We last year strongly advocated the adoption of this amendment and our position of course is even stronger today, and the developments during the year, I believe, will verify this statement, that the absence of quotas allowed the regular and orderly marketing of livestock in a way that was to the advantage not only of the producers of livestock but of the country itself, and I want to give you this illustration to prove my point.

All over the southwestern ranch country, the highly productive area of range cattle, we have had, and still are having, the worst drought that we have ever known in the history of the industry.

Ranchmen in that area have been forced to feed their cattle supplemental feed, on the range, and in some instances this is the twentyseventh month that we have been feeding cattle on the range.

In that area we use the cactus, the prickly pear, as a supplemental feeding, by burning the thorns off it, and the cattle eat it and stay alive, though they cannot grow fat.

Mr. BROWN. You have to carry water for many miles? Mr. MONTAGUE. Many, many miles. The tanks have gone dry and we have had to haul water out on the range and the pear went so dry that when you put the flame on it to burn the thorns off the whole leaf of the pear burned up. That is the first time in our history that that has happened. So, for a long time we could not use that as a supplementary feeding.

There are many ranchers who have invested in their cows and bulls over a hundred dollars, abnormal expense during this last year.

A very large number of those cattle they were all utility cattle, drought-stricken cattle-were put in other markets all throughout the south of Texas and even up into north Texas. If we had had the quota system in vogue at that time, which the OPA tried to start a year ago, had that been prevailing at that time, there would have been an abnormal number of these drought-stricken cattle on the market, graded as utility; the packers who would buy those cattle would have been limited in the number of cattle that they could buy of that class, because the quota system works by classes, and the only relief we could have gotten would have been each time that a man brought the cattle in, and there were no buyers there to buy them because the quotas would have been used, they would have had to wire to Washington to get a special permit for some packer to buy them.

Well, you know that takes time. In our experience under OPA, under a similar regime, it would take from a week to 10 or 11 days to get any answer to a wire. So with a quota system on our necks we would have had to hold these cattle a week to 10 days, at very high expense, and with terrible shrinkage to the cattle.

So the fact that the Congress did adopt the Butler-Hope amendment a year ago proved to be the greatest blessing that we had in our industry in the Southwest during this last year and we sincerely hope that the Congress does not now repeal the Butler-Hope amendment in any reenactment of the statute that you pass at this time. Mr. BROWN. You are emphatically against quotas?

Mr. MONTAGUE. Yes, sir.

That is the only point of the law to which I wish to address myself, Mr. Chairman.

The CHAIRMAN. We are very glad to have your views, Judge.

Mr. MONTAGUE. Thank you.

Mr. BROWN. I just want to say this, Judge, before you leave. You have the admiration of every member on this committee. We all like you. You are frank and sincere.

Mr. MONTAGUE. I thank you very much, Mr. Brown, and I would like to say this for the committee and all of the Congress. I have never had a discourteous word said to me by any Member of Congress and I appreciate Congress.

The CHAIRMAN. There is a quorum call in the House, and I understand that the House will thereafter be in general debate. The committee will recess to meet at 1:30.

(Whereupon, at 11:07 a. m., the committee recessed, to reconvene at 1:30 p. m., the same day.)

AFTERNOON SESSION

(The committee met at 1:30 p. m., pursuant to its recess). Present: Chairman Spence (presiding), Messrs. Brown, Burton, Barrett, Wolcott, Gamble, Talle, Kilburn, and McDonough. The CHAIRMAN. The committee will be in order.

The clerk will call the first witness.

The CLERK. Mr. Wilbur LaRoe, Jr., representing the National Independent Meat Packers Association.

The CHAIRMAN. Mr. LaRoe.

STATEMENT OF WILBUR LaROE, JR., GENERAL COUNSEL,
NATIONAL INDEPENDENT MEAT PACKERS ASSOCIATION

Mr. LAROE. Thank you, Mr. Chairman and gentlemen. Our association is fundamentally and irrevocably opposed to price control on meat. We cannot compromise in our thinking because we have had two experiences with price control and we have abundant proof that it cannot be made to work fairly and equitably. The relief given by OPS is always "too little and too late." To illustrate the unfair delays by OPS in granting relief to our industry, I should like to refer to applications for Capehart amendment relief. Last September, 8 months ago, members of our association filed with OPS facts and figures showing that they were entitled to relief under the Capehart amendment. OPS has taken no action on these applications and our people are still without the relief to which Congress said they were entitled. I have some sympathy with OPS because the meat industry is so complicated that it is a human impossibility to devise prices for every cut and to police the method by which every cut is made in every establishment.

