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Since then, in 1935 roughly—and I would like to say that this is not in my written testimony—but when the barn was organized in Morrilton, Ark., in 1935 it opened on a 4 percent commission, and operated on this 4 percent commission until competition forced it to 3 percent in 1959. And at that time P. & S. asked no questions about reducing the percent of commission. They went down without any trouble at all.

The weekly livestock auction sales started in the United States roughly in 1935. The weekly auction is attended by farmers, livestock dealers and everyone interested in the livestock business. The auction is out in the public, you have all the buyers bidding to the auctioneer competitively.

What I am saying to this committee is that there is a difference between the livestock auction market and a terminal market. The livestock auction has no way of doing any injustice to any producer, whereas the terminal market only deals with one buyer at a time in the sale. The salesman takes the bid on the cattle from the buyer. In turn he relays it to the seller, if he is present. If he is not, and the salesman feels that that is a fair price for his cattle, they are sold.

At the public auction the livestock is started at what the barn operator feels is a fair price and goes up for bids. The auctioneer is the determining factor in making the sale and anyone in the audience can bit, the producer can be there. The producer can see how you operate your business, and he can decide which market he would like to do his business with.

The livestock markets in Arkansas are located normally 25 to 50 miles apart. The mode of transportation that the farmer has, has a choice in his marketing. If he feels like he gets a better price at one barn, he has the opportunity and privilege to sell his cattle there.

The local barn operator is known throughout his trade territory by his reputation by the way he conducts his business.

What I'm telling you is that the local barn operator is known by his customers, and in your terminal markets the man selling 9 times out of 10 is a complete stranger to the consignor.

I hope I have made myself clear in stating the difference between weekly livestock auctions and the terminal markets. If you have any questions concerning this matter I'll be more than glad to discuss it

Thank you for the opportunity to testify today before this committee, and at any time that I can be of any service or answer any questions concerning this very important matter, feel free to call upon me.

Mr. THORNTON. Thank you very much, Mr. Durham.
Mr. Lewis?

with you.


LIVESTOCK CO., INC., CONWAY, ARK. Mr. LEWIS. Congressman Thornton, I'm a little nervous up here, but maybe I can talk.

I want to thank you very much for introducing this bill, H.R. 9482, and also Senator Bumpers for taking time out to look at the small operation, and also Congressman Hightower for stopping bywhich most of the time we don't get that kind of service, they don't recognize us that well.

Mr. THORNTON. We want to thank you for coming to this hearing and presenting your testimony.

Mr. LEWIS. Actually, I have taken over after my uncle, Major Lewis, passed away and I started operating the barn in Conway.

Well, I think it's unfair for the packers and stockyards to come in and tell you what you can and cannot do. They tell you that you can charge this and that amount of money, and you're supposed to do this. In other words, you don't have any authority to say


you do. They come in and tell you exactly what you can and cannot do. Otherwise, if you don't, they single out 4 barns to make an example out of how the other 43 barns in the State will look.

They're doing a good job of it. And at the rate they set for the four barns to operate under, they'll have to pull money in from somewhere else if they operate—I'll put it that way. To operate, they'll have to pull it in from another point.

In the first place, when the barn was built a lot of money came from other sources instead of the livestock business.

You have two or three gentlemen that are fine gentlemen with the P. & S. in Memphis. Well, they come by and tell you what you should do and what you should not do. I talked to a gentleman, he come by here a few weeks ago, and he's a nice gentleman, but I asked him-it wasn't long before he could retire, and I said, Why don't you come by and help me?

When a man walks up to the counter I'm guaranteeing that they get their money, which I'm obligated to do. He's paying me a service to sell his cattle. When I sell the cattle I have no as I'm going to get my money.

They say, Why don't you make the man pay with a cashier's check? Why don't you do this? If you're going to do all thạt, you're not going to have any buyers. You'll have three or four, and the man that walks up and pays you cash right there is not going to give you anything—he's not going to give you market value, when he knows that he's not under obligation.

In Conway there's nine sale barns in a 50-mile radius, and it will not take any man more than 45 minutes to get to any one of the barns. If we do not do the services of any of the other barns, they can go anywhere else. And a lot of people trade with each and every one

ance that

of us.

