The next witness is a representative of the Southwestern Cattle Raisers Association, Mr. Ray W. Willoughby.

The committee is very happy to welcome to these hearings the distinguished senior Senator from Texas, Mr. Connally. We would be very happy to have him sit at the table with us.

Senator CONNALLY. I would be happy to.

Senator ROBERTSON. Do you wish to read your statement, and present it for the record, and summarize it?

STATEMENT OF RAY W. WILLOUGHBY, PRESIDENT, TEXAS AND SOUTHWESTERN CATTLE RAISERS ASSOCIATION, ACCOMPANIED BY JUDGE JOE G. MONTAGUE, ATTORNEY

Mr. WILLOUGHBY. You have been bothered so much with statements this morning, I will be governed by your wishes, Mr. Chairman. I have a prepared statement, and I can make comments on it, answer questions, or can talk from it.

Senator ROBERTSON. How long is it?

Mr. WILLOUGHBY. It is about 11 pages.

Senator ROBERTSON. How long would it take you to present it in extenso?

Mr. WILLOUGHBY. If I read it, I would say about 10 or 15 minutes. Senator ROBERTSON. You are a pretty good reader if you can read it in that time. We will see how you get along.

Mr. WILLOUGHBY. Mr. Chairman and gentlemen of the committee. my name is Ray W. Willoughby. I live in San Angelo, Tex., and I am president of the Texas and Southwestern Cattle Raisers Associa tion, which is an organization of beef-cattle producers. While most of our members are range-cattle producers, we do have a representative group of cattle feeders in the organization.

I would like to point out, Mr. Chairman, we have about 11 percent of the beef cattle in Texas; that is, in the Nation.

Senator ROBERTSON. Do you have more than Florida?

Mr. WILLOUGHBY. I cannot answer that. I do not know. The average rendition of our members, of which we have about 9,500, is 107 head. Ninety percent of our members have less than 170 head of cattle.

The problem: The problem to which you are now giving attention is the question of whether or not the Defense Production Act of 1950 should be extended beyond its expiration date of June 30, 1951, and if it is to be extended then in what form such extension should be enacted by the Congress.

It is to this problem that we address ourselves at this time. Since we are cattlemen we are confining our remarks to an expression of the attitude of cattlemen.

In order to approach this problem logically and intelligently, it is appropriate that we review the record and appraise the present situation. We realize that the basic problem is the correction of the trend toward inflation in this country.

This same problem confronted the Congress in the summer of 1950. Obviously, at that time the Congress concluded that the proper method of approach was through the medium of the restrictive type of legislation enacted in the form of the Defense Production Act of 1950. But the conclusion that the Congress reached at that time was

not then intended to be a lasting or permanent answer, evidence of this thought being contained in the 1-year limitation placed upon the life of the act by the Congress.

Since the law has been in effect for approximately 1 year, and since the same identical basic question is now again-or, rather, is still before the Congress and the country, it is but common sense that the present situation be studied with great care and that an analysis of these present conditions be made to determine whether or not the past approach is the proper one.

Even a casual reading of the Defense Production Act of 1950 would convince anyone of the fact that the Congress, in passing that act, had in mind the fact that "production" must be "expedited" and increased. In the declaration of policy, which is section 2 of the act, the following language appears:

It requires expansion of production facilities beyond the levels needed to meet the civilian demand.

And all of title III of the act deals with the problem of "expediting" and increasing "production." With reference to agriculture, the Congress went even further in writing into the act the following language, in section 401 of title IV thereof:

It is the intent of Congress that the authority conferred by this title shall be exercised in accordance with the policies set forth in section 2 of this act, and in particular with full consideration and emphasis, so far as practicable, on the maintenance and furtherance of the American system of competitive enterprise, including independent small business enterprises, the maintenance and furtherance of a sound agricultural industry

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The production of beef cattle is one branch of "agriculture" and we believe that when the Congress emphasized its interest in maintaining a sound agricultural industry our branch of that industry was encompassed in the declared intent of the Congress.

It is clearly evident that, in enacting this law, the Congress desired to secure increased production and, in language that cannot be misinterpreted, provided that the administration of this law should be carried out so that this emphasized purpose would be accomplished.