I should say at the outset that, at least for the present, price control on beef is unlawful because a Kansas court has held in the recent Excel Meat case that OPS does not have power to order mandatory grading, and the whole beef price regulation rests on such unlawful mandatory grading. In other words, without grading the whole beef price regulation, which at best is extremely unfair, falls to the ground. There is an unfortunate misunderstanding of the fundamentals of the meat-packing industry by the public and I suspect that even some Members of Congress are misinformed on certain matters relating to

the industry. May I briefly deal with the ones which I consider most important:

First, the misconception that the meat industry is a monopoly. There is absolutely no monopoly, or anything like monopoly in the meat-packing industry. There are more than 3,000 slaughterers competing with each other. First, we have to so-called big packers, about 10 in number, which are in the keenest competition with each other. Then we have the independent meat packers, of which we have more than 500 in our organization, which are in the keenest competition with the big packers and often with each other. If we take Washington, D. C., as an illustration, we have within this city the competition of Swift, Armour, Cudahy, Wilson, Hormel, Rath, Morrell, Oscar Mayer, and others, and several of our own members including the Esskay Co., of Baltimore, which has its trucks here every day, the Goetze Co., Tobin Packing Co., and many others. In addition, we have here in Washington the competition of Briggs, a local packer, who does a huge business in this city. In other words, we have in this Capital City the keen competition of 30 or more meat packers, and any idea of monopoly is without any color of justification. What is true of Washington is true of Baltimore, Philadelphia, New York, Pittsburgh, Cincinnati, Chicago, and almost any other typical city of the United States.

Second, the misconception that meat packer profits are excessive. I do not know where the public gets the idea that meat packers make huge profits. As a matter of fact, the average profit from the sale of meat is considerably less than one-fourth of a cent per pound. If these figures are even approximately correct, it must be apparent that there is no real relationship between meat packer profits and inflation. The meat packers could slaughter without any profit at all, and yet there would be no effect on inflation. I include here a chart showing how the consumer's dollar is divided, and who gets the different parts of it, and how much of it is meat-packer profit.

If the members will be so kind as to look at this chart, which accompanies my statement, look first at 1932. The farmer or producer got 34 percent. The next circle shows that he got 471⁄2 percent, and the next circle shows that he got 67 percent.

In other words, there has been a doubling in the share of the dollar which the producer gets.

Now if you will look at the meat packer triangle, 20 percent to start with, then 15.9 percent, and then 13.4 percent. And in the meat packer triangle, on the right, there is heavy type reading "Meat packer profit," that refers to the little shaded portion of that triangle on the left-you see a very narrow shading on the left side of that triangle. That is the meat packer's profit.

I call attention to the fact that the percentage which the meat. packer gets has gone down and the percentage which the farmer gets has gone up.

I do not criticize the latter because we want the farmer to be liberally rewarded otherwise we do not get any meat, and the important thing to us is to get the supply of live animals.

Mr. KILBURN. You do not show the profit.

Mr. LAROE. I do not have the figures because I could not get them. However, I doubt if there has been much change in that item.

I would like to stress the point that high meat prices are bad for our industry. We are in constant competition with poultry, fish, cheese and other items, and there is a limit to which the housewife will go in buying meat. The lower the prices, the greater the volume, and we depend on volume for our profits.

I submit that it is not fair for labor to criticize meat prices when wages have increased faster than meat prices have increased. The previous chart shows that the increase in price is due primarily to an increase in the share received by the farmers or other producers of live animals. We are glad to have his share made as liberal as possible because we cannot operate our business without a bid supply of live animals and we believe that every reasonable encouragement must be given to producers to increase the supply.

Now a word as to the inadequate production of meat animals.

I say with heavy underscoring that what hurts the meat packing industry hurts the producer and therefore hurts production at a time. when maximum production is needed. We are not keeping our meat supply up to the growing needs of our population. Since 1947 the annual per capita consumption of meat has been reduced from 155 to 138 pounds. The following table shows the per capita meat consumption from 1943 to 1951:

On the basis of the latest estimated population figure as published by the Department of Commerce, approximately 157,000,000, the loss in per cpita consumption in the last 4 years amounts to approximately 2,669,000,000 pounds each year.

That is how much meat we have lost by not keeping the production up.

I can say to the committee that our industry today is a discouraged industry, buying with timidity and with hesitation. The industry has been terribly hard hit by the radical decline in the price of lard, tallow, grease, and hides and by the failure of OPS to authorize beef prices which take into account the heavy losses on hides and tallow. It is of course true that most meat prices today are far below ceilings but there are a few items upon which higher prices could be obtained if it were not for the ceilings. There are scores and scores of different cuts of beef and pork.

Let us talk about beef for a moment. In some times of the year, especially the summer, there is a heavy demand for the hind quarters, which means steaks. In the winter there is more demand for roasts because the housewife does not mind a hot kitchen. Right now the demand for hind quarters is increasing and we could get a cent or two more for them, but OPS will not let us do so although most other parts of the beef carcass are way down in price. So we are stuck with an unprofitable operation. One of our best members who makes a profit on beef of something over $200,000 in normal years,

has lost over $40,000 in the last few months, and for the period since price control began his loss has been $37,700 on beef. Yet OPS does not give relief. In normal times there is an elasticity which permits us to charge more for some of the better cuts when we lost heavily on the lower cuts or on hides, but today we are under a double handicap because we have been hard hit on some items, yet we do not have the right to recoup our loss on other items which could stand higher prices.

I have obtained from one of our members a statement showing his present prices on typical cuts as compared with the ceiling prices. This statement is as follows:

Comparison of current selling prices with OPS ceiling prices-pork products, May 12, 1952

NOTE. Prices are below ceiling in every instance except first item in table.

If you will look at figures in that statement, you will see that all

prices but one are below the ceiling prices..

The next page is similar as to pork items. (Printed at end of remarks.)