3. The funds should be collected and handled by a Beef Board, comprised of 68 members. All of these would be cattlemen, nominated by existing cattlemen's organizations and appointed by the Secretary of Agriculture. The Beef Board would contract with other organizations to conduct the desired research, education, promotion, et cetera. 4. The rate of collection, to raise the necessary $30 million to $40 million a year, should be 0.3 percent--three-tenths of 1 percentinitially, the Beef Board would have authority to increase the rate of 0.5 percent-five-tenths of 1 percent-as the need arises and it is deemed necessary. Then, at a latter date, producers could increase the rate further-up to 1 percent-if they approved it in a referendum. 5. The national program should not in any way interfere with State beef councils that are now in existence or that may be formed in the future. To support continuing programs in cattle-producing States, 10 percent of the total collections should be returned to States in proportion to cash receipts from beef cattle in each State.

RESPONSIBILITY TO SECRETARY OF AGRICULTURE

Traditionally, cattlemen have wanted a minimum of Government involvement in their business. We still do. At the same time, we realize that the Government has a responsibility in a program of this kind. if it grants the authority for collections and enforcement thereof, to see that the program is conducted properly.

As with other national programs approved by the Congress-for cotton, eggs, potatoes, et al.-the Beef Board would submit to the Secretary, for his approval, annual budgets to include anticipated expenses for administration, research, consumer education, and market projects.

Because we want this to be a self-help program, with little or no expense to the Government, the Beef Board would reimburse the Government for administrative costs incurred by the Secretary after an order has been promulgated under this act. However, since this is producer money-for which we desire maximum benefit-to-cost ratios we will insist on a minimum of administration costs.

Further, because the Beef Board will be comprised of leading cattlemen-good businessmen in their own right-we believe that they would be best qualified to determine how the money should be pent and that they will be capable of administering the program efficiently. This, we believe, they can do with a minimum of Government help.

INDUSTRY SUPPORT FOR THE PLAN

In recent months, this plan has been presented to a number of cattlemen's organizations. Response has been most enthusiastic-the ost frequent comment being, "It's long overdue." To date, it has been endorsed by nine national beef organizations, six national breed a-sociations, 29 State beef cattlemen's associations, 14 State beef councils.

Now, I would like to call on Mr. Bill Amstein of Kansas, and Mr. Paul Rooney of South Dakota to explain further details of the Beef Research and Consumer Education Act. When they have finished, we will be happy to answer any questions.

Senator LEAHY. Thank you. I think before Mr. Rooney or Mr. Amstein start, I notice in reading through their statements that there are certain areas where they cover some of the same material that you have already covered, and I wonder whether Mr. Amstein and Mr. Rooney might find it best to make a synopsis of the highlights, because we have a number of questions that I would like to get into the record, and I would like to be able to spend such remaining time as we have on those questions.

STATEMENT OF WILLIAM G. AMSTEIN, MEMBER, BEEF DEVELOP-
MENT TASKFORCE, CLIFTON, KANS.

Mr. AMSTEIN. I think I can do that with mine.
Senator LEAHY. Thank you.

Mr. AMSTEIN. Mr. Chairman, my name is William Amstein. I am a farmer and rancher from Clifton, Kans., chairman of the Kansas Beef Council; director of the Kansas Hereford Association; director of the American National Cattlemen's Association; past president of the Kansas Livestock Association. I also am a member of this Beef Development Taskforce, which is my reason for appearing here. There are four areas I want to cover: (1) the amount and rate of collection, (2) from whom collections will be made, (3) value-added concept, and, (4) refunds and exemptions.

After considerable study, and I will move across some of the first part of this, "the amount and rate of collections" was somewhat discussed by Mr. Barron. Only simply to say that rather than a flat rate of collection, it was finally determined that the most fair way was a percentage collection, so that the $15 calf would not pay the same as the $400 fat animal.

