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That competition is increasing rather than decreasing in this industry, thus continuing the pressure for lowered prices;

That price controls impose a heavy burden upon the industry by their require ments of hundreds of man-hours of effort to comply with administrative formalities, to calculate price ceilings, and to determine the various applications of pricing regulations, as well as by the waste of executive time and energy in the development of factual bases for the regulations, and in advisory committee and other work with representatives of the Office of Price Stabilization;

That the inflexibility of price controls is such that the industry is foreclosed from equalization of prices as between a grade of a particular product which is in short supply and another grade of such product which is in relatively surplus supply;

That price control is justified only in conditions of scarcity resulting in bidding up of prices for scarce commodities;

That, it being evident that price control is not justified in the frozen fruit, berry, vegetable, and juice industry; it is

Resolved, That the Office of Price Stabilization respectfully is urged immediately to suspend price controls on frozen fruits, berries, vegetables, and juices and to reinstate such controls only for such of those foods as may, in the future, be in short supply to such a material extent as to require reinstatement of controls in the public interest.

The purpose of my testimony is to present additional facts in support of the foregoing resolution and in support of suspension of price controls in the frozen-food industry.

The facts of the frozen-food industry are simple, and elementary economics clearly demonstrates that there are no inflationary influences present in the frozen-food picture.

Chart I clearly indicates the high level of stocks of frozen fruits and vegetables. These stock data are compiled by the United States Department of Agriculture. You will note that stocks of frozen fruits and vegetables have been increasing to an appreciably higher level each year. Stocks on April 1, 1952, were 8 percent greater than on the same date in 1951.

Chart 2 shows how the production of frozen fruits and vegetables has been reaching new record totals every year. The total pack in 1951 was 12 percent greater than in 1950, and more than twice as great as average production in 1943-45. The 1951 pack was the greatest in the history of the industry.

The strength of America and now the salvation of the world appears to lie in increased production. Only with increased production can costs and selling prices be reduced. Chart 3 has been prepared from prices compiled and published by the Bureau of Labor Statistics. This chart clearly shows the effect of increased production in reducing prices of frozen fruits, juices and vegetables.

You will note that on that chart, the frozen foods, for December 1950, to March 1952, declined 7 percent, whereas all foods increased 6 percent in the same period.

Most frozen fruit and vegetable products are being sold by frozenfood packers at prices below their ceilings. Results of a survey conducted by the National Association of Frozen Food Packers indicate items representing 88 percent of the frozen fruit pack and 81 percent of the frozen vegetable pack are selling below ceilings. Over all, 82 percent of these items are below ceilings.

Furthermore, nearly half or 48 percent of the frozen-fruit items are selling at prices which are more than 10 percent below ceiling. And 36 percent of the frozen vegetable items are more than 10 percent below ceilings. Charts 4 and 5 illustrate dramatically the extent to which frozen fruits and vegetables are selling below their ceilings.

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With this record you may well ask, "Why should frozen food packers be concerned with price controls?" The answer is simple.

Price controls by nature cannot have the flexibility needed in an industry such as the frozen-food industry, which deals with seasonal crops. Such controls are extremely burdensome to the members of this industry. The executive and clerical man-hours required to interpret regulations and make the necessary computations are beyond the capabilities of most small companies. In the case of large companies there are many employees whose sole duty it is to study price regulations and determine the ceiling prices thereunder.

This is needless economic waste in an industry where profits are historically on a narrow margin. Moreover, we firmly believe that, under the American system and in the conditions in which our industry is now operating, the furden should be upon the Government to justify continuance of controls and that it should have the positive obligation to suspend those which are not needed.

Price controls for the frozen-food industry under present circumstances are a one way street that can only lead to the weakening or bankruptcy of an industry that has established an enviable record for increased production and lower prices for the American people.

We strongly urge, therefore, that statutory criteria for suspension of controls be established by Congress, and that these criteria be established in such unequivocal terms as to make certain that an industry in the position of ours will no longer be burdened with uneconomic and unnecessary controls.

That concludes my statement, Mr. Chairman. We would like to submit the charts attached to my statement for the record.

The CHAIRMAN. That may be done.

(The charts above referred to are as follows:)

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SOURCE: NATIONAL ASSOCIATION OF FROZEN FOOD PACKERS, Based on data published by U.S. DEPARTMENT OF AGRICULTURE

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SOURCE: NATIONAL ASSOCIATION OF FROZEN FOOD PACKERS, Based on data published by the U.S. BUREAU OF LABOR STATISTICS.

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The CHAIRMAN. Are there any questions, gentlemen?
Mr. TALLE. Mr. Chairman.

The CHAIRMAN. Dr. Talle.

Mr. TALLE. Your industry is highly seasonal, is it not?

Mr. SNAVELY. Yes, sir, our industry is highly seasonal. We pack all of a particular item in a short period of time, and we are subject to wide variations in the amount of crop that may be produced in that

season.

Mr. TALLE. In my own State of Iowa, for instance, the majority of the packing of peas and tomatoes and corn is done within a few weeks, at Clinton, Iowa, and at Marshalltown, Iowa. Those two centers represent very large canning enterprises.

Just above my district, the Monarch people have a large corn canning enterprise at Rochester, Minn.

That is, of course, a one-crop area. I was wondering whether you manage to dovetail that seasonal aspect in that area, with, let us say, canning in more warm climates?

Mr. SNAVELY. Well, the problems in all areas are basically the same. The problems that exist in Iowa are the same as those that exist in my State, I am sure, of Pennsylvania.

It is the very business that is subject to great fluctuations, as far as yields are concerned, there are extended risks, and one of the things that we run into particularly in this business is the fact that we have an excess supply of a particular grade, for instance, of second-grade peas.

If we have the excess supply of a particular grade, the price of that particular grade is going to drop drastically because of the excess supply, whereas we may be short, then, of a fancy grade, and with ceiling prices, we are held down to the price established, and we are precluded from making a profit on the entire pack, practically.

Mr. TALLE. Of course, that seasonal aspect applies whether the vegetables are canned or frozen?

Mr. SNAVELY. Yes, sir; very much so.
Mr. TALLE. Thank you very much.

The CHAIRMAN. Are there further questions?

If not, you may stand aside. Thank you for your statement.

Mr. SNAVELY. Thank you, Mr. Chairman.

The CHAIRMAN. Call the next witness, Mr. Clerk.

The CLERK. Judge Montague of the Texas and Southwestern Cattle Raisers Association."

The CHAIRMAN. Judge Montague, we are glad to have you return to our committee to give us the benefit of your views.

STATEMENT OF JUDGE MONTAGUE, REPRESENTING TEXAS AND SOUTHWESTERN CATTLE RAISERS ASSOCIATION

Mr. MONTAGUE. Thank you, Mr. Chairman, there is only one angle that I want to talk to the committee about, with reference to the measure pending before you for consideration, and that is the administration's effort to repeal that part of the extended law last year, known as the Butler-Hope amendment, which was an amendment adopted by the Congress that prohibited the use of the quota system in the regulation of the marketing of livestock.

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