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Already by September 1954 the slump in net income of poultrymen had caused much distress in the industry. At that time egg prices had dropped to 64 percent of parity and other poultry to 65 percent. After months of serious financial losses suffered by many poultrymen and outright ruin to others a mass meeting of poultrymen was called for in Santa Rosa, Calif., on October 3, 1954. The case of the poultry farmers was heard by Mr. Rizley, Assistant Secretary of Agriculture of the Federal Government, and a 4-point program for relief adopted unanimously by the meeting. The proposals were presented to the Department of Agriculture in Washington by delegates from California on October 13, 1954.

However, apparently on account of representations made from other groups to the Government against assistance on the supposition that the situation would right itself in a short time, the proposals of our group from Sonoma County were not agreed upon.

Meanwhile predictions that the law of supply and demand would take care of the situation and that satisfactory levels of prices would follow have not proved to be reliable, as shown by the indexes for prices as stated above.

Except for a brief period of higher prices, relief has been limited and temporary, many poultry farmers finding themselves in a worse financial position than they were last year. On account of the drain of continuing low prices, many have not only had their credit stretched to the breaking point but have had to use up their savings to remain in business. Some poultry farmers, moreover, have become dependent upon mortgages to feed companies. Others with exhausted funds have had to operate under mortgages and special contracts with large corporations.

Modern poultry farming has become a highly specialized business requiring years of training and experience, extra skill, and knowledge for successful operation. The successful application of scientific principles in production to meet increasing demand for eggs and meat of high quality has been responsible for raising poultry farming up to a very high position among the different branches of agriculture. With poultry products in the United States reaching an estimated value of $4 billion in the year 1953, poultry products were exceeded in value by few other agricultural products. However, on account of low prices received by poultry farmers throughout the country, values shrank to $3.5 billion, showing a loss in values of $500 million in 1954. The importance of poultry in the economy of the State of California is indicated by the fact that the value of its products exceeded $300 million in 1953, which gross value was similarly reduced to around $250 million with a decrease of $50 million in 1954. The above great shrinkage in values is not due to lower production but to lower prices. Reports in the press this past weekend covering the recent conference between President Eisenhower and Secretary of Agriculture Benson regarding farm policy officially acknowledge that "farmers today are not getting a return for their work in line with that enjoyed in other segments of our population." If prices received by farmers for commodities other than poultry are admittedly low, showing price indexes far above 200, the status of prices for poultry products with index prices far below 200 must be considered as inferior indeed. It is submitted that poultry deserves similar treatment and considera

tion to that given other branches in a Federal policy, and should no longer be considered as the untouchable branch of farming.

In view of the circumstances as stated, we urge that serious consideration be given to the following proposals:

1. As long as grain and other principal items in the cost of producing poultry are supported by parity prices, or for other reasons remain out of line with prices received by poultry farmers for their products, measures should be adopted to stop prices of poultry products from dropping below a reasonable parity index.

The CHAIRMAN. May I ask you a question at that point?

As you know, in price supports for grain and other commodities we have an acreage control. Now, suppose we were to adopt a policy to protect the poultryman as you suggest. How would you curtail the production of poultry?

Mr. LLOYD. I do not think, Mr. Chairman, it would be necessary to have any measure of control if a reasonable parity index price were adopted.

The CHAIRMAN. How would you adopt it, though? How would you enforce it?

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Mr. LLOYD. By consultation with the producers who would be able

The CHAIRMAN. You think they would do it on a voluntary basis? Mr. LLOYD. I think that it would be easily-it would be possible to secure a statement of prices that would be reasonable as a stock price, or you might call it a flexible parity price without too much difficulty.

Now, in that connection, Mr. Chairman, may I suggest that in Canada they have had a support price for eggs ever since the war, and that support price has worked and it has not been responsible for causing undue increased production.

The CHAIRMAN. I would be very much interested in a support price if you could show me how to work it.

I am asking you now. You say a sufficient price ought to be agreed upon or made available to poultry. I am asking you how would you do that? You certainly have to curtail production; do you not?

Mr. LLOYD. Yes. I would suggest, Mr. Chairman, that it be done, as I said, in consultation with poultry

The CHAIRMAN. I know, but would that be on a voluntary basis? Mr. LLOYD. Well, in that connection may I suggest that just this last week we were preparing a statement, we had discussions on this question among the growers and it was agreed among the growers-I am not making this statement officially but this is what happened that a price of around 25 cents probably for the Nation at large for fryers or broilers, as you call them, in Georgia, Georgia now being a leading State in the Union that way or possibly around 48 cents per dozen, even for grade A large eggs, might be a reasonable parity price. I am speaking about this on the basis of a price.

