and I are good friends, and I have no animosity toward him, but he stated, "We are not allowing any increases in Louisiana for anyone that has a percentage market tariff."

I have no argument with anyone turning me down for an increase in tariff based upon reason, and that's what the law calls for. But denying me just simply because of the way I set my tariff, to disqualify me for an increase is not reasonable. And I just tell you that for this reason, is to point out to you the incapability of Government to function in private enterprise, with one exception: And that is anything that they have to do that can provide a better climate in which any free enterprise system can operate. I think that is a duty of the Government. But to regulate it, to depress it, does not come under that jurisdiction. And I believe the setting of tariff rates is a depressing factor, because we are dealing in something over which they have no knowledge and which they do not have the ability to function. And the sole responsibility of the Government should be in the line of responsibility for a good condition under which to operate. And I bring that up again simply for this reason: I believe that years of service or years that we have had the markets to operate in, has set the need for some way for the seller of cattle to be protected and get their money. And I noticed in your bill that you did exclude almost everything out of the present bill with the exception of the ability to set rates for tariffs.

What I'm saying here, time has proven that Government can be of service to the farmer by having a good and strong custodian account and the ability of the markets to service that account. And I believe it would be of value, even though you exclude this from your bill, that it would be of value in getting this bill passed if somewhere that could be restated and accompany this bill, giving the Packers and Stockyards the right to have markets to establish a custodian account and to properly service it.

Again I say that is my philosophy of life. That is my philosophy of what life is all about so far as Government and the economy is concerned. And with those statements I would like to make this remark: That I believe, without a doubt, that the 1,500-plus customers that we serve in our market in Bossier City, La., have a need for a small market at a rather short distance where they can sell their cattle. If you remove the market from the people that raise the cattle, the higher cost of transportation at this time in many cases will exceed the tariff itself. And that is unreasonable so far as the producer is concerned.

And I would say this: That as a producer of cattle, as an operator of an auction barn, and on behalf of the people of the State of Louisiana, I believe I have their full backing here today, that we wholeheartedly agree in supporting this bill that you have introduced. Thank you, sir.

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

It is almost 12 noon. We will be able to resume these hearings and hear all the scheduled witnesses in a short time after a reasonable break for lunch.

After lunch I'm going to ask Mr. Hightower to act as chairman of these hearings for the balance of the hearing. I'll be here to participate. So we will stand in recess until 1:15.

[Whereupon, at 12 noon, the hearing was recessed, to reconvene at 1:15 p.m., this same day.]

AFTERNOON SESSION

Mr. HIGHTOWER [acting chairman]. Would you please take your seats?

I'd like to ask Mr. J. D. Branscome, Mr. Dan Murray, and Mr. Richard Kohler to please come and take seats at the witness table. Because we have so ne time constraints it is going to be necessary for me to ask the witnesses to try to hold their remarks to about 10 minutes. That's flexible, and we want to give everybody an opportunity to make a full testimony. But we also want to remind you again that we will keep the record open for about 2 weeks, and if you have addition remarks, or anyone who has not come today prepared to testify ut would like to submit some testimony, the committee will accept that and it will become a part of the permanent record just the same as if you had testified here today.

If you have prepared remarks, we'd be happy for you to submit those prepared remarks and then speak extemporaneously, if you'd like to do that. Or if you'd prefer to read-whichever way would suit you best. Because, as we said earlier, this is our opportunity to hear your ideas about this legislation, and we don't want you to miss the opportunity to speak, and we certainly don't want to miss the opportunity to hear from you.

I have asked Mr. Branscome, Mr. Murray, and Mr. Koehler to sit here jointly, because as I understand it you are each with a livestock marketing forum or association, and there might be a certain amount of agreement in your testimony.

So we would be happy to hear from you at this time. Let me say, though, first, that Mr. Thornton will be here in just a moment. He had to make an outside call. But he will be here in just a few minutes. But in order to give everybody full opportunity to be heard, we want to go ahead and begin.

I will be presiding this afternoon. We will try to watch the time, but, as I say, we want to give you plenty of time to be heard.

Now, Mr. Branscome.