Proposed amendments: The specific measure before you is the administration's request for the extension of the Defense Production Act as contained in the two proposals for legislation identified as S. 1397 and H. R. 3871. Insofar as our industry is concerned, this proposed legislation has the following pertinent proposals:

1. The proposal to extend the act for a 2-year period, ending June 30, 1953.

2. The proposal to authorize the use of subsidies in the agricultural field, including livestock.

3. Authority to purchase foreign agricultural products at the world market and resell them at a loss in this country. This being a subsidy to foreign producers.

4. Authority to freeze parity on agricultural products for a period of 1 year.

We are opposed to each and all of these specific proposals. Our reasons for such opposition will be made plain in this statement.

CPR 23: It is our experience derived from living under the provisions of the present Defense Production Act and our vivid recollection of conditions that existed under OPA, coupled with our intimate

knowledge of our own business, that forces us to the conclusions we have in these matters.

While we know that the Congress wanted to encourage an increase in production, which increase is badly needed in this country, we also know that the agency entrusted with the duty and the responsibility of administering the act has not approached the discharge of its duties with any realistic attitude calculated to accomplish the purpose of the act.

The Office of Price Stabilization has issued ceiling price order No. 23 by the terms of which the following results are supposed and desired to be accomplished:

1. Roll back the prices that slaughterers may legally pay for live cattle by an amount announced as being 10 percent on all cattle, but which actually is now 18 percent on the lower grades of cattle.

2. Provides for another roll-back of 42 percent on such prices effective August 1, 1951.

3. Provides for still another roll-back on such prices effective October 1, 1951.

To imagine that such an order which reduces the return that producers might legally get for their products will increase production is a plain absurdity. To even suspect such a result would be silly.

This referred-to regulation will have exactly the opposite effect from that announced by the Administrator and an effect directly opposite to the result desired by the Congress. We will establish this fact.

There are two major steps in the production of beef. In the first place beef animals must be produced and then, after they are produced on the range meat must be put on their bodies. We range people produce the animals. Cattle feeders accomplish the second phase.

Feeder operations in Texas: I would like to discuss first the operation of feeding cattle in order to increase the tonnage of beef. I am not a cattle feeder, though I do produce animals that go to the feed lots for finishing. I will not attempt to tell you, from experience, the position of the feeders, but, in an effort to obtain for you the exact facts relating to feeding operations in Texas, I have assembled as much thoroughly reliable information as I can obtain. I have secured detailed reports covering 10 actual feeding operations in Texas. These records are furnished to me by Extension Service agents and by the Agricultural and Mechanical College of Texas. Each report is in complete detail and can be exhibited to you if you desire to see it. I have made a calculation from these reports and find that the average cost incurred by these feeders for each pound added to the weight of the animals being fed was 43.45 cents. These animals all graded Choice and the ceiling price at Chicago, as established by CPR 23, is 34.20 cents per pound, live weight. Therefore, if these animals had to be sold under the operation of this order the feeders would have lost, on an average, 9.25 cents for each pound of added weight resulting from such feeding operations.

The figures stated above do not cover (1) labor expended in the feeding operation: (2) selling and transportation cost: (3) capital investment in feeding lots and equipment; (4) death loss. If these proper items were added to the total the loss would be considerably more. Furthermore, the ceiling price of 34.20 cents is the ceiling applicable for Chicago. The actual ceiling applicable in Texas is

approximately 2 cents less than that Chicago figure. Therefore, the actual loss would easily amount to 12 cents for each pound of weight added by the feeder.

You have had or will have before you many actual cattle feeders from different sections of the country and these gentlemen are far more competent to discuss the problems of the feeders than I am. However, since none of those present operate in Texas, I believed it appropriate to give you the result of my investigation into this

matter.

With feeders facing an inevitable loss for each pound of weight added to an animal, I cannot understand the Administrator's statement that CPR would not only maintain the present rate of beef production, but that it would actually increase production. The opposite effect is certain. Obviously, the order or regulation will be in direct contradiction of the expressed and emphasized will of the Congress.

Range operations in Texas: Now, if I may, I would like to discuss the effect of CPR-23 on range operations where the live animals are raised.

