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The Van Camp Sea Food Co., Inc., is either marginally the largest canner of tuna in the United States, or marginally the second largest. It utilizes substantially more domestically caught tuna in its pack than it does imported tuna. Its reporting year is from May 30 to June 1. Its annual report for fiscal 1957 will not be released until sometime in August. It does, however, issue public semiannual reports. Its semiannual report for the period June 1 to November 30, 1957, shows a total sales of $24,570,000 for the 6-month period and an operating profit of $1,127,000, or 4 percent on sales. It is generally understood in the trade that the operating profit for this company in the last 6 months of its fiscal year will be shown to be substantially greater than during the first 6 months' reported upon above. This understanding appears to be supported by (1) the action of the company this month in raising its quarterly dividend on common stock from 20 cents per share to 25 cents per share, and (2) the current listing of the common stock on exchanges at $15 per share versus $7 per share of 3 and 4 years ago.

Table 36 of the Tariff Commission report shows, for all tuna canners in the United States a net operating profit of 5.3 percent on canned tuna sales in 1957.

Government statistics covering the processors of food and kindred products in the entire United States in 1957 show the following net profits before taxes on gross sales to have been as follows:

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Thus it is clearly evident that in this period of years when the imports of tuna have been increasing steadily in volume the tuna canning industry has enjoyed a rapid and steady increase in its volume, and a rate of profit on its sales which certainly compares favorably with that enjoyed by kindred processors of food in the United States. The year 1958, which is a recession year for much of United States industry, gives every prospect of being a boom year for the domestic tuna canning industry. If the whole year holds up to the first 5 months, total sales of canned tuna for 1958 will be 15 to 20 percent higher than during 1957, the previous highest year of record. Profit on sales will without a doubt be substantially higher than last year for the reason that there have already been two price rises on canned tuna at the wholesale level this year, and there has beeen no compensatory increase in the price of tuna to the fishermen or in the canner's other costs of production. This is reflected in the retail price of tuna in the Washington, D. C., area where advertised brand, light meat, chunk style tuna was selling at 27 to 29 cents per can last year, and is now selling at 31 cents per can.

Canned tuna has protective tariffs and quotas. Tuna canned in oil bears a duty of 35 percent ad valorem. Tuna canned in brine bears a duty of 122 percent ad valorem up to 20 percent of the total apparent consumption of tuna in the United States, after which it bears a

duty of 25 percent ad valorem. The quota has never been reached and the higher duty after it has never, thus, been paid.

This tariff protection afforded by the United States Government to the domestic tuna canning industry, however, is by no means as direct, strong, and helpful as the protection afforded to it at the present time by the Japanesse Government.

The export of all canned tuna from Japan to the United States is regulated fully as to price and volume by the Japanese Canned Tuna Export Association, à cartel operating under the supervision of the Japanese Government. This cartel has embargoed the shipment of tuna canned in oil to the United States and has limited the export of tuna canned in brine to definite monthly and annual quotas at regulated "fair-trade" prices. The operation of this cartel, and its companion frozen tuna cartel, in this market are described in our attached letter (appendix 2, 2a, 2b, and 2c) of August 27, 1957, to the Secretary of State in which we asked him to invoke article XVIII of the Treaty of Friendship, Commerce, and Navigation between the United States and Japan and thus abate the harmful effects of these cartels on the tuna trade between the two countries.

Thus the United States tuna canners are almost completely protected from serious Japanese competition in this market by legal protection afforded by the United States Government and extra-legal protection afforded by the Japanese Government. It is little wonder that they look askance at any effort on our part to disturb the status quo.

It is only fair to state that their primary and useful protection is that which comes from the Japanese Government through its canned tuna cartel, and that this is capable of being withdrawn instantly upon the whim of the Japanese (or in retaliation should the domestic tuna canners aid the domestic tuna producers in attaining assistance from the United States Government.)

In this situation the only worry among domestic tuna canners is confined to the large canners who have advertised brands. They look with sharp distaste at the rapid decline now taking place in the productive capacity of the domestic tuna producers because they realize only too well that when they become dependent upon the Japanese for their raw material the Japanese will sooner or later own their brands and their market. They have not quite gotten into the position yet, however, where this worry overcomes their fierce competitive urge to cut each other's throats.