And it's unfair to pick out four barns and go across and not bother the rest-and that's fine, I'm glad they're not-but they'll make an example out of the four, and then they'll go after the rest of them. But those four either have to go out of business—of course, naturally the other barns it wouldn't hurt them until they get on them, and when they get on them of course they're going to holler.

But they have three or four over there in the office, and they work 8 hours a day. When a man's running a livestock barn, you get up all hours of the night to take care of your customers. They bring their cattle in, and we'll stay there and check them out until they're all gone. This summer I've went to work at 6 o'clock in the morning, and I did not take my boots off until Wednesday morning at 3 o'clock, and got back up the next morning to load cattle to go to the packing house.

They say, Why don't you hire this ard hire that? It's pretty hard to do, when most-you don't work 8 hours at a barn and do your job like you do for the Government. And I think we have too much Government in our business today. A man sitting in Washington, Memphis comes up there and tells you what you should not do and what you should do, and who's paying him? Folks like us, that works day and night pays taxes, and then they're drawing money telling you how to operate or how you cannot operate.

I could talk on and on, but I'll shut up and thank each and every one of you for listening.

Mr. THORNTON. Thank you very much, Mr. Lewis.

Without objection, your prepared testimony will be made a part of the record.

[The prepared statement submitted by Mr. Lewis follows:)


CONWAY, ARK. I am Tommy Lewis, owner and operator of Lewis Livestock Co., Inc. of Conway, Ark. I have been in the livestock business since I was 14 years old. In 1971, I undertook the responsibility to build a Sale Barn in Conway, Ark. Cost of this facility and land investment is in excess of $500,000.00. Money was borrowed from the local Production Credit Association at 9% interest. I was under the impression that the free enterprise system in the U.S.A. would permit me to build and own my own business and charge a competitive fee that would return reasonable profit on my investment.

The customers that we serve in the Central Arkansas area have no complaints to my knowledge of any discriminatory charges that the Packers and Stockers Administration has claim my Sale Barn is operating under the Free Enterprise System. Barn operators promote competition for livestock in this area. In a 50 mile radius, there are 9 sale barns which compete for the farmer's business in the Conway area. I feel that if my rate charges are out of line that the customer will carry his cattle elsewhere. I plan to have my charges competitive with other barns in this area, but I feel that as long as the rates are uniform and non-discriminatory to the customer, I should have the right to charge a rate that would allow me to operate, pay my bills, debts and give a return on my investment. The rates asked by the Packers and Stockers would not allow me to continue to operate if it is imposed on my facility.

The Stockers and Packers have singled out 4 sale barns in this area to test their authority to regulate the rates that a barn must charge. I feel that this is discriminatory and unfair to these operators. There is nothing fair about the method that the Stockers & Packers are trying to impose their rate making authority on these four barns and not attempting to regulate all the barns in Arkansas. The four barns involved in this action have always charged less than other barns in this general area. I presently charge commission based on the value of livestock, whether it is a baby calf, steer, cow or bull. I believe that it is the fairest way that I can operate for my customers.

The present rates that are being sought by the Packers & Stockers will force the small Sale Barn operator, like myself, out of business and create only large Terminal Markets, that provide very little service for the small operator like we have in Central Arkansas.

I do not understand why the Packers & Stockers Administration that was formed over 50 years ago to regulate the large Terminal Markets, would try to impose a rate that is unfair to the Sale Barns, based on the utility concept, and not consider the operation costs, investment, risks and the area service, that a local Sale Barn provides.

Mr. THORNTON. What you're saying is that competitive situation such as you've described, your customers are the people who tell you what services they want and what rates they're willing to pay, as compared with what your competitors are charging; is that right?

Mr. LEWIS. Yes; right. You take in, say the barn business, we charge 4 percent up to the first $2,000, 3 percent for all over $2,000.

All right. I started out with my uncle, Major Lewis. We went to the Morrilton sale, it was 30-some years ago, in an old Chevrolet that had a thing on the back end of it that we hauled calves over there. The commission in Morrilton at that time was 4 percent. What you

sold or what you did not sell, it cost you 4 percent to sell.

And the commission rate since that time has gone down instead of going up. So you can understand what with your labor--then you could hire an auctioneer for $20, and now it's $100-$150 and on. And labor then you could hire for $4-$5 a day. Now it's $2.75, $3, $3.25, or $3.50 an hour, and on. And most of your barns-not all of them's the same—but most of your barns from Conway north is on a straight 4 percent. In ours, we're 4 percent for the first $2,000, and 3 percent thereafter. And you know with today's expenses what it costs to operate.

