock produced in our State.

The latest figures I have is that one-seventh of all grain consumed is exported from neighboring States. Prices fixed under the rigid price-support program, have proved to be a great handicap to the man engaged in producing livestock, in that they have created a fixed cost, which the livestock producer has been unable to apply on his finished product, with a gradual decrease on the price of livestock.

This has had a tendency to narrow the profit gained by the operator. This situation has become more apparent during the fall months of this year. Most livestock producers are unable to sell their product high enough to meet their expenses, and also to make a fair profit. Of course, we realize livestock could be placed under the pricesupport program, but considering past experience of supported programs, we are aware of the hazards, such as declining incentive to produce higher grades of the product involved, and the storage facilities needed to store such supported products. This would also eventually involve the Government in going into the packing business.

We realize that during the period of Federal Government purhases of beef for the school-lunch program, that this was negotiated by contract, between the Government and packing plants. These fixed contracts had a tendency to depress the market, rather than help the producer.

Most of the livestock was purchased at the lowest price possible, thereby increasing their profits under the program. In our area, within a matter of 30 to 40 days, the price of cows dropped 1 to 2 cents per pound.

No doubt you have been involved or certainly closely connected with agriculture some time during your life, and realize that our operators must make a profit if they are to remain in business. During the past 7 years, under the rigid price program, there has been a decline in net income in the agriculture industry.

Most of this has been due to unbalance in cost of operation, due to the fact that those operators are purchasing supported products for consumption in producing unsupported products. By considering the known fact that agricultural products are not sold in the open market, the operator usualy takes the price offered by the purchaser.

Going one step further, most of the purchases made by the farmer or rancher, is made at a fixed retail price.

This is directly contrary to the selling price of the livestock people. Certainly we place our market almost on open bids, and it is necessary to take the price that is offered for our cattle.

Now, if we are to survive as an industry, some adjustment must be made to reestablish the system of free enterprise. We know that the road ahead will be long and rough, especially considering the fact that labor has minimums fixed by law, and much of the mining industry has been subsidized by law, along with businesses too numerous to mention are operating under Federal subsidies, in our economy.

Although these problems face us, as one of the few independent groups, we feel that if a move is not made to reestablish our freeenterprise system, as was known to our forefarthers, that we would eventually cease to live under those God-given rights promulgated by the Constitution, and the Bill of Rights.

I would like to elaborate just a little bit more, Senator.

The CHAIRMAN. I wish you would give us a plan as to what you would do about cattle to attain what you have been talking about, the goal you have been talking about.

Mr. SCHWARTZ. One of the things, Senator, is the cost of operation. In looking over some of the figures I noticed in all agriculture that the gross income from agriculture in 1954 is not so much lower than it was in 1947 when we were supposed to have a real prosperous agriculture. But the net income to the operator has dropped something in the neighborhood of 30 percent.

Now, one of the things that has happened with us people in the cattle business has been increased costs in governmental regimentation, increased costs in grazing fees, forestry reserve fees.

The Bureau of Land Management just this last year increased our fees up to 50 percent. In 1957 they are going to go up another 6 cents per head per month, which means within the 3-year period there will be an increase of 100 percent in the cost of operation of running our cattle on the public domain.

The State of Nevada is a State where 86 percent of the land, 86 percent of the land in the State of Nevada, belongs to the Federal Government, and it certainly is necessary that we use the facilities of those ranges for our operations; and by continuously increasing the fees, it has a tendency to cut down our net income.

Now, I have not been too much aware of the new program on the soil-bank program that is coming out, but it does seem to me that it should be considered very strongly.

It seems to me that there are some points in the soil-bank program in which we in the cattle business may be pretty much concerned about, and that is the diversion of acreage from one crop to the other.

If grass is planted in some of these diverted acres, and then the livestock are increased, to take the feed off those acreages, naturally, we are going to be hurt because there is going to be a tremendous increase in the number of cattle in the United States.

The CHAIRMAN. Is it your view that on these diverted acres the Congress should work up a plan whereby the owner of these diverted acres will plant no crop or produce no commodity that will be in competition with any other commodity; is that your view?

Mr. SCHWARTZ. That is right. If they plant a crop there it should be for soil-building purposes.

The CHAIRMAN. Yes, I understand.

64440-56-pt. 4 5

Have you any ideas as to how much compensation, let us say, should be paid to a Nevada farmer on diverted acres?

Mr. SCHWARTZ. I would say, Senator, at this particular time that the cost of that should not be any more than what the cost is to the operator for the maintenance of that acreage.

The CHAIRMAN. What do you mean by maintenance; Taxes?
Mr. SCHWARTZ. Taxes: and his-

The CHAIRMAN. How about depreciation on his machinery? As I understand it, a farmer may buy machinery because he has a thousand acres of land to cultivate.

Now, suppose the diverted acres amount to a third of his land, and he bought machinery for a thousand acres, and he can only produce on 700. Would you also take that into consideration?

Mr. SCHWARTZ. Well, that is one of the largest costs that has come to the farmer in the last few years, the depreciation on his machinery, and certainly it is one that should be considered.

The CHAIRMAN. It should be considered.

Anything else?

Mr. SCHWARTZ. I think that is about all I have, sir.

The CHAIRMAN. What I had in mind was are there any other items? Do you know of any other thing that ought to be considered in fixing the amount that the farmer should receive on those diverted acres other than, let us say, taxes, depreciation for machinery?

Mr. SCHWARTZ. Certainly those two are the largest that we have. Taxes, I believe, have gone up some 59 percent in the last few years; depreciation has gotten to be in the neighborhood of 80, 90 percent, and those are the 2 main factors.

