TABLE 3.-Chicago-Salable receipts and shipments of cattle

TABLE 4.-Omaha-Salable receipts and shipments of cattle

TABLE 5.-12 markets-Salable receipts and shipments of cattle

TABLE 6.-Feeder shipments of cattle and calves to eight Corn Belt States

TABLE 7. Cattle, by classes: Estimated number on farms, Jan. 1, 1940–51

-7

TABLE 8.-Cattle slaughtered under Federal inspection at specified centers as a percentage of total cattle slaughtered under Federal inspection at all stations, by months, 1948-50

Includes Chicago and Elburn, Ill.

Includes Denver, Colo., and Ogden and Salt Lake City, Utah.

The CHAIRMAN. The next witness is Mr. James K. Farrell, Capitol Packing Co.

Mr. Farrell, will you proceed in your own way?

I notice this is a short statement. Do you want to read it?

STATEMENT OF JAMES K. FARRELL, CAPITOL PACKING CO., DENVER, COLO.

Mr. FARRELL. Yes, sir.

On August 14, 1951, I informed this committee that I am one in favor of slaughter quotas and that I would be pleased to testify before the committee accordingly. I welcome this opportunity to explain to the committee why I am in favor of quotas and why they are necessary at this time.

At the present time the absence of slaughter quotas has had the following results:

(1) Forced live cattle prices to rise beyond the Office of Price Stabilization compliance price maximums.

(2) Unorderly distribution of our beef supply.

(3) The establishment of black market operations.

Now, to understand these reactions to the lifting of quotas, it is necessary to describe market conditions as they are today and also point out to you how the meat packing industry has been affected by the lifting of quotas.

The demand for beef today and for many months past has exceeded the available supplies. The beef market today can be described as a seller's market and there is no competition between slaughterers to sell their production of beef carcasses.

Senator SCHOEPPEL. Do you mind an interruption?

Mr. FARRELL. I would prefer that you let me finish the statement and then we will discuss it.

Senator SCHOEPPEL. All right.

Mr. FARRELL. In view of this condition, many small but established slaughterers began to expand their operations when they became free to purchase and slaughter as many cattle as they desired. These smaller slaughterers came on the market as strong competitors of the companies that had previously purchased the bulk of the daily run of cattle in the stockyards. Due to this competition, and with the supply of cattle not being in sufficient numbers to satisfy the demand, the cattle prices began to rise. A large percentage of the purchases of cattle at the stockyards is now being made by comparatively new buyers to process and distribute.

I am sure that it is not the desire or the purpose of either the Office of Price Stabilization or of the Congress of the United States to convert the beef industry to such an extent that the slaughterers that were buying the bulk of the cattle, processing them, and distributing them, must now set aside their investments in buildings, equipment, and employees, and good will to let these newcomers take over. It cannot be the intent of either to let these newcomers disrupt the industry to such an extent that legitimate slaughterers are pushed off the market because of their desire to comply with Office of Price Stabilization regulations. Nor can it be the will of the Office of Price Stabilization or the Congress of these United States that the Nation's supply of beef be diverted, with some of it going into the hands of black-market operators. But that is what has happened since the lifting of the slaughter quotas.

It has been our goal at the Capitol Packing Co. to distribute our production of beef carcasses proportionately to the accounts that have purchased them over the past years. I am sure that the same program is the goal of any legitimate slaughterer. But we cannot continue to supply our accounts with beef if supplying them means violating Office of Price Stabilization regulations or incurring losses for our company. However, if it is not possible for the legitimate slaughterer to purchase the cattle for one reason or another, these same cattle will be purchased by these newcomers who will distribute them in their own manner.

Proper and orderly distribution of beef in times of shortages is extremely important. The disruption of marketing operations, which includes the distribution of beef, in times of shortages, coupled with price controls, creates black markets. This happens when new distributors of beef carcasses enter the market. The beef supply will not find its way to the wholesalers and retailers that have in the past consumed the supplies. Instead, the beef will go in excess to some areas,

creating shortages in other areas, and that type of distribution establishes black markets.

I would like to point out to the committee that when the Office of Price Stabilization was authorized to establish quotas for every slaughterer of cattle, these conditions did not prevail. Slaughter quotas suppressed demand for cattle, causing orderly buying in the stockyards at prices that were well within compliance. Today our markets are disrupted. I want to tell you that cattle cannot be purchased within compliance limitations. I want to tell you that beef is being poorly distributed throughout our Nation, causing shortages and establishing black markets.

We appeal to the committee to propose legislation that will reinstate the Office of Price Stabilization with the authority to establish slaughter quotas on the beef industry. We have confidence in the personnel of the Office of Price Stabilization to administer that authority well.

We believe that the reinstatement of quotas will again make it possible for the legitimate slaughterers to purchase their share of cattle in the stockyards within compliance limitations. Then, with their past experience, they will be enabled to process and distribute once again the Nation's production of beef in an orderly and just manner, eliminating the possibility of the creation of black markets. The beef industry is plagued with ills; slaughter quotas will not remedy all of its ills, but their reinstatement will be a step in the right direction.

The CHAIRMAN. Senator Schoeppel?

Senator SCHOEPPEL. You say on the first page of your statement: The demand for beef today and for many months past has exceeded the available supplies.

Mr. FARRELL. That is a true statement, sir.

Senator SCHOEPPEL. That is on page 1 in the third paragraph.
Mr. FARRELL. Yes, sir; that's a true statement.

Senator SCHOEPPEL. How do you account for greater supplies going into storage, then?

Mr. FARRELL. I don't know that they are, sir, and I don't know that the statement you made, that there were cattle carried over in Kansas City-I am not familiar with that, sir.

Senator SCHOEPPEL. I suggest that you check that.

You, of course, know that we are now in the seasonal run of cattle from the grass lands.

Mr. FARRELL. Yes, but they are less than they were the same week a year ago. They have been for many weeks past. There is a definite shortage of cattle, sir.

The CHAIRMAN. Let me say that as far as that beef that went into storage is concerned, I do not understand that.

Mr. FARRELL. That doesn't affect our market.

The CHAIRMAN. There is a law against hoarding.

Mr. FARRELL. Hoarding? There is no hoarding, sir.

The CHAIRMAN. I am not suggesting what you think I am. I do not say it is hoarding. I would not make such a charge. I want to find out.

We investigated some steel hoarding here confidentially with the FBI last year, and I believe it sort of helped the situation. If there is hoarding, I would like to know why.