We appreciate this opportunity to appear before the Committee to present testimony in support of S 772, a bill to create a beef research and consumer education program, referred to in the cattle industry as the beef market development program. As others testifying in support of this bill have emphasized, and will emphasize, the beef cattle industry is in economic trouble. We come to you with an industry self-help program, not one that requires governmental funding. This, in itself, is a bonus in this age of unprecedented federal budget deficits. We propose to generate $30 to $40 million dollars annually, from within the beef cattle industry, to be spent on cattle and beef research, consumer education and foreign and domestic market development. How do we propose to spend this money? CONSUMER-MARKET EXPLORATION First, market research. Consumers have always demonstrated a preference for beef. However, there is a need to more accurately determine consumers' needs and uses for the product. Do they want well-marbled or leaner cuts of beef? Do they want hamburger or sirloin? Beef for roasting or for broiling? We must determine consumers' needs and desires as they pertain to beef and then we can proceed to meet their specifications for different types of beef products and new or better ways to use them. PRODUCT DEVELOPMENT This brings us to the area of product research and development. We need to do more in the development of new and different beef products. We might discover new techniques of canning, freezing, freeze-drying or otherwise preparing or preserving fresh meat-techniques that are both desirable to the consumer and are cost-savers for the beef industry. Most important of all, we need to conduct nutritional research on our own product. We must get sound answers on the various health-related claims surrounding beef and increase existing knowledge of the nutritional value of this stable product. Today's consumers are growing more aware of the importance of good nutrition and they are demonstrating this concern by wanting to know nutritional information about the food they eat. Our program will foster trust and credibility between the producer and the consumer of beef as we fill this need for sound information. CATTLE PRODUCTION RESEARCH After we have investigated new products and explored nutritional areas, we must move into actual production research on cattle and forages. This will enable us to more efficiently and economically produce beef. We need to research cattle diseases, cattle feed rations, and efficiency, genetics and environmental considerations. We have currently reached a plateau. The industry faces a standstill in developing new means to increase production. This comes at a time when there is little federal money committed to further agricultural research to meet an everincreasing need for this quality protein food. Our Beef Market Development program will provide the impetus to continue this needed research. It has the added value that the money would come from within the industry, not the federal government. BEEF DISTRIBUTION The next step would be to develop better means of product distribution. We need to move beef from the point of production to the point of consumption as efficiently as possible-improvidng processing, transportation, storage and handling of our product. In its investigation into meat margins, the USDA points out that 80% of the increase in food prices in the past year results from increases in costs and margins in the non-farm sector. In this same report, USDA says that improvements in processing, handling and distribution of beef could lower retail beef prices by at least 5¢ per pound. In seeking this legislation, we are asking to be allowed to invest our own funds to help make the distribution of beef as efficient as possible. FOREIGN MARKET DEVELOPMENT One of the most critical needs for this industry is to develop foreign markets for our product. This will help in allowing us to produce at full capacity and will in fact provide a climate of stability for production. Cattlemen plan for eptimum production when they know there are adequate market outlets for the product. Another important reason for foreign markets would be to enable us to move away from a two tier marketing structure. We think in terms of domestic marketing and foreign marketing when in truth, our domestic production costs and prices are tied to the fluctuations and developments in the world price situation. We must become more active participants in this system. The benefits to the U.S. balance of payments situation that would accrue from our increased marketing abroad would, of course, be favorable. CONSUMER EDUCATION The final area of proposed beef market development is a key one sumer education. con As mentioned earlier, the consuming public is increasingly demanding in its choices of foods purchased to meet the nutritional needs of the American family. We in the beef industry must communicate directly with consumers. We must provide them with accurate, helpful information on beef and its nutritional value. We feel that this will go a long way toward responding to the requests voiced by consumers, to provide them with good nutritional information. This can be accomplished through the education of teachers, students, parents, homemakers, extension