Изображения страниц
PDF
EPUB

Mr. SMITH. Yes, that is true. I think those figures will show a little higher. Somebody may have them for 1933, I do not know. Now the matter of volume, that has moved direct, was given by Mr. Carnes this morning, and I will not reiterate those figures.

This tremendous volume purchased direct has weakened the demand of the processing interests at the terminal price fixing markets. Due to the fact that they have a part of their supplies, as the result of direct buying, they are not in the market actively competing with other processors for their supplies. This in turn has not reflected values of livestock to the producer, which we firmly believe would have been the case if this dual system of purchasing supplies was not in existence, as direct buying today being unregulated and unsupervised.

We desire to make this point clear-that our cooperative association is not opposed to direct buying of livestock provided same is under regulation and supervision of the Packers and Stockyards Act. We desire to see such regulation and supervision imposed upon direct buying so that equality of conditions will be established in order that producers of livestock will receive comparable prices, with proper differentials-locations considered for the grade and quality of stock offered for sale at a given time.

Because of this unregulated condition as to direct buying, the efforts on the part of the selling agencies and those of our Government in the Chicago market this past fall, in attempting to secure a fair price for hogs, were thwarted.

May we emphasize the need for regulation, supervision, and control throughout the entire buying and selling activities, whether on public terminal market, small posted market, concentration yard, private packers' yards, railroad yards, or other yards where livestock is publicly handled? To this end we encourage amendments to the Packers and Stockyards Act, 1921, giving authority to the Secretary of Agriculture to regulate, supervise, and control all public buying and/or selling of livestock.

We believe business in general is attempted to be done in an honest, fair manner, but with this tremendous increase in direct buying, many malpractices have crept into the system. It is common to hear on the part of the direct buyer that he desires to pay the full market value for the livestock which he is attempting to purchase. Numerous illustrations of this could be given on all species of livestock. Suffice to state one instance that recently occurred, where an owner of some cattle trucked same to a direct buying yard. This party was a good cattle man, closely followed market conditions, and knew the grade of cattle which he had for sale. The cattle were unloaded at the yards. The packer-buyer stated to the owner that he desired to pay the full market value of the cattle which he then proceeded to look over. He told the owner he would pay $4 per hundredweight for a certain number, $3 per hundredweight for others, and one head at $2 per hundredweight.

The owner inquired of the buyer why he was keeping the true market value of these cattle secret. The buyer replied that he was attempting to buy these cattle at what he felt was a fair value. The owner stated to the buyer that he knew full well, with one exception, his cattle should be worth at least $4.50 per hundredweight. The final purchase price of these cattle, without giving the complete de

tail of the discussion, was $4.50 per hundredweight, with one out at $4 per hundredweight. We raise the inquiry here what would have been the price paid for these cattle had the owner not been present and had he not known market conditions, even though he was present at the time of sale. So we repeat, that we desire to see the general interest of the average producer of livestock protected in the sale of his stock.

The question will be asked on the part of the buyer: Why does the producer patronize this local buying plan rather than send his stock to the market? The answer is obvious in that the average producer at any one time has a relatively small number of head of livestock to sell, has not yet fully comprehended the ways and means whereby his stock with that of his neighbors can be assembled into larger units and moved to the market, has accepted the local plan as one of convenience and in turn has not familiarized himself with many of the discrepancies that have come into the direct buying system. The average producer has been and is today honest, fair, and square in his dealings, and in general has not mistrusted the one buying as to his grading, weighing, and price paid.

Here we wish to make it clear that we do not believe all direct buyers of livestock to be dishonest and unscrupulous, but there has entered into the system ample evidence to warrant the entire system being regulated, supervised, and controlled.

We want to urge upon your committee and upon the Senate the immediate enactment of something to take care of this situation as has been proposed, and that that be done now, and that we not await the investigations which undoubtedly will take many months more that are underway at the present time.

Senator CAPPER. You have in mind the investigations of the Department of Agriculture?

Mr. SMITH. Yes, sir. We believe those investigations will disclose many wonderful things, but on the other hand we do not wish the Senate or House, before whom we want to appear tomorrow, to fall into the trap that because of these investigations this enactment should be delayed, otherwise the practice will be continued, and our livestock industry will continue to bear the burden.

