most recent such authority being the Egg Research and Consumer Information Act approved late in the 93d Congress.

However, S. 772 contains a unique feature with regard to the calculation and collection of assessments which presents serious legal and administrative problems. Under the language of the bill, each time cattle are sold the seller must pay the purchaser an assessment based on the sale price of the animal. The purchaser is required to collect that assessment and pay the same to any person to whom he subsequently sells the animal, along with an added assessment based on the increase in value of the animal under his ownership.

The purchaser at the point of slaughter must receive from the seller the total assessment based upon the sale price of the animal at the time of slaughter, and that amount must be paid to the Beef Board. If the animal increases in value through the production process, as would normally be the case, the assessment based on the value of the cattle at the point of slaughter should equal the total of the prior assessment. However, if the sales value of an animal declines or if an animal dies after any assessment has been collected on that animal, or if heifers purchased as feeders should be diverted for breeding purposes, the owner would technically be entitled to retain all or part of the assessments paid to him by other producers, since there is no provision in the bill for this money to be remitted to the Beef Board. In our opinion, the omission of such procedures represents a serious deficiency in the bill and could raise constitutional problems.

Further, we believe it would be administratively impossible to enforce the provision which requires that assessments be made and collected for each sale. Reasonable enforcement would require detailed recordkeeping and periodic audits to insure compliance with this provision. Cattlemen would be required to keep records of assessments collected on each individual animal. Because of the complexity of the cattle production and marketing system and because some 40 million head of cattle are slaughtered annually, it would be impractical to expect cattlemen to maintain complete and accurate records of assessments collected and paid. Thus, it would be virtually impossible to determine compliance with the proposed bill.

We stand ready to assist the Congress or the industry in effecting needed changes to overcome these deficiencies.

One final point-S. 772 contains authority for an appropriation to cover the costs incurred by the Department in developing an order and conducting a referendum. Because of the number of beef producers approximately 2 million-these costs would be relatively large. We estimate that an appropriation of about $750,000 would be needed to cover the Department's costs in developing an order, holding hearings, and conducting the referendum which would be associated with any beef promotion program of this magnitude. After approval of the order, USDA administrative costs approximating $100,000 to $150,000 annually would be defrayed by assessment. Beef Board expenditures would depend on the amount of revenue generated by the assessment but could approximate $40 million annually. Because of the above problems and the President's moratorium on new Federal spending programs we cannot support enactment of S. 772 at this time.

The Office of Management and Budget advises that while there is no objection to the presentation of this testimony, enactment of S. 772 would not be in the long-run interest of agriculture, the food industry, or consumers in general. It is OMB's view that the involvement of the Federal Government in the promotion of a particular commodity at the expense of other commodities would compel other groups to seek similar assistance in order to maintain their share of the food market. The net effect of such action would be to unnecessarily increase costs to both producers and consumers.

Mr. Chairman, this concludes my statement. We shall be glad to respond to any questions which you or members of the committee may have.

Senator LEAHY. Thank you.

You mentioned in your statement that the costs of the above problems and the President's moratorium on new Federal spending programs you can't support enactment of S. 772 at this time.

Mr. BLUM. Yes, Mr. Chairman.

Senator LEAHY. If there was no moratorium on Federal spending, would there be circumstances under which the Department could support S. 772?

Mr. BLUM. If there were no moratorium on Federal spending and if the administrative problems that we have enumerated here for the bill could be corrected, the position might be different.

Senator LEAHY. Would it be a good bill under those circumstances? Mr. BLUM. I don't know that the Department normally passes judgment as to whether bills are good or bad. It is a question of whether we could or couldn't support it, and I can give you only a personal judgment at this time. I think we probably could.

Senator LEAHY. Are you aware whether there has been any discussion about having an assessment of this nature, but making it entirely voluntary? Have there been discussions with various cattlemen's organizations concerning assessments of the nature they have discussed in S. 772, but making it voluntary?

Mr. BLUM. I am not closely acquainted with what has been going on in this area, Mr. Chairman. I have understood that there was a voluntary program of some sort in the past, and this has not been considered adequate by the industry.