I will move from that to "from whom collections will be made." In meetings with industry leaders across the entire country, the general feeling was that all cattlemen should participate, that is, that there should be a collection or deduction each time an animal changes hands, and only in this way would everyone pay his fair share. But the nature of our business would make it very difficult, if not impossible, to have money actually remitted after each sale, and that is what we are going to explain very briefly with the charts on the "value-added concept," which is a new concept, and one which has not been used in this area before, at least in animal agriculture.

I think this was a concept that came to Mr. Barron. We had wrestled with something that seemed to solve the problems that all of us couldn't agree on in the industry. It is sort of a compromise, but it is called the "value-added concept" in that each purchaser would, as he buys an animal, collects three-tenths of 1 percent of the purchase price when he pays for the animal. That is, he would deduct that amount from the check he writes, and that amount stays with the animal, until slaughter.

Let's take an example, a very simple one, a one-animal example. It could be applied to any number of cattle. Take a cow-calf operator who sells a calf to a stocker operator for $100. The purchaser at that point deducts the three-tenths of 1 percent of $100, or 30 cents when he is writing the check, and the seller would then actually-the buyer

would actually write a check for $99.70. The seller would receive 30 cents less than $100, so he then would have contributed the threetenths of 1 percent in the value of the animal sold.

The buyer at that point has that 30 cents in hand in the animal he has, so later we will take the stocker operator selling that yearling to a feeder for a value of $200. The purchaser of that feeder animal, at that time, deducts 60 cents, or three-tenths of 1 percent of the $200. When the stocker operator had collected 30 cents he bought the animal, and he has added $100 in value, so he has put another 30 cents in, so they both have put 30 cents in. The feeder who has bought the animal has deducted 60 cents from the value of the animal he purchases.

So the feeder then finishes with the animal. No money at that time has gone through the Beef Board. It has just been in the transactions, and the money is being retained by the person who has the current ownership.

At this point, the feeder sells the animal to a packer. Say the value is $400. The packer deducts at that point two-tenths of a percent, or $1.20, and he remits that to the Beef Board. The feeder at that point has put $200 of added value into the animal, and 60 cents in the potential of the $200, and only at this point does money go to the Beef Board, the $1.

Very briefly, we call it the "value-added concept." Each owner has paid his fair share on the animal, based on the value he himself added to the animal.

And only the packer has remitted money to the Beef Board at this time.

Refunds and exemptions are something I think I should mention very briefly. If any owner does not want to support the program, or decides he wants a refund, he can get that by writing to the Beef Board, the mechanics of which have been perfected, and other checkoff programs would be to write to the Beef Board of his desire.

Breeding animals has been a thing of concern to us, and we have at this time exempted them from the assessment. The reason for this is most breeding animals have a higher value when young, and therefore do not fit the value-added concept. However, all breeding animals are eventually slaughtered, at which time the last owner would pay the assessment. Some question has been raised about this as to the definition or designation of breeding animals, and, therefore, it is our suggestion at this time that this be left up to the discretion of the Beef Board, with the approval of the Secretary. Some consideration was also given to exempting small cattlemen. This idea was rejected, however, for two reasons.

First, as cattlemen will benefit from the program in proportion to the number of cattle that they own. And second, it is somewhat impossible to define what a small cattleman is.

In conclusion, the Beef Development Taskforce felt this program should be broad based so that every cattleman pays his fair share. We feel that the percentage assessment and the value-added concept accomplishes both of these requirements.

Thank you.

Senator LEAHY. Thank you.

Before we go on to the next witness, in your chart, what about the USDA objection? What if the value of the head of cattle goes down? Mr. AMSTEIN. Well, we have discussed it, and we figure that there will be some slippage here and there along the system, but we are really not concerned about it. I think the Department of Agriculture is concerned about it from a legal standpoint, and I guess I am not in a position to answer that.

Senator LEAHY. You figure that the Beef Board is going to be so effective and so efficient that the value is never going to go down any more? I mean we have certainly had instances of that problem in the very recent past.

STATEMENT OF PAUL ROONEY, MEMBER, BEEF DEVELOPMENT TASKFORCE, SIOUX FALLS, S. DAK.