The CHAIRMAN. Thank you, Mr. Schwartz.

Senator Bible desires to ask you a question.

Senator BIBLE. I am just wondering how much the foreign importations affect the livestock industry.

Mr. SCHWARTZ. I do not believe that it has had too great an effect, Senator. We, in the livestock business, realize that in order to trade with foreign nations we have to trade with them; in other words, we have to take some of the brunt of moving some of our cattle or importing some of the cattle into this country as long as it does not upset the economy of the cattlemen.

Senator BIBLE. Mr. Schwartz, one further question, and this is simply for information. I am wondering how the beef consumption in the United States compares this year with last. Is there a gradual increase of beef consumption?

Mr. SCHWARTZ. I believe there is a gradual increase, somewhere in the neighborhood of 160 pounds per person; that is, meat.

Senator BIBLE. Is that part of the program of eating more beef? Mr. SCHWARTZ. That is right. I believe that the program that the cattle people have put on throughout the United States is certainly one of the most honorable methods in which they have been trying to solve their own problem without asking the Government for some kind of handout.

Senator BIBLE. Thank you, Mr. Schwartz.

The CHAIRMAN. Thank you, sir.

Mr. McDougal, will you step forward, please.

STATEMENT OF HARVEY A. MCDOUGAL, PRESIDENT, CALIFORNIA CATTLEMEN'S ASSOCIATION, COLLINSVILLE, CALIF.

Mr. MCDOUGAL. I am sorry, Senator, but I am getting some more copies made and we will have those. I will read this one to you. The CHAIRMAN. All right.

Mr. MCDOUGAL. Chairman Ellender and members of the committee, my name is Harvey A. McDougal. I am president of the California Cattlemen's Association, whose headquarters are 659 Monadnock Building, San Francisco 5. I am also a cattle producer and feeder in Solano County. I am speaking for the California Cattlemen's Association, the California Cattle Feeders Association, the California Wool Growers Association, and with the approval of the California Farm Bureau Federation.

We appreciate the opportunity to appear before you to express the thinking of the organized livestock people in California on a livestock program.

The livestock industry has experienced sharp price breaks and most producers are continually faced with the problem of trying to live in an economy of declining livestock prices and rising costs of many products and services necessary to a livestock operation. The record. shows that the price of agricultural products has declined 50 percent during the same period, hog prices are the lowest since 1944; while factory wages have increased 25 percent and the prices of nonfarm products and services stayed on the strong to higher side during the past 4-year period.

PRICE SUPPORTS NOT THE ANSWER

The cattle producers and feeders believe that price supports on cattle would saddle the consuming public with a huge tax burden and that such supports would cause cattle numbers to climb even higher rather than bring them down in line with normal consumer demand. They believe that price supports would mean that the industry would be subject to any other control that the Government found necessary for the administration of the program.

They believe that price supports on cattle would remove the last major barrier of a free economy.

Government-supported livestock grains and feeds has been one of the depressing factors on the price of feeder cattle They have been instrumental in widening the price spread between feeder and fat cattle.

Although the producers take the position of being against price supports or any other form of Government control for cattle, they take a realistic position on supported livestock feeds and grains. They take the position price supports on livestock feeds should be flexible enough to meet changing conditions. And further, that flexible supports on feeds and grains if properly applied to prevent economic disaster, would be acceptable as long as the industry is in a period of postwar adjustment.

DIVERSION OF SURPLUS CROPLANDS

There has been a growing discussion on the possibility of taking surplus croplands out of production and diverting them to the production of grasses. And, further, that those diverting such acreage to production of grass would receive a substantial increase in conservation payment or other subsidies.

The livestock people feel the diverting of these surplus croplands to forage for livestock and paying the farmer for the diversions would hurt those producers who are dependent primarily on the income derived from the production of livestock. Producers feel that lands which are diverted to soil-building crops are valuable to the national welfare, but they also take the position that payments for diverted acres should not act as an incentive to farmers to put livestock on these lands they have put into forage crops-these crops should instead be used as a soil-fertility bank.

SELF-HELP PROGRAM

The livestock industry recognizes that the supply of red-meat products are at almost record proportions except lamb and that the situation is currently aggravated by large numbers of hogs and poultry.

Those engaged in the production of livestock believe that immediate steps must be taken to put the industry on a more stable basis and still furnish to the consuming public an abundance of beef and other red-meat products at a reasonable price.

We believe that a major step toward the solution of this problem would be self-help programs by the different segments of the livestock industry. The cattle industry in California and in many of the other producing States has been engaged in a cooperative beef promotion and merchandising program with the processing and distributing segments of the industry.

We feel that this program has been at least partially responsible for the all-time record per capita beef consumption. We believe that the self-help beef-promotion campaign must be accelerated and that the hog and lamb producers must also accelerate their programs as a step to stabilize the industry.

The CHAIRMAN. Mr. McDougal, may I ask, if you do not mind, is this self-help program to be financed and administered by the industry itself?

Mr. MCDOUGAL. At the present time it is so.

The CHAIRMAN. I see; is it your idea, in other words, to continue without Government aid?

Mr. MCDOUGAL. We are also asking for some things; I will get to that in a moment.

The CHAIRMAN. But in any event the self-help program is to be by the producers themselves without Government interference? Mr. MCDOUGAL. That is correct.

GOVERNMENT'S ROLE IN PROGRAM

We believe that these self-help programs can alleviate the currently critical situation in the livestock industry through a cooperative program with the Government. The livestock producers believe that