There is another point most worthy of mention, in that those concerned with direct buying, as a part justification of their method, claim that they save the producer of livestock who sells to them the, marketing charges, including a lower trucking cost, savings on the marketing costs, including the charges of stockyard owners and the commissions for selling. It is true that in the public market these charges openly appear on the account of sales. I take it you gentlemen are well familiar with that. In direct buying while these costs do not appear openly, they must be borne in some manner. They are covered up some place in the operations of the business and while it does not appear openly, it must come, either as a result of grading, weighing, or in lower price returns to the producer. Because of this it is believed by the patrons of this organization that the prices of hogs have been materially lower during these past many months than would have been the case had direct buying been regulated in a similar manner to the selling of livestock at public markets.

49990-34-45

We wish to justify the position of this association on the question of direct marketing by the following illustration: Some months ago the Federal Surplus Relief Corporation granted funds to the Ohio Relief Commission for the purchasing of cattle for relief purposes. The local commission decided upon a plan of buying the cattle which they were to purchase, direct from the owner at the farm or in the feed lot. This plan, after announcement, was immediately brought before the directors and many, many members of the association, both individually and by groups meeting. In every case in our investigation, came the opinion and the desire that cattle purchased by this commission buy on the terminal market. The reason for this was to place the added purchasing power on the market, to bring this increased demand into play where we felt it would have effect on prices of all cattle rather than a limited number purchased direct, as indicated. The results of our investigations were brought before the relief commission and after consideration, their buyer for this section of the State was placed here on the market. This, in the opinion of all interests, aided in gradually strengthening our cattle market for the sale of all cattle.

May we add here that the packers, processors, and small killers' at Cincinnati have not been favorable to direct buying, have utilized the system only in case of need of supplies which could not be secured at the market, or as a result of our market being out of line as to values with the general prices of other markets. We have had both of those situations where direct buying has been employed on the part of some of our packers. Generally, it is not true. However, they are reporting to us that unless practices in vogue in direct buying are regulated and supervised, that it will be necessary for them to go to the country to buy a fair amount of their supplies in order to compete in the trade with their products.

Now I would like to cite two or three instances in closing:

To the north of us, 50 miles, is the Dayton market. In addition to the public market, two of the three packers of that city, buy direct from producers. For years we have recognized the advantage taken as the result of direct buying. Through our cooperative marketing interests an analysis of the Dayton and Cincinnati markets was made 3 years ago. This covered the entire transactions in the sale of hogs for the year 1930 and the first 3 months of 1931. Values paid at Dayton for 180- to 200-pound weight hogs, was 50 cents per hundredweight less than the Cincinnati market for this 15 months' period. The 200- to 225-pound weight hogs averaged 47 cents per hundredweight less; the 225- to 250-pound weights 45 cents less per hundredweight. This situation was brought before the producers of livestock throughout that territory. As a result, a material increase in the volume of hogs from that territory came to the Cincinnati market, which our records clearly indicate.

Here, again, we may cite, why is it within 50 miles of the other market these producers would continue to sell their livestock with that much of a differential. But the situation was only true there that is found around any local packing interests or local market center, is a matter of convenience, generally speaking, rather than price being the consideration.

Recently an analysis of these two markets was made for the year 1933. The 180- to 200-pound weight hogs at Dayton still showed a

spread of 47 cents per hundredweight. The 200- to 225-pound averages narrowed to 26 cents per hundredweight and the 225- to 250pound weights averaged 29 cents less than the Cincinnati market.

That has come about largely as a result of our activity in that area, bringing a lot of those hogs out of the Dayton territory on the Cincinnati market, and relieved their supplies to the place that it, has narrowed the values, and our records clearly indicate the vast amount of livestock, particularly hogs, that normally went to Dayton and that normally should go to Dayton that have come on to the Cincinnati market.

The packers at Dayton have apparently lost sight of their public market, are buying their hogs at their plants, on the farms, in local community auction sales and in most any manner, as cheap as possible, in order to secure their supplies. May we add here that by this method of direct buying and the lack of interest in the public market, the average purchase price of good lambs at the Dayton market for the year 1930, was $1.38 per hundredweight less than the Cincinnati market. This lowered to $1.12 per hundredweight for the year 1933. In the case of veal calves the spread was 94 cents per hundredweight on good calves for the year 1930, and narrowed to 51 cents per hundredweight for 1933.