Would Mr. Pierce care to elaborate?

Mr. PIERCE. I think you have covered it, Mr. Blum.

Senator LEAHY. My last question, has any study been made by the Department of Agriculture as to the ultimate costs to the consumer under S. 772?

Mr. BLUM. We have made no detailed analysis of that, Mr. Chairman. We did do some calculations which would indicate that if the total cost involved here were to be passed on to the consumer it would be a fraction of a cent per pound, however, I don't know whether the total cost would be passed on or not. There could be offsetting things in the system.

Senator LEAHY. But as you understand it, it would be less than a cent a pound.

Mr. BLUM. If the total amount of the assessment were passed on,

yes.

Senator LEAHY. That would include the administrative costs of the assessment? That is the whole assessment?

Mr. BLUM. That is true.

Senator LEAHY. Thank you very much. Unless there is anything else you would like to add for the record.

Mr. BLUM. No, Mr. Chairman. I would just ask would it be necessary for us to remain here? We have a lot of things happening on the beef front this morning.

Senator LEAHY. I certainly don't have any need for you to stay unless the staff does.

I understand you are willing to work with the committee in clearing up the problems that you see.

Mr. BLUM. Yes, sir.

Senator LEAHY. I am not suggesting that that indicates any support on the part of the U. S. Department of Agriculture for the bill, but you are willing to work

Mr. BLUM. We are willing to give you whatever technical assistance we can, sir.

Senator LEAHY. Thank you.

Mr. Chernauskas.

Mr. CHERNAUSKAS. Might I add along that last point, Mr. Chairman, in our review of the bill we did find considerable editorial changes which we could suggest to make the bill more clear and more administratively feasible in addition to the problems mentioned by Mr. Blum.

Senator LEAHY. Fine.

I am sure the committee and the staff of the committee would appreciate that. Thank you very much.

Senator LEAHY. Next we have Mr. Barron, Mr. Amstein, and Mr. Rooney.

Who wishes to lead off?

STATEMENT OF 0. J. BARRON, JR., CHAIRMAN, BEEF DEVELOPMENT TASKFORCE, SPUR, TEX.

Mr. BARRON. I will start off, sir.

Mr. Chairman, we thank you for the opportunity of testifying on this bill. My name is O. J. Barron, Jr. I am a rancher and cattle feeder from Spur, Tex. I am first vice president of the Texas Cattle Feeders Association, director of the American National Cattlemen's Association and a member of the Texas & Southwestern Cattle Raisers Association.

I am chairman of the Beef Development Taskforce, which, during the past year developed the proposed uniform collection plan for beef research and consumer information. It is in this capacity that I appear today.

With me are two others members of the Beef Development Taskforce, whom I will introduce later to explain some details of the plan. First, I would like to give you a little background on: (1) the state of the cattle industry, (2) the need for this program, (3) how the plan was developed, (4) our responsibility to the Secretary of Agriculture, and (5) industry support for the plan.

STATE OF THE BEEF CATTLE INDUSTRY

Today, as throughout the history of this country, the cattle industry is recognized as a basic industry, a large industry and a growth industry. On January 1, 1975, there were 131.8 million head of cattle in the United States-3 percent more than a year ago, 21 percent more than 10 years years ago, 108 percent more than 50 years ago. Today, there are a total of 1,830,000 farms in the United States producing beef. This includes dairy farms, since every dairy animal eventually is slaughtered and consumed as beef. Not only are these 1.830.000 farm families dependent upon beef, but there are an estimated 5,490,000 more employees in the United States who depend upon beef for their livelihood in some way, by virtue of the fact that they supply cattlemen or handle beef products.

In addition, almost every consumer likes beef and recognizes it as one of the most desired forms of protein food. So every U.S. citizen has a direct or indirect interest in the future of the beef cattle industry.

