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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

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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.

The poultry industry has long been afflicted with the disparity in the egg-feed ratio arising from an economic relationship where unsupported poultry, dairy, and other grain-dependent products must be produced by use of supported grains, the price of which is relatively inflated by the past and present

parity arrangements. The resulting imbalance between unsupported and nonsupported commodities can he traced to its origin with no difficulty.

The validity of the price-supports principle has long been accepted by virtually everyone. It has been distorted, however, so that the middleman rather than the farmer has been the beneficiary. Our proposal for production payments to achieve parity by making up the difference between market prices and the parity level would bring the program back to its original intent which was to stabilize the income of farm families. It would make possible the protection of family poultry operators from absorption or annihilation by massproduction poultry interests which have been increasingly invading the California market.

2. CHEAP CREDIT AND FARM DEBT MORATORIUM

The small- and medium-sized farmer needs low-cost nondistress governmental credit to relieve him from gouging at the hands of private creditors and lending agencies. Farmers' Home Administration lending funds are totally inadequate and are provided only if credit is unavailable from other sources. The giant operations are again at an advantage in that they can command cheaper credit even from private sources than can the smaller operators. Where stabilization can be brought about by refinancing, such opportunities should be afforded on a long-term basis.

Farm debt moratorium legislation is required as a standby measure to prevent any dispossession in the event of continued deterioration in the farm picture. The United States Senate of the 84th Congress is commended for having passed a moratorium bill (S. 689) and we are urging the House of Representatives to follow through in the forthcoming session.

3. CROP INSURANCE

Poultry, along with other commodities, is susceptible to many disease epidemics and natural catastrophes over which the farmer often has no control. The enormous losses suffered by poultrymen in southern California in September 1955 as a result of the unusual heat wave is one of the most recent examples of the helplessness of even the most efficient producers against such acts of God. It was for the purpose of coping with these catastrophes that the Federal Crop Insurance Corporation was originally established.

We urge that your committee recommend that a pilot study be inaugurated at the earliest possible time to determine how such a program can be set up to cover poultry producers.

4. FOOD ALLOTMENT PLAN FOR UNDERNOURISHED The California poultry industry has demonstrated that it is able to take advantage of scientific and technical achievements to produce a volume of eggs and poultry meat to provide California's increased

population and the constantly rising standard of living for which this Nation is internationally recognized, with an abundance of eggs and poultry meat. Nonetheless, the Senate has repeatedly noted in proposed legislation that consumers' buying power is not able to avail itself of this productive capacity and has therefore proposed certain measures through which low-income families may avail themselves of nutritious foods, amongst which eggs and poultry meats are basic. One of these bipartisan proposals is S. 45 (Aiken-Young-Humphrey),

This plan would fully utilize normal commercial wholesale and retail facilities and would make unnecessary the establishment of a Government-financed stamp-distribution system since all cooperating agencies have their own apparatus for handling client allotments.

We urge early enactment of this legislation.

5. INCLUDES EGGS AND POULTRY IN SCHOOL-LUNCH PROGRAM

The CHAIRMAN. Will you just submit that for the record? We are familiar with the problem. We have had a lot of testimony on that.

Will you give us points that you have not heard here today?

Mr. GURA. Those are the 5 points that I want included in the record and which we recommend.

The CHAIRMAN. Thank you; they will be included in the record.
Thank

you ever so much. (The prepared statement of Mr. Gura follows:) As a segment of California's economy which provides a livelihood for some 35,000 farm families, over one quarter of our farms, according to the 1950 agricultural census, grossing some $300 million in 1953 and $247 million in 1954, proposals for stabilizing the economic fluctuations in the poultry industry are definitely in order. We poultrymen therefore propose certain measures for the consideration of the 84th Congress, which we feel will provide “shock absorbers" to a further economic collapse in the poultry industry, nationally, and in California.

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 price 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 1 year.

The poultry industry has long been afflicted with the disparity in the egg-feed ratio arising from an economic relationship where unsupported poultry, dairy, and other grain-dependent products must be produced by use of supported grains, the price of which is relatively inflated by the past and present parity arrange ments. The resulting imbalance between supported and nonsupported commodi. ties can be traced to its origin with no difficulty.

The validity of the price supports principle has long been accepted by virtually everyone. It has been distorted, however, so that the middleman rather than the farmer has been the beneficiary. Our proposal for production payments to achieve parity by making up the difference between market prices and the parity level would bring the program back to its original intent which was to stabilize the income of farm families. It would make possible the protection of family poultry operators from absorption or annihilation by mass production poultry interests which have been increasingly invading the California market.

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