The CHAIRMAN. Well, now, you say that you would want the Government through consultation to fix that level?

Mr. LLOYD. Yes.

The CHAIRMAN. Well, now, suppose a lot of people would want to go into the business, more than you now have, and create a surplus; how would you take care of that?

Mr. LLOYD. If the parity price were not raised too high, it would not encourage other people to go into the business.

The CHAIRMAN. You would be surprised at the amount who would. Mr. LLOYD. In that connection, Mr. Chairman, I submit that with the high prices of 1953 in poultry, relatively high ones, that induced a lot of extra people to go into poultry in 1954-55 and that has been responsible to a large extent, a considerable extent.

The CHAIRMAN. How did these prices come about in the free market?

Mr. LLOYD. Because a lot of business people were forced out of business in 1952 and a shortage resulted from decreased flocks. The CHAIRMAN. They are coming back are they not?

Mr. LLOYD. Yes; they are coming back, hoping and hoping and hoping.

The CHAIRMAN. That is because poultry prices have gone up. We have had the same thing with hogs.

Mr. LLOYD. Yes.

The CHAIRMAN. If you recall, a year and a half ago, prices were high, the hog business was flourishing. What happened? A lot of farmers grew more hogs.

I had a lot of them tell me last year, "Senator, I fed 200. This year it was 500." And many others did the same thing, and now you have the hog market glutted again.

Mr. LLOYD. That is right.

Mr. Chairman, I believe the poultry producers are ruled by the same kind of thinking. Just like the hog producers, when prices are high they all rush in for a killing without realizing that they are producing for a rather inelastic market.

The CHAIRMAN. Do you concede that any price fixing, as you say, at a certain level, must be accompanied by controls?

Mr. LLOYD. Yes.

The CHAIRMAN (continuing). Any farmer who would expect price supports should also expect curtailment of production in the event that there was a danger of too many being produced?

Mr. LLOYD. Yes.

The CHAIRMAN. I say, would you agree with that?

Mr. LLOYD. I can base my experience, Mr. Chairman, on my own. experience in Canada over a period of 10 years following the war. It was argued there that there was greater danger in setting support prices too high or any kind of a support price as being very natural inducements, or providing an incentive for increased production. But it actually has not worked that way because they kept that support price down low and I think that is the secret of the successful application of any kind of a support price.

The CHAIRMAN. Proceed, sir.

Mr. LLOYD. While such a measure would lend a certain amount of stability to prices it would not be as effective as a plan whereby farmers were paid the difference between a free market price based on supply and demand, and a reasonable or flexible parity. This latter plan is preferred and recommended.

2. Because of distressed financial conditions of many poultry farmers the moratorium law be reenacted, to prevent more from being forced out of business, as many have been forced out of it.

3. Long-term loans at low rate of interest be made available to poultry farmers in financial need and/or during emergencies.

4. Government purchase of surplus products be made an integral part of the Federal program for the stabilization of prices of agricultural products. This coincides with point three of the reported Eisenhower-Benson plan, viz:

A vigorous purchasing program to remove market gluts whenever they occur and assist farmers adjust to market demands.

I would submit a paper clipping which includes that statement in the press which probably you have already seen.

Means should be taken to distribute such surplus poultry products through school lunches, hospitals, low-income families, the armed services, and other suitable outlets that will not disturb the market.

5. A congressional investigation of the spread between prices received by producers and prices paid by consumers.

With that last point, Mr. Chairman, if I may say, just last Friday in the San Francisco market, market specialists discussed the market situation which has demoralized the fryer market. There were several retailers and they were struck with the unanimous opinion of those retailers that they were not looking and the public was not looking for lower prices on poultry fryers because when they put the prices down, then they had difficulty in getting them up. But the processers were so stampeded at the present time that they were offering chickens at very, very low prices.

The CHAIRMAN. Thank you, sir.