STATEMENT OF J. D. BRANSCOME, CHAIRMAN, LIVESTOCK MARKETING FORUM

Mr. BRANSCOME. My name is J. D. Branscome, of Grenada, Miss. At the outset I wish to express my appreciation for the opportunity to present this statement on a subject in which I have a direct and dual interest. That subject is if the tariff regulation of the livestock marketing business is subject to the Packers and Stockyards Act of 1921.

I have an individual interest since I am actively involved in the ownership and operation of the Oxford Livestock Market, Inc., of Oxford, Miss., which is a marketing business subject to the provisions of the Packers and Stockyards Act.

My experience with the livestock industry in general, and in the marketing sector in particular, spans my lifetime through the family ties and background in this particular area of Mississippi, and includes almost every aspect of the operation of the business.

In addition to my personal interest, I speak today too on behalf of an industrywide concern, as chairman of the Livestock Marketing Forum, a subdivision of the Livestock Laws Reform Commission.

The Livestock Laws Reform Commission is a foundation which is concerned with a broad range of laws, State and Federal, which affect the marketing sector of the livestock industry and is sponsored by the Livestock Marketing Association. I have some 7 years of experience with this industrywide effort.

In conjunction with this industrywide concern I take this opportunity to introduce to the subcommittee Daniel Murray, an executive officer of the Livestock Marketing Association, and Richard Koehler, an attorney with the association, each of whom will offer remarks on this same subject.

Presently tariff regulation is based on the statutory provisions of the Packers and Stockyards Act of 1921, and is carried out through the Packers and Stockyards Agricultural Marketing Service of the U.S. Department of Agriculture under the Department's recent reorganization.

Prior to this recent reorganization, the administrative organization was known as the Packers and Stockyards Administration. The tariff regulation now in effect deals with the charges that a marketing business can make for the services it provides in assisting a farmer and producer in selling his livestock, but is essentially limited to marketing businesses with fixed facilities.

My reference to a livestock marketing business or a marketing business includes such usual designations as terminal, stockyards, livestock auction markets, auction barns, and auction stockyards. I know that I speak quite strongly for myself and the industry in general when I say that the tariff regulation of the Packers and Stockyards Agricultural Marketing Services is an unwarranted holdover of yesteryear, and really not applicable or responsive to today's and I emphasize today's-industry.

The Thornton bill, H.R. 9482, as well as companion bills, H.R. 9639 and H.R. 10016, and S. 2195, which seek to limit the regulatory authority with regard to tariffs, focus attention on and deal with an area long overdue for reform and Congressional scrutiny. As such, I am quite heartened by the efforts of Representatives Thornton and Hammerschmidt and this subcommittee. We note that the Packers and Stockyards Agricultural Marketing Service has recently announced that it will hold a series of seven public hearings across the country, commencing January 23, 1978, in Sioux Falls, S. Dak., and we cannot help but believe that the impetus of such action must be attributed to no small extent to this legislative effort.

There is no doubt from the hindsight of historical perspective that tariff regulation was an important facet of the Packers and Stockyards Act at about the time of the original legislation. At that time this legislation dealt with a small number of rather large terminal markets, with strong and influential ties to large packers. It did deal with very real and undesirable profits.

At that time, too, the vast majority of such, approximately 80 percent of all livestock had to be, and were, marketed through these terminal markets and were shipped to such markets by rail.

In contrast to the above, we note significant changes in today's industry. Livestock from birth to slaughter changes hands or ownerships several times through one marketing system or another.

The announcement for the upccming public hearings of Packers and Stockyards carry the following data: During 1975 posted stock

yards handled over 95 million head of livestock, valued in excess of $13 billion. Yet, in actuality, such data relate to only approximately one-half of the livestock transactions in this country. That is, there are another 95 million head of livestock involved in sales not subject to tariff regulations.

In that sense, one segment of the marketing sector is scrutinized and regulated far out of proportion to the other.

In addition, we have an element of competition present today that was unheard of at the time of the original legislation. There are some 14 marketing businesses within a 75-mile radius of my own business. Hence, I must strive to have Oxford Livestock Market at its best in all aspects of its operation in order to stay in business and maintain a viable entity.

A lack of attention to our endeavors would mean simply a loss to both consignors and purchasers of livestock.

