STATEMENT OF ROBERT H. LOUNSBERRY, IOWA SECRETARY OF AGRICULTURE

As a leading livestock state, with currently over 20 million head of hogs and cattle on our farms, Iowa is vitally concerned in any decision made by or affectthe Packers and Stockyards Commission and involving the marketing of livestock in Iowa.

We also recognize the right, in a Democratic society, of individual and cooperative livestock salebarn (auction) operators to be free to run their enterprises with the least amount of government interference. They should have a voice in selecting the type of marketing fees which will provide them with a reasonable margin of profit and will also provide a fair and equitable service to the customers they serve.

We believe that in the past, the Packers and Stockyards Commission has sometimes acted in an arbitrary manner in setting auction commission fees.

However, we do not believe the Packers and Stockyards Commission should be completely removed from its regulatory role. Rather than total de-regulation, we would suggest that a more cooperative and flexible attitude be taken in dealing with auction market owners to allow for unusual and mitigating circumstances and for the geographical locality which is served. A public posting of fees, which have been filed with and approved by Packers and Stockyards, should also be prominently posted for the benefit of all. Thank you.

Hon. RAY THORNTON,
U.S. Congressman,

ARKANSAS CATTLEMEN'S ASSOCIATION,
Little Rock, Ark., March 8, 1978.

Washington, D.C.

DEAR RAY: Thank you for your letter of February 23, 1978 relating to H.R. 9482. We have been extremely busy with our convention which ended last week. During the convention, the following resolution was presented to the membership of the Arkansas Cattlemen's Association and was passed during the business session:

"Be it resolved that the Arkansas Cattlemen's Association supports the free enterprise system that promotes competition. We favor the general deregulation of the rate making authority of the Packers and Stockyard Administration over the public livestock markets. We feel that the commission structure at any public livestock market, as long as it shows uniformity and is nondiscriminatory can best be structured by the present owner."

Due to the fact that testimony on H.R. 9482 is scheduled for March 14 before the Subcommittee, we will not have ample time to prepare the proper written or oral testimony. I am enclosing two (2) copies of this letter and you may wish to present this to the Subcommittee at the hearing.

Very truly yours,

JIM SANDERS, Executive Vice President.

STATEMENT OF

ARKANSAS FARM BUREAU FEDERATION

As you know, the Arkansas Farm Bureau Federation is a general farm organization made up of 76 County Farm Bureaus representing over 90,000 member families.

Twenty-five

thousand of these member families derive a major portion of their income from the sale of livestock. Our producer members have shown an interest in current developments and possible changes in the charges for the marketing services they receive from auction markets. Livestock is a major source of income to many thousands of people in Arkansas who need a dependable efficient marketing system.

The livestock marketing sector and particularly the auction market system in Arkansas is of great importance and provides a needed and valuable service to our state's livestock economy. This point is evidenced by the fact that approximately 90 to 95 percent of all cattle marketed in the state are sold through auction markets; a similar high percentage also applies to hogs and pigs marketed in the state. Not only do livestock producers rely on local auction markets as an outlet for their products, but these markets also serve as a price determining point for sales outside regular marketing channels and provide a stimulus to many local economies. The necessity to keep market outlets for livestock (or any other product) operating in a climate of free and open competition is basic to the economic principles on which this country was founded and is in the best interest of producers, market operators and consumers. While regulations under the Packers and Stockyards Act were promulgated to protect livestock producers, such regulations should not be constructed or construed so as to hamper normal marketing practices nor to restrict or reduce marketing services provided by the various livestock market agencies.

The issue before us concerns a proposal to eliminate certain livestock markets from rate regulation under the

Packers and Stockyards Act. We would agree with this ammendment to the Packers and Stockyards Act on the grounds that our

members have expressed deep concern with overregulation by government agencies. This ammendment would remove certain regulations which at times have proved burdensome and costly

to both the regulatory agency and the livestock marketing industry. Adoption of this ammendment could also provide greater flexibility in rate setting and could allow market operators

to choose the rate structure and schedule which best suits

the needs of their market area. Both of these objectives are being sought by livestock market operators in our state and around the country.