All we ask is to be fair to each and every one of us. In other words, get on us all, or get off of all of us. I think that would be fair. And if hé wants to charge 2 percent, I'm for it, if he wants to charge it. And if he wants to charge 4, I'm still for it. So the customers you do business with determine what you do.

Mr. THORNTON. Thank you very much, Mr. Lewis.
Mr. Dennis Wilcox is next.



Mr. Wilcox. Thank you, Congressman.

My name is Dennis Wilcox, and I'm a cattle producer from Faulkner County, Ark. I've been a cattle producer most of my life. I'm now connected with the Faulkner County Farm Bureau and still have a part-time cattle operation.

My operation would be typical, in my judgment, to most of the cattle producers in our area. I'm testifying on behalf of our cattle industry in my area in regard to the Packers and Stockyards Commission regulations on rates charged for the sale of our commodity. Our area is made up primarily of 50 percent agriculture and 50 percent industry.

The average herd in my area is primarily about 30 head, or less, per farm, so like myself most of these farmers have a job that they work at to make a living. They raise these small herds of cattle to subsidize their income, by the sale of these small herds of cattle.

The marketing system that we have enjoyed for years and years is very convenient to our type of operations. Inasmuch as since the average herd size is 30 or less, no individual farmer in our area has a great number of calves to market at a given time, like there is in some areas. For this reason we need markets available on a local basis where, whether after work or before work or the day before these cattle can be taken to the auction barns in the future, like it has been in the past.

Even though the rates would be regulated by the Packers and Stockyards Commission, we think that this would be a detriment to not only our people as producers, but it would be an increase in the end to the consumer that eventually and finally consumes the commodity.

So it's my opinion that if I'm forced to go 100 miles or 150 miles to a market it's going to increase my expenses. And we feel that the system that we've operated under for the past several years has been very successful, and for this reason we feel that the free enterprise

system in marketing is the system that we should continue under. We strongly feel that these rates that are charged should not be regulated by the Packers and Stockyards Commission on the small sale barns like it exists in our area now.

I am familiar with an area of 75 miles around here, and I would say in my area that there is a sales barn that would be no further than 30 to 50 miles, and at the outside no further than 75 miles from an individual farmer, where he could take his cattle.

We feel that should this free enterprise system not continue, that this would cause not only additional cost to the consumer but it would cause additional inconvenience to the producer and more especially to the small and the part-time producer.

The people that I visit with, in the everyday walk of life, feel that anything the Government has been involved in, in the way of controls, in the past not been successful, and in essence we feel that all and all we just have too much Government already.

For this reason we feel that the present system should be continued, and the rates charged or the commission charged by the local markets should not be regulated by the Packers and Stockyards Administration, but should be left alone and left to the free enterprise system. Of course, we think in the end this would be a savings to the consumer, which is really the ultimate goal.

I would say in my contact with my fellow farmers and my fellow workers, that my folks are satisfied with the marketing system as it exists, and we would urge our leaders in Congress to continue the system the way it is. We feel that continuing the way the system is now would in the end be a saving to the consumer, plus the fact that it would be much more convenient for the producers.

That's the end of my testimony.
Mr. THORNTON. Thank you very much, Mr. Wilcox.

Several times you said that you thought the system should be continued as it is now. And at the same time, you said that you believed in the free enterprise system of letting competition control the rates, the charges.

My concern, and what I would like to ask, is that under the present law, the Department of Agriculture has begun to regulate rates and charges and to substitute a Government determination for the free enterprise system. Now, that is the situation as it is now.

Are you suggesting that we should go back to the procedure where each barn had more authority to set its own rates, or do you want to have the Government regulate them?

Mr. Wilcox. No; I'm suggesting that—of course, the regulations, even though they have been a law in the past, have really never been enforced, and

Mr. THORNTON. That's right, they have not been enforced. And now they're beginning to enforce it

Mr. Wilcox. Well, my contention is that they shouldn't have gotten into it to start with, and let the free enterprise system work as it should, and let competition take care of the commission that's charged on the services.

I realize my prepared statement should have indicated that, but as Mr. Lewis testified, they've only started on four barns. This is the first four that I know of. So up to this point there hasn't been much regulation.

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