Mr. ROONEY. The value would very seldom drop below the value paid. In a rare case, it would, but it would be very, very minimal. Mr. BARRON. Our losses generally have been production losses. Some of these have been tremendous. If the feeder puts $250 of feed into an animal, and then loses $150, this is a feed loss but does not reduce the original value of the animal.

Senator LEAHY. That is really before you get into the chain we are talking about here, is that right?

Mr. BARRON. The feeder is the last link of the chain, and this same thing would hold true of the stocker man. He might buy the animal, keep him on grass a year, and sell him for what he paid. He would lose his feed but, again, the animal would not decrease in value.

Senator LEAHY. How would your value-added concept work there? Do you see any problems?

Mr. ROONEY. No.

Mr. BARRON. We think that there might be rare instances, but generally speaking, even in bad times like we have had in the last 18 months, we still feel the value-added concept will work.

Senator LEAHY. Thank you.

Mr. Rooney.

Mr. ROONEY. Mr. Chairman, I will be very brief. My name is Paul Rooney. I am a farmer and cattle feeder from Sioux Falls, S. Dak. I am past president of the South Dakota Livestock Feeding Association; director of the National Livestock Feeders Association, and past chairman of the South Dakota Beef Council.

I am also a member of the Beef Development Task force and helped develop the proposed uniform collection plan for beef research and consumer information. It is in this capacity that I appear today.

I would like to explain some details of the plan relating to (1) how the funds are to be handled; (2) composition of the Beef Board, and (3) State beef councils.

First, how the funds would be handled. Since these are producer funds, the Beef Board, to be comprised entirely of cattle producers, will have sole authority for collecting and administering the funds. The last purchaser, which normally would be the slaughtering plants, is to deduct the assessment and to remit these funds to the Beef Board. The Beef Board would have an auditing staff to keep

records. In addition, the Department of Agriculture would have the authority to spot check slaughtering plants to assure full and accurate remittance of funds.

The second major function of the Beef Board would be to conduct. the desired research, education, market development, and so forth. They would do this by contracting with existing organizations such as the Beef Industry Council of the National Livestock and Meat Board, the National Dairy Council, State beef councils, universities, private research organizations, consulting firms, and other organizations. We do not feel the Beef Board should be restricted to contracting with any specific organization or organizations, however.

The Beef Board will submit an annual proposal of programs with an accompanying budget to the Secretary of Agriculture. The Secretary of Agriculture will have the authority of approval only, and can not originate programs.

Now, on the composition of the Beef Board, it has already been. mentioned to you as 68 members. Each of the major cattle States will have at least one representative on the Beef Board, and some States will have more, based on the population, cattle population, in each State. Because this is a rather large board, the taskforce envisions that its members would elect a committee to conduct the routine business.

Now, on the State beef councils, at present there are 28 State beef councils, 17 legislative and 11 voluntary. Their purpose is beef promotion, consumer education, and research. The national programs will not interfere in any way with the State beef councils. Since they have done good jobs in the past, and since local promotion and education programs will always be needed, 10 percent of the total collections will be returned to States in proportion to cash receipts from beef cattle in the States, but most of the money will be invested in national programs where it will do the most good."

In conclusion, I would like to emphasize that these funds will be producer funds which we producers will expect to be discreetly invested for maximum return. We believe that a Beef Board comprised of leading cattlemen will be capable of administering their own programs efficiently and effectively, with a minimum of Government regulation.

Thank you very much, Mr. Chairman.

Senator LEAHY. Thank you. Has there been discussion among the various cattlemen's associations about making this program a voluntary one? As I understand it, under this law they would be required to pay the assessment but could get it back if they requested it. Was there discussion about making it entirely voluntary to begin with? Mr. BARRON. Yes. In our original discussions, we talked along that line. That is the way we are working now, with voluntary programs, and we are just not able to generate the kind of money we need on a voluntary basis.

Senator LEAHY. Do you feel, then, if it is done on a mandatory basis, that the actual number that would turn around and ask for a rebate would be very small?

Mr. BARRON. In the cotton program, less than 3 percent of the producers request a refund. This amounts to 8 to 10 percent of the collec