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adequate notice to its market users and to the Department of Agriculture. A copy of any rate change would be filed with the Department and it would review the tariff at the market for uniform application. The agency would review the level of rates based on the cost of service only on valid

complaints.

Tariffs would be required to be filed on a per head basis. A recent decision of the U.S. Court of Appeals for the Eighth Circuit affirmed a decision by the Judicial Officer of the Department, in which it was held that a percentage or value based tariff was contrary to the provisions of the Packers and Stockyards Act. It was held that such tariff was discriminatory and did not uniformly or consistently reflect the cost of the service performed; fluctuations in the price of livestock bear no relationship to the changes in the cost of providing the stockyard services. Under the statutory provisions the Secretary is required to rescribe rates and charges which are just, reasonable, and nondiscriminatory, and he is required to prescribe the rates and charges which shall be both the maximum and minimum to be charged. Under the percentage based tariff, there was no way to predict the actual charges to be assessed since they would fluctuate with the unpredictability of livestock prices.

We plan to publish a notice in the Federal Register that we are considering changing our rate policy along the line I have described and invite views and comments from industry and any other interested persons. A decision would then be made on the future rate policy after consideration of all views, comments, and recommendations regarding this

alternative.

We believe that the alternative deregulation rate policy we plan to propose would afford the market operators great flexibility in setting their rates and charges and thus the objections to per head based tariffs should be obviated. Furthermore, we believe per head

tariffs would assure more competition among markets in their rates and charges, which should benefit the livestock marketing industry as well as the livestock producers.

The changes in our rate regulatory policy that we are considering can be accomplished without amendments to the P&S Act. We believe the changes will afford the relief markets contend they need to be able to promptly reflect in their market charges increased costs of doing business, plus a reasonable profit.

Throughout the hearings conducted by the Department many market owners expressed the immediate need for substantial increases in their market charges. The implication is that should deregulation occur so that each market could establish its own level of rates, there probably will be increases in market charges to the livestock producers. It is for this reason that we recommend deregulation by way of change in our policy rather than by statutory amendments. The Department would, after a reasonable period of operation under a change in policy, review the level of market charges. If it should be found that costs to livestock producers for market services are at unreasonable levels, the Department could immediately initiate procedures to alleviate the situation.

Mr. HIGHTOWER. Mr. Jennings, thank you for your testimony. Would your time schedule permit you to stay until the conclusion of the other testimony here?

Mr. JENNINGS. Yes; surely.

Mr. HIGHTOWER. If you would, then we will take the whole panel of witnesses together for questioning.

Thank you.

Our next witness is Mr. Tom Peterson of the Iowa Livestock Auction Markets Association.

We are glad to have you, Mr. Peterson, and will hear from you at this time.

[The prepared statement submitted by Mr. Peterson follows:]

Testimony

Before the Subcommittee on Livestock and Grains
House Committee on Agriculture

Position Statement

of

The Iowa Livestock Auction Markets

Given by

D. Tom Feterson, Executive Secretary
March 14, 1978

I.

The 1.L.A.M.A. supports Congressman Thornton's (Arkansas) bill to
amend the Packers and Stockyards Act of 1921 (H.R. 9482).

II.

Iowa's auction markets are in total agreement that we in the auction market industry must have relief from the rigid, unreasonable control that the Packers and Stockyards Division wields over us in the auction

markets.

A.

Many Iowa auctions have attempted to have tariff changes made
in the past. Almost all have been denied by the Packers and
Stockyards Division of the U.S. Department of Agriculture (USDA).

The difficulty and lengthy time involved in attempting to change

B.

a rate is so slow and frustrating that most give up and yield to the Packers and Stockyards authority.

III. Iowa's auction markets believe that if the bulk of the remaining 112

full service auction markets in Iowa are to survive

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the Packers and

Stockyards Division must be eliminated from the rate-making and
regulation of charges capacity that they now hold.

IV. Iowa's auction markets have decreased in numbers drastically these

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past 10 years from 167 markets in the 1960's to now less than 112.
The decrease in the number of auctions can be directly attributed to
inflation, increase in cost of doing business, and the inability to
pass the inflation and higher costs to our customers, the consignor.
Our research into the rising cost of operating an auction market

A.

in Iowa clearly shows that in the past five years insurance
premiums have risen some 70%, labor costs have risen 40%, and

utilities and repair maintenance has increased an overwhelming

85%.

B. These overburdening cost increases have not been passed on to

our customers. One reason for this is that the Packers and

Stockyards Division would not permit us to. The result has been
a loss in auction markets, resulting in producers' having to
travel further with their livestock to sell them, or seeking
new or other methods of marketing their livestock.

V.

Iowa's auction markets serve the marketing needs of over 70,000 individual livestock producers. These producers need and want our markets to stay

in business.

A.

We have endorsements from leaders of the Iowa Farm Bureau Federation, the Iowa Cattlemen's Association, and the Iowa Pork Producers

Association.

They state that they support us in our efforts to

free ourselves from the tight-fisted financial stranglehold the

Packers and Stockyards Division has on us in the marketing industry.

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