In the first place the regulation-or rather the statement of considerations accompanying the regulation and the further statements of the Administrator relating thereto-are most misleading. By these statements the Administrator announced that the roll-back amounted to 10 percent on the price of live cattle. Actually, on the kind of cattle I produce and such as are produced on practically all range land, the roll-back amounts to 18 percent now, with two additional roll-backs of 4 percent each to come at later dates. If 10 percent in the present order means 18 percent reduction in price for our cattle now, and if the same proportion is carried out in later orders, then the actual, ultimate announced roll-back would amount to 34 percent and not the 19 percent announced.

It is not believed that, in relation to our cattle, the regulation is a fair administration of the law or even an attempt to carry out the will of the Congress.

We would like to give you some accurate statement of the cost of production involved in range cattle operations. I would like to say that I have available for the files a record of a man producing as low 30 calves, 32, 200, or on up to 700 or 800, which I will put in the record.

It is impossible to furnish any figure that would be a reflection of the costs of any person other than the individual making the statement. We know of no Government agency that is willing to offer a statement as being of national significance. I shall give you a statement of the actual costs involved in the production of a range animal in the area where I operate. There are so many divergent factors to be considered such as geography, range conditions, weather, nearness to market, and a thousand and one such matters that such a statement cannot help but be individualistic. But, because I believe you are interested in this subject and because you have been promised some such figure, I will do my best to supply you with my cost of production in relation to the type of animal mentioned. This evidence will be offered at the conclusion of my statement. In addition to my statement as to production costs, there is tendered to you the evidence of these gentlemen here with me, each of whom is a range producer.

All of this evidence establishes the indisputable fact that the Office of Price Stabilization has, by CPR No. 23, attempted to establish ceilings on our cattle that are below the cost of production.

Conclusion as to effect on production: From the foregoing it is obvious that if CPR No. 23 is to be kept in effect-and it will be, as such an announcement has been made by the Administrator and other high-ranking officials-then both types of beef cattle producers-that is, the feeders and the range producers-will be denied a fair margin of profit on this investment and for their labor. In fact, they are evidently expected to operate at a positive loss.

Subsection (3) of section 402 of title IV of the Defense Production Act of 1950 has the following pertinent language:

The President shall give due consideration to affording equitable treatment to all producers of the commodity for which the ceiling is being established.

We respectfully submit that CPR-23 violates the quoted provision of the law just as it clearly violates the expressed and emphasized intent that the Congress had when the law was enacted.

Quota regulation: There is one further feature about regulations in force applicable to our industry about which I would like to comment. I refer to the quota regulations. By these regulations the slaughterers of livestock are limited in their productive effort-because processing live animals into meat is something like production. Quotas are fixed for each slaughterer, such quotas being based on his previous operations.

Since the country needs the meat and since it must be handled through licensed slaughterers, no such limitation is warranted. In fact, the opposite rule should prevail. The individual slaughterer should be encouraged to process as many animals as he possibly can so that more meat may be available to fill the demand. And this quota system operates to the injury of cattlemen. A slaughterer may well fear that he will have difficulty in securing cattle to fill his quota in any given accounting period. Inspired by this fear, all slaughterers will, at the beginning of such accounting period, buy all the livestock they can get and rush their slaughtering operations. Toward the end of the period the slaughterers will have exhausted their quotas and will not be on the market. This will cause a glut on the market. Livestock will be on the stockyard with no buyers to take them. This will be a bad situation for cattlemen to face. We faced a similar situation under OPA and we know what we may now expect. In fact, the only purpose that quotas can serve is punitive in its nature. Slaughterers violating any provision of any regulation may be punished by loss of quota. We believe that, in case of such violation, the punishment should not be visited on the cattlemen who put their stock on the market. We know that the order provides for adjustments of these quotas upon application being made to the agency and proof of necessity offered. But, if you have ever had experience with Government action on similar applications, you know that such relief will be slow in coming. In the meantime, what would happen to the cattle?

Position on proposed amendments: It is hardly necessary for me to comment on the changes asked for in the law, but we do not wish to avoid such comment.

In the first place we strongly object to the 2-year extension of the law. In fact, we believe that the story we have told and which we