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The National Grange has among its approximately half million members thousands of small producers of livestock that rely on auction barns as the sole method of marketing. Therefore, we have a keen interest in the per-head commission charged by small rural auction barns.

The National Grange is in opposition to H.R. 9482, a bill to exempt small rural livestock auction barns from the rate regulations of the Packers and Stockyards Act. In our judgment, the amendments to the Packers and Stockyards Act are not necessary; in fact, they could be detrimental to the livestock producers who depend on small rural livestock auction barns as their means of marketing.

H.R. 9482 would exempt from the rate regulations of the Packers and Stockyards Administration 1877 livestock auction barns. These 1877 auction barns handle 44.3 million head of livestock or 90% of all livestock sold, with a total value of $7.9 billion.

We are not talking about small rural auction barns; we are talking about facilities that market nearly 100% of all cattle sold, facilities that small livestock producers depend upon as their market outlet. Therefore, the rates charged as commissions for services rendered by the auction barn have a direct effect on profits of small producers who are limited in their marketing choices and must depend upon rural auction barns.

One basic purpose for passage of the Packers and Stockyards Act was to insure that livestock producers selling their livestock at public markets would receive reasonable services and facilities at reasonable charges. The present regulations pertaining to rates and charges contain sufficient administrative authority to protect the livestock producer and at the same time allow the stockyard operator or market agency to recapture all of their reasonable operating expenses in furnishing the stockyard services and facilities plus a fair return on their investment.

In addition, fair procedures are set forth under the present regulations to permit increases in the rates or charges to cover operating cost and a fair return on the operator's investment.

We believe the regulations in the Act as briefed above provide the necessary protection of both auction barn operators and producers. The U. S. Fifth Circuit Court of Appeals at New Orleans, Louisiana, on December 27, agreed when it upheld an administrative order requiring the firm to use a per-head schedule of rates.

The court found that the rate schedule set by the judicial officer gave Giles Lowery Stockyards a rate of return which was "not unreasonably low". It also said the method used in establishing the rate-making proceeding had not violated rule-making procedures.

The court noted that "the same method is not required to be used in computing rates for auction stockyards as is used for terminal yards. Further, it said "it was permissible to use nationwide allowances or averages of auction markets in fixing the petitioner rates."

The P&S Act, a fair trade practices law, requires livestock market agencies to provide reasonable stockyard services and facilities at rates which are just and reasonable. Its purpose is to promote fair and open competition in the marketing of livestock, poultry and meat.

Therefore, H.R. 9482 should not be approved.

We would appreciate this letter being made a part of the hearing record on H.R. 9482.

Thank you.

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The National Grange has listened to and studied the testimony before the Subcommittee on Livestock and Grains of the House Agriculture Committee on H.R. 9482 and related bills to amend the Packers and Stockyards Act in regard to rate-making at public livestock markets, and we reaffirm our opposition to H. Ã. 9482.

The National Grange, after due study and consultation with representatives of the livestock industry, supports the concept of deregulation when it can be achieved and at the same time continue to protect the public interest. However, we believe the necessary changes can be accomplished by amending the current regulatory policy under the Packers and Stockyards Act, thereby making the proposed legislation unwarranted.

The National Grange will support regulation changes in the rate-making procedure of the Packers and Stockyards Administration that would: (1) provide that a stockyard or market agency could establish and apply, as determined by the stockyard or market agency, its own level of rates on a per-head basis, after giving notice to its market users and to the Department of Agriculture; (2) provide that a copy of any rate change would be filed with the Department of Agriculture and such proposed change would be posted 10 days prior to making the rate change; and (3) provide that the P&S Administrator would review the level of rates to assure uniform and nondiscriminatory application based on the cost of service only on valid complaints of producers.

We appreciate this further opportunity to comment on H.R. 9482 and ask that this letter be made a part of the hearing record.

Thank you.

Sincerely,

John N Seatt

CC:

A11 Members,
Agriculture Committee

John W. Scott
Master

TEXAS DEPARTMENT OF AGRICULTURE,

Austin, Tex., March 13, 1978. Hon. Ray THORNTON, House Agriculture Committee, Subcommittee on Livestock and Grains, Long

worth House Office Building, Washington, D.C. DEAR SIR: I would like to take this opportunity to express my support for legislation which would exempt small rural auction barns from Packers and Stockyards Administration (P&SA) rate-setting regulations. By approval of this legislation you have a rare opportunity to cut Federal red tape which is tying up the market segment of the livestock industry.

Texas livestock producers would be better served if small livestock auctions are allowed to set their own commission rates without government intervention. With the possible exception of a few isolated areas of the state, we have an adequate number of auctions to allow competition to set the necessary rates, as opposed to the Federal Government setting those rates.

The free enterprise system should be allowed to work. Competition alone is all that is necessary to establish the rate an auction charges for each animal sold. If that rate is out of line, a rancher will quickly shop around for a better rate.

Perhaps prior to our current transportation methods and our improved farmto-market highway system, a Texas cattle producer was restricted to one single auction with sales commissions which might represent a monopoly. This is no longer the case in almost every area of our State.

In the few isolated areas where competition might not exist, a reasonable maximum rate might be necessary. Easing these regulations would also free P&SA personnel from this time-consuming duty to attend to higher priority functions. Thank you for your consideration of this proposed legislation. Sincerely,

REAGAN V. BROWN,

Commissioner.

DEPARTMENT OF AGRICULTURE

OFFICE OF THE SECRETARY
WASHINGTON, D. C. 20250

MAR 14 1978

Honorable Thomas S. Foley
Chairman, Committee on Agriculture
House of Representatives
Washington, D.C. 20515

Dear Mr. Chairman:

This is in reply to your letter of October 11, 1977, requesting a report of the Department's recommendations on H.R. 9482, a bill "To amend the Packers and Stockyards Act of 1921." The bill defines an animal marketing unit and restricts the Secretary's authority with respect to the justness or reasonableness of any rate or charge (or the method of computing the rate or charge) for stockyard services at stockyards which (1) have an annual sales volume of over 100,000 animal marketing units or (2) have an annual sales volume of 20,000 animal marketing units and are located more than 75 miles from the nearest independently owned and operated stockyard.

The Department opposes enactment of this bill.

Enactment of the bill, based on 1976 volume, would limit the Secretary's rate regulatory authority to only 103 of the 1,980 stockyards now regulated. The 103 stockyards include 71 auction markets with over 100,000 animal marketing units, 9 auction markets with 20,000 units located over 75 miles from the nearest market and 23 markets referred to as terminal stockyards.

During January and February 1978, the Department conducted a series of hearings nationwide to receive oral statements and written comments from livestock producers, livestock marketing industry representatives and others to assist it in determining a future rate regulatory policy. The Department agrees with the basic objective of the bill to reduce regulation if the economic position of the livestock producers is not jeopardized or adversely affected. The Department shares the President's goal of eliminating unnecessary regulations and reducing unnecessary paperwork requirements. Testimony by some livestock market operators at the hearings indicates that if rate controls were removed, there might be substantial increases in the fees livestock producers would pay for selling their livestock. Therefore, the Department is preparing an administrative alternative to accomplish the same goals.

An analysis of the record of the hearings and other information indicates that some de regulation of rates and charges at posted stockyards may be

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