Similar situations to the above result from activities of other interior packers at Piqua, Ohio, Muncie, Ind., and other places, in that they are in position under present unregulated conditions to purchase their raw products direct from the farm to a large extent of their killing requirements, and thus move it by truck into Cincinnati and other consuming centers at a lower price to the wholesale trade.

I want to mention this one thought, I have plenty of records to indicate that within 70 miles of our market the average buying of hogs ranges from 40 to 70 cents per hundredweight less, and the out-grades of hogs from 50 cents to a dollar less than the Cincinnati

market.

The other vicious part of this program, as we see it reflected, is the fact that as the result of these and other interior packers purchasing their supplies at lower costs, this has enabled them to move their product into this and other markets at a lower cost than the packers here have been able to compete with, which in turn has been a factor in bringing lower values to the livestock producer. Similarly, as the result of direct buying by some larger packers in the West, dumping of meat has taken place on our Cincinnati market, to the place that it has lowered the wholesale values on the day of such dumping, to the extent of at least 3 cents per pound. This in turn has naturally reflected itself in a narrower purchasing demand on the part of our processors, small killers, and butchers.

We have had our butchers, after a dumping process took place, to almost be off the market because they couldn't compete and buy the supplies today at a dump price where it is being unloaded there in carload lots. It is a very serious situation.

Another part of the business is the buying at country points by country traders and operators. Reference here is particularly to the operator buying at a number of country points, and shipping all the stock he can direct to packer. In such cases the operator is the sole agent, dealing with the individual livestock producer, or in many

cases where the owner does not accompany his livestock to be sold, the operator alone handles all transactions.

We have found for some time that there has been considerable discrimination for the same grade of livestock purchased at different points by the same operator. In Whiting County, Ind., at one point, there is a cooperative shipping association, as well as the local operator or country buyer. At the other point the local buyer has no competition. These two points are about 20 miles apart. We found the general spread in price paid for the same grade of hogs averaging around 20 cents per hundredweight more at the point where there was a cooperative shipping association than at the other point where no such local competition was afforded.

We have plenty of records of other instances of that same nature. At Decatur, Ill., through the Illinois Live Stock Marketing Association, is operated a cooperative selling agency. Since the organization of this, the price spread paid by local buyers in relationship to terminal-market price has narrowed from 60 to 70 cents to about 40 cents per hundredweight; in other words, relieved that situation in that market area, as Mr. Ewing mentioned this morning, from 20 to 30 cents per hundredweight.

An order-buyer at Danville, Ill., where there is a cooperative shipping association, pays from 10 to 20 cents per hundredweight more for the same grade of livestock as is the case where he operates at other points without competition and the market spread at Danville has narrowed from 70 cents to around 35 cents, which reflects itself to the entire livestock interest, whether handled cooperatively or otherwise.

Similar instances of past operations are most frequent in practically all territories where this method of buying has been practiced Here it is interesting to note that since the investigational work on direct buying has taken place, that some of the larger operators that generally discriminated in their price from point to point, are today paying virtually but one price for a given grade and weight. In other words, an operator was paying 20 to 25 cents a hundred at comparable points on the same railroad or in the same given territory where, since the investigation has started in the last few weeks, all of those points carry one price today if they are operated by the same agent. This is indeed significant in view of the fact that these same operators carried a variance of from 10 to 20 cents, and not infrequently 25 cents per hundredweight at these points. Because of this situation may we encourage that efforts not cease in going back and checking up in detail past operations as well as those of the present day.

One other illustration might be cited in comparison with the Indianapolis market: In and around a given county, 100 miles northeast of the Indianapolis market, we found from the published newspaper reports of the local markets and the use of the Government market reports for the Indianapolis market, while the 210- to 250-pound weights sold 29 cents under the Indianapolis market, or an average for these desirable weight hogs, of 25 to 26 cents per hundredweight. In the case of the 120- to 160-pound weights there was an average variation of 34 cents per hundredweight. This, coupled with the fact that these several local markets were nearer to the eastern consuming trade, and carrynig a slightly lower freight rate, can only mean that so long as the system is permitted to con

« ПредыдущаяПродолжить »