Hence, we believe the overall concept of the tariff regulation is unwarranted. The reality of competition in a free economic system would provide the most meaningful regulation of services provided to the consignors for their marketing services and the charges set for such services. This basic concept of total deregulation of all stockyards and marketing businesses subject to the act has long been a goal of the livestock marketing forum, and is presently being pursued through S. 2275, introduced by Senator Eastland, entitled, "The Freedom of Livestock Marketing Act."

As such, I once again express my appreciation for the deregulation efforts of Representative Thornton and this subcommittee. Your interest in this area is certainly welcome.

Thank you.

Mr. HIGHTOWER. Thank you, Mr. Branscome.

We will now hear from Mr. Dan Murray.

STATEMENT OF DAN MURRAY, ASSISTANT MANAGER,
LIVESTOCK MARKETING ASSOCIATION

Mr. MURRAY. Thank you, Chairman Hightower and Congressman Thornton.

My name is Dan Murray. I'm assistant manager of the Livestock Marketing Association with headquarters in Kansas City, Mo. This is a national trade association of livestock marketing businesses which represents better than 900-plus subscribers throughout the United States and also in Canada.

It's a great opportunity to be in front of this subcommittee today to discuss a very concerned subject of livestock marketing businesses which we represent, and the primary purpose that I'm here is that I represent these markets in the States of Missouri, Arkansas, and Oklahoma.

I would like to briefly focus my remarks on the day-to-day aspects as far as tariff regulations. That is, in any one given locale of any given marketing business there are a number of circumstances which can arise which relate to an increased cost of doing business.

A normal business, one whose incoming revenue is not strictly regulated, has more latitude and greater ability to deal with such circumstances as they arise. A good example is the recent increase in the Federal minimum wage as set by Congress. How does a business begin

to deal with such extra cost of doing business? Presumably such costs could be dealt with by each individual marketing business that's making application to the agency, at some point in time for the commission to increase their prospective tariff. This process might involve an exchange of letters, depending on the agency's review on a particular business situation. This, then, becomes a matter of extra expense and effort in dealing with the ordinary, or day-to-day problems."

A second aspect which I deal with is in the custom and usage of a trade. An example of this would be in reference to the tort bill as far as animal marketing unit. That is, in my experience the concept of animal marketing units is not a term or concept of the trade. Those who operate marketing businesses do so with the knowledge and understanding as far as head count, species, type, as far as fat cattle, feeders and stockers, feeder pigs and stock hogs.

These businesses' books and records as far as general accounting practices are handled along these same lines. As such, I wonder if the animal market units actually reflect the manner in which the industry does business?

In closing, I again would like to express that I am representing here today better than 900 marketing businesses that support as far as deregulation of tariffs on our marketing business, mainly because the association represents a wide range of size and category measured by the volume of livestock handled."

Hence, on behalf of the association I reiterate that the point made by Mr. Branscome, that we are hopeful that a total tariff deregulation can be an obtainable goal which would be beneficial and be responsive to the trade industry.

Mr. HIGHTOWER. Thank you very much, Mr. Murray.

We now will hear from Mr. Richard Koehler.

STATEMENT OF RICHARD A. KOEHLER, GROUP COUNSEL,
LIVESTOCK MARKETING ASSOCIATION

Mr. KOEHLER. Chairman Hightower, Representative Thornton, I, too, would like to express my appreciation for being able to be here to present these remarks, and if I could I will try and give some background in regard to remarks which we have previously heard. I'm an attorney with the Livestock Marketing Association, and have been for approximately 2 years. I have been counsel for two different subscribers to the association who have been involved in rate hearings before the Packers and Stockyards of the U.S. Department of Agriculture.

Mr. Hartje, who testified this morning, represented markets of Arkansas in a similar proceeding.

There have been, as a little bit of background, four rate hearings held since 1973, and of those four I have been involved in two of these. There has been some discussion of value-based tariffs, or percentage tariffs in previous testimony and, as such, I would give a brief bit of background of how a marketing business comes to a rate hearing.

I quote from a letter of July 1, 1975, as written by Mr. Jack W. Ringmeyer, who is Chief of the Rates Services Facilities Branch of the Packers and Stockyards. He says:

Our policy since November 1974 is not to accept modifications that will increase the revenues produced by tariffs based on the value of the livestock sold. However, we will accept increases based on reasonable per head charges if our analysis of the annual report and data shows an increase is warranted.