Bait-boat producers: There are three different types of fleets that produce tuna domestically:

(1) The bait-boat fleet that fishes exclusively for tuna, almost exclusively for yellowfin, skipjack, and bigeye tuna, and normally catches about 70 percent of the domestic tuna production:

(2) The purse-seine fleet which not only fishes for tuna but also for sardine, mackerel, and anchovies in season, and ordinarily catches about 15 percent of the domestic tuna production (yellowfin, skipjack, and bluefin tuna; and

(3) The albacore fleet which fiishes only for adbacore tuna in season, many vessels of which fish in other fisheries in other seasons, and which ordinarily catches about 15 percent of the domestic tuna production.

The bait-boat fleet, being by far the largest component of the domestic tuna producers in volume of production and being concerned solely with tuna production, reflects most clearly and simply the effects of tuna imports upon the domestic tuna producers. My use of this fleet as an example, for purposes of simplicity of presentation, should not be allowed to cloud the fact that the purse-seine fleet and the albacore fleet have been harmed as much or more in their tuna operations by tuna imports as has the bait-boat fleet. Among the purse-seiners the number of vessels fishing for tuna in this period of years has been reduced from 120 to 45, and among the albacore fleet the number of vessels participating in the fishery has been reduced from about 3,000 to about 1,200.

The physical changes that have taken place in the domestic fishing for yellowfin and skipjack tuna are listed as follows by the Secretary of the Interior in his report published less than a month ago: (1) A decline of 27 percent in landings from 1950 to 1957; (2) No overfishing to account for this;

(3) A decline of 30 percent in the number of vessels participating in the fishing from the high point of 1951 to 1957, and a decline of 24 percent in the carrying capacity tonnage of the fleet;

(4) A decline of 25 percent in the price of yellowfin and 28 percent in the price of skipjack from the peak year of 1954 to 1957;

(5) A decline in berths available on bait boats of 27 percent since 1951, and on purse seiners of 50 percent since 1949;

(6) A steady increase in the actual and proportionate share of the United States tuna market held by tuna imports (6 percent in 1948; 39 percent in 1956; 46 percent in 1957); and

(7) More than a doubling of tuna imports since the big year of 1950 when imports broke the United States tuna market.

The other part of the picture is given in table 14 of the above-cited Tariff Commission Report on Tuna Fish, where the owner's net profit or loss before taxes is given as follows for recent years:

1953.

1954

1955

Percent

-1.6

4. 0

.1

1.1

1956.

1957.

-3.7

A comparison of these profits with those cited above for the Columbia River Packers' Association, and in table 36 of the Tariff Commission report for all canners, quite aptly summarizes the differing views of the tuna-canning industry and the tuna-producing industry to tuna imports. The former is thriving; the latter is going out of business as rapidly as capital can disengage itself from vesssel ownership.

The Secretary of the Interior, in his report cited above, ascribes the downward trend in production and loss of markets to these primary factors:

(1) Declining ex-vessel prices;

(2) Increasing competition from imports of frozen tuna, canned tuna in brine, and frozen cooked tuna loins and disks;

(3) Differing tariff rates on the various tuna import categories; (4) Growing use by canneries of imported frozen tuna;

(5) Increased costs of United States vessel operations;

(6) Higher costs of construction of United States tuna vessels; and

(7) Increasing insurance cost for United States tuna vessels.

He also notes that the Japanese high-seas tuna fleet has nearly doubled its size since 1951 under the stimuli of subsidies by government on the construction, rebuilding, and insuring of vessels, as well as long-term operational loans at low rates of interest.

It is a matter of prime importance to notice from the present and former reports of the Tariff Commission on tuna fish that the profitand-loss situation of the tuna-bait boats has had a 1-year periodicity since 1950. Profits have been highest in the even-numbered years and losses have been greatest in the odd-numbered years. The reason has been primarily political.

In 1950 there was heavy dumping of tuna canned in oil in the last 6 months of the year and this broke the market in 1951 with consequent losses to us. The House of Representatives passed a temporary 3 cents per pound tariff on frozen tuna in 1951 so near the end of the session that your committee could not act upon it.

