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STATEMENT OF JIM SANDERS, EXECUTIVE VICE PRESIDENT,
ARKANSAS CATTLEMEN'S ASSOCIATION
Mr. SANDERS. The Arkansas Cattlemen's Association would like to thank the committee for the opportunity to present written and oral testimony on H.R. 9482.
Before we go into it, Congressman, I'd just like to say a few things and then I'll get into the written testimony a little bit.
We called certain producers—who are the people we representcalled across the State so I could get a cross section of their feelings, their attitudes. And the majority of them, to a certain extent, were not familiar with this bill and the pending legislation, and so forth. So we spent a good bit of time explaining to them, and hopefully the idea got across.
We, as an association, support the free enterprise system 100 percent. One reason the cattlemen of Arkansas and this country are in the business they're in is it gives them a chance to determine their futures without constant control and regulation by the State and Federal Government.
We feel the difference is, though, you cannot go in a free enterprise system from total and absolute control to no control at all.
Here's some of the things I'd like to bring forward into this:
At the last and latest report, which was yesterday, there are 47 sale barns in operation now within the State of Arkansas. Of these, only three would come close to still being regulated under the structure of the Packers and Stockyards Administration.
According to the latest State marketing report, there were 1,124,911 animal marketing units sold in Arkansas in 1977. That would give us about 70, in other words, 70 percent of the ones that are reported. There are several others, or people have told us that this is about 70 percent of all cattle that are sold are reported into marketing, and this is from about half of the barns. So there's about 23 of the barns reporting, but there's still over 50 percent of the cows. And so you really cannot conclude a percentage as far as these three barns go against the other ones, because of this lack of total information.
But as Mr. Wilcox brought out, the average cow herd in the State of Arkansas numbers less than 30 producing females. The vast majority of these producers do work full time at another job, and the cattle are the secondary occupation. They do not have the equipment or the time to move their calves and their cattle to larger barns and market their product at the most competitive sale available as the larger, full-time cattlemen do, who have the equipment and have the people and the facilities to do this. Their breeding programs are usually year round, and they generally send their cattle for sale to the nearest and most convenient location available to them. These are the people who make up the majority of the business for these small local barns.
If the bill, as written, were to be enacted he would probably receive less total gross dollars for his cattle than at one of the larger barns that are regulated by the P. & S. and in some instances be charged more sales fees than at the P. & S. regulated yards, resulting in a considerably less amount of total dollars received. Therefore, we feel that in equity, because you're going to be having some regulated and
some nonregulated barns, there needs to be a uniform type of legislation.
The second part of your bill, Congressman, I don't believe would have any effect in the State of Arkansas, because I pulled a map out and I couldn't find any area that is over 75 miles from one sale barn to another.
I think it was Dr. Pickett who said earlier, about the basis for the formula for the 100,000 units number, and we would like to ask this question: What system would determine whose sale barn qualifies under section 1 as a stockyard that
has an annual sale volume of over 100,000 animal marketing units? What period of time and/or what records will this be based on? If nothing was established as a firm set, this could be very easily manipulated to stay under the 100,000 unit number.
It would also be unfair to these stockyards to base it on current figures, as the liquidation period of this cattle cycle has sent more cattle to market in the past years.
In the years ahead, these stockyard operations could reach a period of drastic reduction in total number of cattle sold through their barn if they were still regulated. His rates would be set on previous records, and he would not be able to operate effectively at that figure.
When we have another cattle cycle, and that will come one day, the liquidation phase takes place again, and a stockyard that has had annual sales under 100,000 marketing units could very easily exceed this figure.
Would this stockyard be placed under the P. & S. regulations, or would he continue being operated as usual? If the stockyard did face P. & S. regulations, would the manipulation of total numbers take place by canceling sales or sending cattle to other markets?
This is an area we would like to see explained to us and defined more accurately for us. Could the monopolization of an area take place? Could a larger and more profitable stockyard cut its fees in an attempt to shut down the small barns?
These are things that need to be brought into the question.
If this were to be accomplished, the remaining barn would be able to set prices as it chooses. There would be no more competition. If there were two stockyards in an area, what would stop them from raising their rates at the same time, fixing the price that the cattlemen had to pay?