As an organization representing livestock producers, we would like to point out several concerns regarding the effects of eliminating regulatory authority on rates charged by livestock markets. Based solely on 1977 statistics, adoption of the amendment would remove all but three of Arkansas' fifty livestock markets from rate regulation. We would hope that this measure would allow open competition between markets and that rates charged would continue to be reasonable and fair. However, with no rate restrictions in effect, we would wonder whether or not some rate supervision might be necessary in case of dispute or appeals on the part of producers and other markets. Procedures used in adopting specific rate structures and schedules might also need supervision to facilitate organization and assure accountability.

Farm Bureau's basic philosophy is based on a free enterprize system of commerce which promotes open competition. While there is a need to eliminate overregulation in American agriculture, the Packers and Stockyards Administration still has a very important role in providing protection to livestock producers from unfair trade practices. We have and continue to support the vigorous enforcement of the Packers and Stockyards Act. The removal of markets from rate regulation under the Act is a matter which should encourage open competition, but we would urge that careful consideration be given the concerns expressed above as they affect implementation of this proposed ammendment.

ansas

ivestock ssociation

2044 FILLMORE / TOPEKA. KANSAS 66604 TELEPHONE 913/232-9358 Owns and Publishes The Kansas Stockman magazine and KLA News & Market Report newsletter

COMMENTS

OF THE

KANSAS LIVESTOCK ASSOCIATION

ON

HR 9482

March 20, 1978

The Kansas Livestock Association, a voluntary membership organization representing over 7,000 cattlemen, swine and sheep producers in Kansas, submits the following comments relative to HR 9482.

The Kansas Livestock Association favors the concept of removing much of the regulatory authority of the Packers & Stockyards Administration over tariffs charged by livestock auction markets. However, it's our belief that the interests of both livestock producers and auction market operators would be best served by returning livestock auction business to a free market approach in the determination of commissions charged for livestock sales.

The industry has undergone substantial change since the present regulatory authority over stockyards was implemented in 1921. At that time the Act was basically directed toward the 72 terminal stockyards which handled a greater percentage

of livestock sales than they do now.

However, since that era when the act was passed, livestock production - because of increased population, efficiency and demand - has increased dramatically. Livestock auction market outlets have also increased substantially. In fact, there are presently approximately 2,000 auction markets and stockyards under regulation by P&SA.

Even if it could be argued that there was a just need for governmental regulation in the earlier years of this century, it must be admitted that the economic and innovative changes in the livestock industry have increased competition to the point where further regulation of auction market tariffs is unnecessary.

Livestock producers have numerous alternative methods by which to market their products. Producers today may participate in the increasingly common practice of selling direct to order buyers, feedlots, packers or other farmers, in addition to taking their livestock to any of the numerous auction markets or terminal stockyards

that exist.

Livestock markets should not be subjected to the same theory of regulation which is applied to public utilities where it is argued that consumers of these services would have little choice of alternative services if no governmental regulation were practiced.

Competition is the best "regulator" of the price and services available to producers. In a free market where the users of these services can express their preferences the auction market operators can hope for success only by superior performance. Hence, every market operator must always be engaged in seeking to provide better service at a more economical price than his competitor.

No third party (government) can correctly evaluate the price of the service; the mutually agreed upon price is evidence that the subjective values of both the buyer and the seller have been satisfied. A fair price is what satisfies both parties at the time the "sale" (for services) is consummated.

Competition is a natural phenomenon observable in the actions of choice making individuals. Livestock farmers and ranchers are very familiar with it because it daily sets the market price of their product.

market or create competition.

Government cannot legislate the free

Neither should the P&SA decide an auction market's

commission rate based on the bureaucracy's opinion of what a "reasonable revenue requirement" or a "fair return on investment" should be.

The Kansas Livestock Association submits that both the taxpayer and the entire livestock industry would be better served if P&SA authority to regulate livestock sales tariffs were removed. We respectfully urge the removal of P&SA authority in this area either by administrative action or by passage of appropriate legislation.