Since September 1973, the beef industry has been in a slump, which hasn't bottomed out and probably won't for another 2 years. During the past 16 months, our fed animals that were marketed have lost an average of at least $75 per head, and in some cases, up to $200 per head. At the conservative average loss of $75 per head, the 36 million head marketed during this period have lost a total of over $2.75 billion. In addition, the inventory value of the 131.8 million on hand. has dropped from $40.9 billion to $20.9 billion. These unprecedented losses have made it impossible for many cattlemen to stay in the business. And if cattlemen cannot stay in business, there will not be adequate supplies of beef to satisfy the growing demands of consumers. So, again, every American has an interest in the future of the beef cattle industry.

NEED FOR A RESEARCH AND CONSUMER INFORMATION PROGRAM

Farsighted beef industry leaders have long recognized the need for a national program of research, consumer information, and market development. Our problems of the past 18 months have merely accentuated the potential value of a long-range plan that would fulfill the needs. Also, consumers have expressed many concerns about beefthe economics of beef, the future supply, the nutritional and health aspects-indicating that consumers, too, feel a need for more information of the kind we propose.

Our efforts along this line have been very minimal. In 1973, the Beef Industry Council of the National Live Stock & Meat Board collected about $1,500,000 for national beef promotion, consumer education and nutrition research. In addition, State beef councils collected another $2 million-most of which was spent in the States where collected but usually not where needed the most. That is a total of about $3,500,000-for an industry that in 1973 had $23 billion in gross sales which amounts to only about one sixty-sixth of 1 percent of sales volume.

It was noted that other agricultural commodity groups were spending much more to improve their product and their position. For

example, cotton producers are investing 0.4 percent of sales volume in research and promotion; Long Island Duck Growers-0.43 percent; Milk Producers-0.6 percent; California Prune Growers-2.15 percent; and the Florida Citrus Industry-2.3 percent.

All of these seem small when compared to what some commercial companies spend in explaining the merits of their products. Wrigley & Col, the chewing gum people, invest 12.1 percent of their sales in advertising alone; General Foods-8.1 percent; Proctor & Gamble6.3 percent; and Ralston Purina-1.6 percent. Again, the beef industry is investing one sixty-sixth of 1 percent in promotion, consumer education, and nutrition research combined.

DEVELOPMENT OF THE PLAN

As a result of the suggestions by rank and file cattlemen, a Beef Development Taskforce was appointed in July 1974, to study the feasibility of an expanded program and to draw up guidelines. This task force was comprised of 15 members representing the American National Cattlemen's Association, the National Livestock Feeders Association, the National Live Stock and Meat Board, United Dairy Industry Association, Competitive Livestock Marketing Association, National Livestock Dealers Association, Central Public Markets, and American National Cow Belles.

These task force members, who served with me, came from all parts of the United States; all have served as officers of their State or regional organizations; they are progressive; and they are sound thinkers. Many of their names you will recognize: Bill Amstein, Kansas; Marvin Berschet, Ohio; Bob Carter, Texas; Matt Engler, Michigan; Gerald Plowman, Colorado: Robert Rebholtz, Idaho; Paul Rooney, South Dakota; Jose Russell, California; Tad Sanders, Missouri; Chandler Scott, Alabama; JoAnn Smith, Florida; Creede Speake, Jr., Oklahoma; James Stevenson, Iowa; and Robert Cunningham, Nebraska.

During the last 8 months, this task force met a dozen times and traveled from coast to coast to study other programs; to determine our needs; and to formulate a plan that we thought would work for the beef industry. From the beginning, an overriding factor in our planning was that any new program would have to benefit consumers our customers as well as beef producers. If it helped consumers, we reasoned, it would help our industry.

On needs, our estimate is that the beef industry needs $30 million to $40 million a year. That amounts to only 0.3 percent of gross sales, based on the 5-year average of slaughter value. As inflation continues and if we see the expected results, this might increase in time. But $30 million to $40 million would get us started with a reasonable. program today.

Here are a few key points in the program we propose:

1. To have a uniform collection, so every producer will pay his fair share, the program must be legislated and approved by producers in a referendum.

2. The collection should be voluntary; thus, there should be a refund provision so any producer can, upon request, get a refund.