We would like more definition in this area contained in the bill.
We know that the majority of the stockyards have had a rough time in the past years, as have the cattlemen. In most instances the cattlemen have not objected or would not object to an increase in cost at his local stockyard if he felt that he was receiving more services and the top dollar available for his cattle.
But the secret is good active competition among the stockyards themselves. This is the only answer to a healthy economy and free enterprise system in this business.
If in every case, statewide and nationwide, good healthy competition was evident, the problem would be solved. But that is not the case. The laws and regulations in the Packers and Stockyards Administration need to be updated and changed. But this bill, as it is written, we feel cannot accomplish this.
Hopefully, with hearings like this and the ones scheduled by the
Packers and Stockyards Administration around the country, a workable and profitable legislation can be made, can be arrived at, one that can be fair and honest to the cattleman and also profitable and economically sound for the stockyard operators.
Thank you, sir.
Mr. THORNTON. Thank you very much. We appreciate your testimony. And, of course, you've hit upon the purpose of the hearings being held around the country by the committee and also, as you mentioned, the Packers and Stockyards Administration.
As a result of the introduction of this legislation, there's been a great deal of interest in the whole question of whether, when you have nearly 2,000 small businesses in the United States, regulating any of them as a public utility is a proper way to go. The Packers and Stockyard Division of the Department of Agriculture is making a very serious inquiry as to whether, instead of trying to divide between large auction barns and small auctions barns, all ought to be removed from regulation as a public utility.
And I think what you're saying is that you think perhaps a uniform treatment across the board, to remove everybody from regulation, might be better than just removing the small barns from regulation. Is that right?
Mr. SANDERS. Well, Congressman, we just feel that it goes back to the old adage, “What's good enough for the goose, is also good enough for the gander.” And we feel that if everybody around the State was competitive, whether he was a small barn or a large barn, the people themselves would be benefited. Because, like I say, there's a lot of people in this State, like Mr. Wilcox mentioned, that are small producers who've got a pickup and a stock rack, and if they've got to haul 50 miles they don't have the facilities to do it. And if everybody was able to compete and have good active competition around the State among themselves, and be able to charge a fair percentage that they could operate at and that everybody could operate at, they could accomplish this, because everybody would be receiving the same equal treatment. And we feel that percentage would be the best way to accomplish this, and it would be least discriminatory.
Mr. THORNTON. Do you like the percentage or per-head charge, or does it make any difference?
Mr. SANDERS. I think the percentage would be the fairest, because the simple fact is if a man has an animal that brings him, $100, he's going to pay a rate for what that animal brought him, and the man that had an animal that brought $300 is going to pay his proportionate share.
Mr. THORNTON. You are aware that the bill I introduced does continue all of the authority of the Packers and Stockyards over discriminatory rates and charges, and would prohibit two barns going together to agree to raise rates arbitrarily?
Mr. SANDERS. Yes, sir, I know this. But the thing is, these are questions that were brought up by some of the people, and that is what my job is, is representing them, and that's why we called them. and these were various comments around the State. I mean nowhere at all was there animosity about, you know, why are stockyards charging too much and all this, and so forth. There's nothing like that in the State. In other words, they're for the stockyards because they're neighbors, they're friends, and in many cases they're the same people. Mr. THORNTON. Do you think in the situation we just talked about in Conway if Government regulations were to drive three barns out of business and leave one to serve everybody, that be a good thing?
Mr. SANDERS. It would be a terrible detriment, because, we can sit here and have coffee, and Tommy could be my cousin, and everything like this, and everything going on. But if a man is sitting here and he knows there's active competition going on, and these people are going to get the buyers out, they're going to get the best available dollar for the money, and if he knows that on Wednesdays he can take his cattle to a sale in Morrilton and get a higher dollar for them, he's going to do that. And I think that the man sitting here knows that too. I mean to me that's just good, active competition. It's pretty much like a political race where you go out and shake their hands and tell them what you're going to do for them.
Mr. THORNTON. Actually you're really helping in the legislative process right now, because the reason we schedule hearings is because we have a problem. The problem is that you've got a regulation that's having an unfair effect, and going to result in a harm being done to both producers and people operating these small rural barns. And we have hearings in order to find out how better to change the law.
