tions, depending on how hard the times are, and we would anticipate something like this.

Senator LEAHY. What would be the practical effect of somebody asking for a refund? Would they face any economic reprisals from the Beef Board?

Mr. BARRON. I certainly wouldn't think so. This information on refunds will be strictly confidential. There have been no problems with the cotton program along this line.

Senator LEAHY. Have you made a study of what the cost to the consumer would be on this, or do you have even a general idea?

Mr. BARRON. Well, in a free market enterprise, such as cattle, we certainly are not able to pass our cost on. If we were, I wouldn't be losing $75 a head on each animal I feed. I think that the consumer will benefit considerably by this program.

Senator LEAHY. Your 68-member board is entirely made up of beef producers, the cattlemen?

Mr. BARRON. Yes, sir.

Senator LEAHY. Was there any consideration about putting any consumer or public representatives on the 68-member board?

Mr. BARRON. Because the cattlemen are putting the money in, we believe they should be the ones to make the decisions on the Board. Certainly we would welcome consumer advisory groups, or other advisory groups, but we do feel that the operation of the Board should be by the people who are putting the money in.

Senator LEAHY. But some of the money really does come from the consumer, in one sense. I realize we have not talked about passing on costs, but if there is a mass production, and if you can get to the effective level that you want in selling, the cost is going to be paid eventually by the consumer, is it not?

Mr. BARRON. If they are buying the product, eventually the proceeds should filter down to us, but we cannot pass on costs.

Senator LEAHY. As a consumer, I am aware of the fact that the cost of beef products is somewhat substantially different than it was just a few years ago.

Mr. BARRON. Yes.

Senator LEAHY. So is the cost of lumber, so is the cost of other things, I realize this too. But the determination has been made that you do not want a public representative or public representatives as such on the Board, is that correct?

Mr. BARRON. Yes, sir. This is the way most Boards are administered-by people who are personally involved in the production— and we feel this would be better in our case.

Senator LEAHY. Now, as I understand it from the staff, $3.5 million was spent on promotion in 1973.

Mr. BARRON. That includes the State beef councils and the National Livestock and Meat Board.

Senator LEAHY. If you will bear with me a bit, as I am a new member of this committee, generally, how was that money spent?

Mr. BARRON. In broad fields of promotion, education and nutritional research. The educational programs were mostly in schools, by home economists, trying to teach the youth of the country facts about basic nutrition.

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 inrested 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

Mr. ROONEY. It is spelled out in the bill under section 15. It is fairly lengthy.

Senator LEAHY. You figure that is adequate?

Mr. ROONEY. Yes. We pretty much went by the guidelines set up in the cotton bill. Even in cases such as in Texas, where there are as many as 12 cotton organizations, they were able to work out their differences and come up with a representative that was satisfactory to all.

Mr. BARRON. This would also include the general farm organizations. In nearly every cotton-producing State, they are certified. Senator LEAHY. Would you have a situation with two or more organizations in a State where both would certify nominations to the Board?

Mr. ROONEY. Very definitely. This has happened in cotton, particularly in Texas where there are 12 or 14 certified organizations. Senator LEAHY. What do you do then?

Mr. ROONEY. They get together and sit down and pick a representative. If they can't, each one can present one to the Secretary, and let the Secretary choose, but in the past the cotton people have found that they can get together and pick the representative as well or better than the Secretary could.

Senator LEAHY. You talk about the value-added system being selfpolicing. Do you want to elaborate on that a little bit?

Mr. AMSTEIN. Yes. This has been a concern of some people. The way we feel, the buyer knows that when he sells the money will be collected. So he is going to make a deduction when he buys an animal. In that way, we think it is self-policing.

Senator LEAHY. Is it the economic incentive?

Mr. AMSTEIN. Yes, he knows that when he sells it will be taken off; so when he buys an animal, he will take it off from the seller. We think this is self-policing and really would take very little enforce

ment.

Senator LEAHY. Insofar as the cattle buyers collecting assessments and/or remitting, how do they feel about it? Have you talked with them?

Mr. BARRON. While we met with the three major packer associations, and while they have not officially endorsed it, they expressed general approval. They realize that it can cause them a little more trouble, but they also realize that if the producer and the consumer benefits, they also will benefit.

Senator LEAHY. What about small locker plants?

Mr. BARRON. Of course, we will have to collect from the small locker plants.

Senator LEAHY. That is going to be a problem.

Mr. BARRON. This could be a problem, because they are smaller, and they don't keep the books that the large packers do.

Senator LEAHY. If an animal is slaughtered by a locker plant for an owner, and the animal is never sold, are you going to be able to collect?

Mr. BARRON. Yes, sir. We are writing that in, and we think that we will. The locker plant operator always goes by the carcass value of the animal that he slaughters. He has a value that he fixes daily

on his own produce, what he sells, and he certainly can refer to that price. Then, when he collects from whoever brings the animal in, he can deduct for the program at the same time that he makes his charge.

Senator LEAHY. I see.

Mr. Barron, you mentioned in your statement that you hope that the amount of bureaucratic involvement would be kept to a minimum. Mr. BARRON. Yes.