(Supplementary statement filed by Mr. Lloyd is as follows:)

We beg to refer further to our statement made before you on November 2 last at Fresno, Calif., on poultry conditions in our State. In our brief you will recall that we used tables of indexes of agricultural prices from the United States Department of Agriculture Marketing Reports for the past 2 years, 1954 and 1955, to show the grave disparity between prices received for poultry and those received for other animal products. At the same time that prices of poultry products have remained at such low levels the prices of feed and other commodities paid by poultry farmers have continued to hold at comparatively high levels. Resulting from a long period of such low selling prices and high costs many poultry farmers have suffered financial distress and are in sore need of assistance. Certain measures were proposed by our organizations at the Fresno meeting to alleviate the situation.

With more specific reference to our proposals, No. 1 on establishing a parity index for prices for poultry products, you raised the question as to how a parity price could be paid and the effect it would have on production. In reply you may recall that I suggested consultation with poultry producers regarding same. Furthermore, I stated that the payment of a parity price would not necessarily be responsible for creating surpluses as they had learned by experience in Canada. Considering your question further, we can report that after careful consideration in consultation our members find themselves in complete agreement with the proposal made at Fresno by Mr. Sol Gura, of the Southern Poultry Cooperative and the San Fernando Valley Poultry Cooperative, Inc., and Mr. George Sehlmeyer, master of the California State Grange. The proposal involves the application of the principle of the two-price system, or the Brannan plan, which is based on 100 percent parity and supplementary payments to poultry farmers when prices received in the free market are below parity. We would draw attention to the limiting clause in our proposal which would stipulate a maximum of $2,500 as the total amount that 1 farmer could receive in any 1 year. While such an arrangement would provide a reasonable measure of financial assistance to the small family farmer, it would not be an incentive for increased production and so contribute to undue surpluses.

In answer to the question raised about control of production under the twoprice system we accept the principle that prices and production will find their 64440-56-pt. 47

respective levels on the basis of supply and demand. Under the two-price system we would conclude there would be no need for the Government to store burdensome surpluses purchased at artificially high prices.

For details of the Gura and Sehlmeyer proposals please refer to their statements as submitted at Fresno.

Our Nos. 2, 3, and 4 proposals as submitted at Fresno are clear and should need no further explanation.

Supplementing our No. 5 proposal on spread between producer and consumer prices, we would emphasize the fact that in periods of low prices for live poultry, as at present, the spread taken by retailers is in many cases excessive, especially since retail prices to the consumer do not decline to the same extent as prices to the producer. Furthermore, since the prices of poultry meats are subject to serious and frequent fluctuations, retail prices when kept up are often excessive to the consumer, but still low to the producer. We consider further, in this connection, that the Brannan plan as advocated above would be an effective agent in dealing with this phase of the poultry-marketing problem. As in the case of our proposal No. 1 on parity price and the Gura proposal, with which we are now in agreement, the extra payment to be made to the producer in 1 year, as the difference between free market and parity prices, should not exceed $2,500.

The CHAIRMAN. Mr. Gura.

Will Mr. James Hanley step forward and be seated in the front row?

All right, sir, proceed, Mr. Gura.

STATEMENT OF SOL GURA, CHAIRMAN, VALLEY POULTRYMEN'S COOPERATIVE OF SAN GABRIEL VALLEY, BALDWIN PARK, CALIF., ALSO REPRESENTING THE SAN FERNANDO VALLEY POULTRY CO-OP., INC.

Mr. GURA. Honorable chairman and members of the Committee on Agriculture, my name is Sol Gura. I am an egg producer residing in Baldwin Park, Calif. I am chairman of the Valley Poultrymen's Cooperative of San Gabriel Valley and am officially delegated to represent that cooperative at this hearing.

I am also authorized to represent the San Fernando Valley Poultry Co-op, Inc., as verified by the letter from Secretary James D. Lynch which I am filing with your committee.

I wish to present the following statement for your consideration. In view of the fact that time is getting short, I would like to present what we think would be the program to help the poultrymen.

The first is this: In the first instance, poultry producers must be given equal consideration with producers of other commodities in every Federal program dealing with agriculture.

To achieve these ends, we ask:

1. PRODUCTION PAYMENTS DIRECT TO PRODUCERS

This proposal would allow commodities to find their own price level on the open market. If the price fell below what it takes a poultryman to break even (which is the meaning of parity), the Government would reimburse the producer an amount equal to the difference between the open market and parity.

It is not our intent to bring about unreasonable farm subsidies. We propose production payments only on the first $25,000 sales by an individual producer and in no case should one producer receive payments in excess of $2,500, in any one year.

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