So your testimony is very helpful. I'm hopeful that there will be some changes that may come out of these hearings that may make the law more fair. Maybe we'd even want to deregulate everybody.
Mr. SANDERS. Well, thank you. Because, I'll tell you what. We spend a lot of our time in Little Rock pretty much doing the same thing. We write several letters to Washington a week. The cattlemen around Arkansas, and I'm just going to get off the record here a minute, the cattlemen of Arkansas are pretty much like the cattlemen anywhere else. They're pretty much fed up with the Government telling them what to do. And that's just another case, if they feel like they can help the stockyards around this area I think it's a good idea. Yet at the same time, they're still watching their pocketbooks.
Mr. THORNTON. They want to make sure that the results are fair. Mr. SANDERS. Fair and effective, yes, sir.
Mr. THORNTON. I want to thank you for your testimony. Do you have any questions?
Mr. HIGHTOWER. No questions.
STATEMENT OF FLOYD VALENTINE, PRESIDENT, LOUISIANA
LIVESTOCK MARKET ASSOCIATION
Mr. VALENTINE. My name is Floyd Valentine. I live in Shreveport, La. I'm president and general manager of the Livestock Producers Auction Barn in Bossier City, La. Also, I'm president of the Louisiana Livestock Market Association.
I didn't start out working for any of these people because I thought it was going to be for free, but yet it actually turned out that way. The way I make my living, I farm. I farm à 3,500 acre Red River farm around the Shreveport, La., region, and run about 2,500 cattle on this farm. Therefore, I am vitally interested in the market and what a market can do for me as a farmer.
I don't think it would be very proper for me to appear here before you today unless I told you that at the present time I represent, as
president of the Livestock Producers, Inc., 144 stockholders. We're a corporation, we're not a cooperative. We went into this business for one thing, and that is to improve and enhance the free, competitive and the livestock way of marketing our cattle. We did not go in there as a means to reduce marketing costs. We went in there with the sole reason that we believed the livestock auction market system was the best, and that the best interests of the producer could be the amount of money that he received above the commission.
Also I might say that we opposed what we believed to be a procedure by the Packers and Stockyards Administration several years ago to gain information to change our structure of setting our tariff rates. And along the line in opposing this, our attorney made a mistake. And as a result, 17 markets in the State of Louisiana now have judgments against them in the amount of $477,000, which I must say is very unreal.
Yesterday I was in Washington and appeared before the Packers and Stockyards Administrator and representatives of the Justice Department to attempt to determine what was real.
And I didn't come here today to try that, because I brought this up for one reason. And that is to let you know that we have been engaged in this litigation, that I have no vendetta against the Packers and Stockyards Administration, and they have a representative sitting in this audience here today.
Whatever rightful and reasonable justification the Packers and Stockyards has for its existence, I am for. But in no way as a conservative, and as a believer in free enterprise, can I class the livestock marketing system in the State of Louisiana as being any other than a free enterprise system. And to my dying day I will oppose Government regulatory and oppressive practices that would cause the producers of the State of Louisiana to receive less money for their products.
I believe the years of service of the livestock markets in Louisiana have set the tariff structure. And I might say this: If my good friend at the National Stockyard of Arkansas wants to sell cattle for $2.50 a head, then he knows what his service is worth. And if I want to sell them for $5 a head, I believe I know what my service is worth. And I believe that we, and we alone, have the benefit of knowing what that amount should be. Certainly we're going to have to make a profit if we are going to do anything for the cattle producers. When we walk in and pop that whip, as the gentleman mentioned here a few moments ago, and set a price and support that market, it takes money, it takes time, it takes ability. And I don't believe that there's any way that the Government can arrive at what rate of profit a man should make. Certainly the auction markets of this Nation have proved beyond the shadow of a doubt that this is one of the best ways in which to market cattle.
I would like to point out one thing. When we talk about the present capabilities of the Government to set tariff rates, and I believe Mr. Grizzell, who is in the audience here today will concur with this statement that I'm fixing to make now. A few months ago I called him and told him I needed to get an increase in yardage charges. We charge 4 percent, and 30 cents yardage, if my memory serves me correctly. And also I wanted to place a stated amount of money to cover insurance costs. And without any reservation, and Mr. Grizzell
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