Senator LEAHY. An attitude that I think is commendatory and I wish that everybody in Washington felt the same way. I don't think they do.

Now, how much Government regulation or supervision do you feel would be necessary?

Mr. BARRON. Just enough to ascertain that the program is conducted in accordance with the law. Of course, this would require an annual audit. Also, the Government needs to monitor what the Beef Board is doing. The Beef Board would have to submit proposed programs, annual programs, et cetera, of what they plan to do the next year so the Secretary can ascertain that the money is being spent the way the law prescribes. But I do feel this can be kept to a minimum. Senator LEAHY. We were talking earlier about the education programs. These education programs that you presently have in the schools, are they primarily pro beef education programs?

Mr. BARRON. Yes, sir, to an extent. The information put out by the Beef Industry Council of the National Livestock Meat Board, is pro beef, of course, because that is the product they are working with. It is factual information on the food value of beef, the best method of preparing it, and this sort of thing.

Senator LEAHY. But it is an advocacy kind of education, supporting a particular type of product. It doesn't go into, say, the various alternatives to beef and things of that nature.

Mr. BARRON. We feel that this program could go into the alternatives. I am somewhat familiar with the dairy educational programthe four food groups-and I think this program could be broadened and it should be part of a total education for a child.

Senator LEAHY. What you emphasize is inexpensive cuts and ways of preparation.

Mr. BARRON. Yes.

Senator LEAHY. Now, the last question, if you put out a referendum on this, how do you propose to inform the producers throughout the country so they can make intelligent choices in the referendum?

Mr. BARRON. We plan to appoint a State chairman and committee in each State, plus a county chairman and committee in each county to conduct an all-out educational program, so we can have the most involvement, the best understanding possible, and also get the greatest number of voters possible.

Senator LEAHY. And those areas, such as New England, in which I have a certain amount of interest, naturally, where you are going to have one representative for the whole area, what about during the referendum? Would you still have one person in each State to get the word out, or would it be one person for the whole region?

Mr. BARRON. We are going to depend heavily on the dairy people in that area, because the dairy cattle population is much greater than the beef cattle population. We are working with Mr. Louis Longo and other dairy industry leaders in New England. We do hope to come up with a plan that will cover the area. I can't give you the details at this time.

Senator LEAHY. Thank you. I have nothing further. Do members of the staff have any further questions? Thank you very much. [The prepared statements of Mr. Amstein and Mr. Rooney follow:]

STATEMENT OF WILLIAM AMSTEIN, BEEF DEVELOPMENT TASKFORCE, CLIFTON, KANS.

My name is William G. Amstein. I am a farmer and rancher from Clifton, Kansas; chairman of the Kansas Beef Council; Director of the Kansas Hereford Association; Director of the American National Cattlemen's Association; and Past-President of the Kansas Livestock Association.

Also, I am a member of the Beef Development Taskforce and helped develop the 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 about the plan relating to (1) amount and rate of collection, (2) from whom collections will be made, (3) the valueadded concept, and (4) refunds and exemptions.

AMOUNT AND RATE OF COLLECTION

After several months of study--study of beef industry needs, of opportunities for the industry, of what other commodity groups were doing and what we could reasonable expect beef producers to invest-the Beef Development Taskforce concluded that a realistic goal was $30 million to $40 million a year initially. While at first that may sound like a large amount, it really isn't large in relation to the size of our industry.

Our next step was to develop a formula and determine what rate of collection would be necessary to arrive at that amount. For this, we solicited help from the USDA and from two independent agricultural economists. All three sources came up with the same answer: Assuming 100% efficiency in collections, 0.3% (3/10 of 1%) would yield about $35 million a year. Thus, 0.3% is the initial rate on which we settled.

Realizing that inflation could erode the effectiveness of the program, we felt there should be some flexibility. So it was determined that the Beef Board would have authority to increase the rate to 0.5% (5/10 of 1%), as the need arises and it is deemed necessary. Then, at a later date, producers could increase the rate further-up to 1%-if they approved it in a referendum.

Some consideration was given to a flat rate collection, such as $1 per head. This was ruled out, however, after some cattlemen felt it would not be fair for a dairyman selling a $15 calf to pay the same amount as a feeder selling a $400 fat animal. The percentage-of-sales-value approach, it was agreed, is fair to all.

FROM WHOM COLLECTIONS WILL BE MADE

In meetings with industry leaders across the country, the general feeling was that all cattlemen should participate; that is, there should be a collection or deduction each time an animal changes hands. Only in this way would everyone pay his fare share. But the nature of our business would make it very difficult, if not impossible, to have money actually remitted after each sale.

There are approximately 15,000 livestock markets (including terminal markets, auction barns, market agents, etc.) not to mention the thousands of private treaty sales each year. So we concluded that it would be more efficient and more effective to have the money actually remitted at the narrowest point in the funnel, which would be the slaughtering firms. (While there are are about 5.800 slaughtering plants in the U.S., over 90% of the cattle are slaughtered by 1,082 plants. The remaining percentage is slaughtered by locker plants.)

To collect at point of slaughter and still permit each seller to pay his fair share, we settled on the value-added approach.