The Japanese reacted to this by restricting the volume and controlling the price of tuna exports to this country temporarily in order to create a sufficient illusion of prosperity in our industry that the Senate would not enact the House bill. They did give us a breathing spell which brought our earnings back into the black a little way; the legislation was defeated.

Immediately the legislation was defeated in mid 1952 the Japanese let down the bars again and the pent-up flood hit us and as a consequence 1953 was again a loss year for us. Toward the end of 1953 new legislation was introduced on tuna in ports into the Congress.

This time the Japanese abated the flow of canned tuna, apparently under the correct assumption that if they got the domestic canners on their side the domestic tuna producers would not have sufficient political push to get the bill through the Congress. 1954 put us again in the black, and the bill never advanced in the Congress.

In 1955 the flood of imports broke our prices by 23 percent, laid up the fleet and was a ruinous year to us. This time, instead of trying legislation we implored the executive branch of the Government for help as hard as we could. This was completely ineffective but it did cause the Japanese to draw back a little and we barely edged into the black again in 1956.

In 1956 the Japanese frozen tuna cartel seriously misjudged the economic forces at work, suffered severe losses on frozen albacore, and finally had to dump their surplus on this market at distress prices in the first half of 1957. This knocked us off our feet again in 1957 when we suffered the worst financial losses yet.

Having now had some years at this business we began preparing for the next legislative campaign with better care and foresight. The Japanese also have had some years of experience at whipping us so they also have engaged in their counter activities with greater care and skill. They now have their entire tuna trade with this country tightly controlled by the two cartels under Government supervision (the controls have had loopholes of greater or less size in the previous years).

The cartels this year cut off tuna canned in oil for this market completely. In the early winter-at the direction of the Japanese Gov

ernment and we have reason to believe upon the suggestion of the United States Government-they prohibited the export of cooked tuna loins to this country (beginning last month they began taking orders for cooked loins for delivery after the close of this session of Congress). They closely regulated the flow of tuna canned in brine to this market, and they raised the check price on the f. o. b. Tokyo price of both yellow fin and albacore.

In the past month they have brought about what we have reason to believe is the cleverest whizzer yet. All of a sudden there has turned out to be a shortage of albacore in Japan and as a consequence the price of albacore has been rising sharply and steadily in Japan, there is great outcry among canners on both sides of the Pacific about the dire albacore shortage and the fiercely high prices.

We would not be so cynical about this particular albacore shortage if we did not know these things:

1. In 1956, the Japanese summer albacore catch also was moderate. and the price high, but at the end of September that year the frozentuna cartel suddenly found 14,000 tons frozen at warehouse that had been there since June. It turned out that the cartel had been successfully suppressing the news of this volume of frozen albacore for 3 months to keep it from breaking the market.

2. We have legislation before this Congress and this Congress will adjourn before the end of August.

However, this being an even numbered year we have the likelihood of breaking even this year or even getting into the black a little. We nevertheless dread the thought of the odd numbered 1959 ahead of us when, without the passage of this legislation, H. R. 9237, we will be hit with the pent-up flood of Japanese exports to this market like in 1951, 1953, 1955, and 1957.

Each cycle the profit we are allowed in the even numbered year is less than the cycle before and we are fewer in number; each cycle the loss we suffer in the odd numbered year is greater than that of the preceding cyclic year.

To sum up this section, the problem is that the Japanese are driving the United States tuna-fishing industry out of business while they cherish and support the United States tuna-canning industry so as to avoid the political danger of the canners supporting our legislative efforts. Obviously, the strategy is to take us over first, after which the canned-tuna cartel can readily reduce the American tuna-canning industry to submission.

THE REMEDY

The remedies to a situation of this sort are obvious and they are two in number. They are obvious because one or both are in steady use by all of the major fishing countries of the world including Japan, and excepting the United States only. On the one hand the domestic producer can be protected by controlling the flow of imports whether by tariffs, quotas, or combinations of the two.

On the other hand the domestic producer can be protected by givinghim a subsidy that will equalize his cost per unit of production with that of his foreign competitor. This can be done by direct subsidy per unit of production (the cheapest way) or by giving him a number of odds and ends of aids, grants, etc., that are politically more palatable to a people that resent outright subsidization (this way is:

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