agents, consumer agencies, in short everyone who buys and consumes our product. We feel this can be done through the beef market development plan as outlined in S 772. All we ask is a chance to do it ourselves. The American National Cattlemen's Association urges passage of this bill. Senator LEAHY. Our next witness is Mr. Strathearn. Mr. Strathearn is general manager of California Beef Council, of Redwood City, Calif. Mr. Strathearn, you can either read your statement, or summarize the high points, whichever you prefer. STATEMENT OF GEORGE W. STRATHEARN, MANAGER, CALIFORNIA BEEF COUNCIL, BURLINGAME, CALIF. Mr. STRATHEARN. Thank you, Mr. Chairman. I am George Strathearn. I am a cattle rancher in California, and have managed the beef council since 1971. I think that just a little bit should be said about State promotion organizations, the California Beef Council is the oldest recognized State beef council, and is comparatively well funded. It is a legislated program enacted into law in 1957, and is financed by the California beef industry on a 10 cents per head assessment each time an animal is sold. The basic purpose of our council is to act as liason between the beef industry and California consumers in general. Our basic objectives are divided into four broad categories, each of which I would like to discuss briefly. I think I can dispense with some of the detail in my testimony at this particular time, but I would like to point out in the field of consumer education that we try to get involved as much as we possibly can with young people in our home economics programs in our school, and by the time the 1974-75 school year is completed, we will have distributed around 500,000 individual pieces of educational material to schools. In addition, providing a number of teaching materials to somewhere in the neighborhood of 1,000 teachers. We are involved in other areas of consumer education that we think are very important. Certainly one is the food pays publicity. Most of what our consumers in California read as it relates to recipes, preparing beef, most of that on the food pages is done by our home economists on our staff, and one of the things that is kind of disappointing to us, we have a big State and we are not really well enough funded in our present budget to even reach everybody in our schools with free materials, and I just wish we had more money to do a better job than we are doing in that whole area of consumer education. In public relations we try to be active in that area, and I would just like to read a part of my testimony, I feel there is a great lack of awareness in our society as it is related to the complexities of beef production and marketing. I think that we found that back in 1973. And if we are to attain the awareness and understanding of our industry by the American public, it seems to me that a far-reaching in-depth program must be developed on a national industrywide basis. Another area that we work in is the area of promotion, and we have many activities, one of which is stated, that will be in the record. The fourth area that we are involved in is the area of research, and I should point out that most of our research is done on a basis with projects that are relevant to the California beef industry, but I would like to mention one project of interest, and that was a study that we did in cooperation with the State Department of Agriculture in California to determine just how much beef was coming into our State from other States. We found that 40 percent of all the beef consumed in California comes from 53 other States and foreign countries. I mention this just to emphasize the fact that our industry is not separated or identified by State lines, and we have not, nor can we expect to communicate totally with the American public on a Stateby-State basis. One of the problems being that in our producing areas, where we are funded to do the job, we don't have consumers, and we are not doing the job that we should do in a lot of areas where we have millions of consumers. The beef industry is truly national in scope. Whatever happens in supply and prices of a major consequence in any one part of the country affects both the industry and consumer all over the Nation. In closing, I would like to say that we are proud of what the California Beef Council has accomplished along with the Beef Industry Council of the National Livestock and Meat Board, and similar organizations in 27 of the States. Much more needs to be done, however, and since the average family spends 2.6 percent of its total disposable income for beef. we should fund ourselves properly to conduct research, develop informational programs, and obligate ourselves to be of more service to the American public, which in turn will serve the best interest of the beef industry. Relative price and market stability is advantageous to both beef producers and con sumers. Now, the Beef Research and Consumer Information Act, I don't think, will serve as an instant panacea, but I sure think it is a giant step forward, having worked with consumers and having tried to work in a State that is a rather large producing State, as well as a big consuming State. So that concludes my testimony. I appreciate the opportunity to be here, and I would be happy to answer any questions. Senator LEAHY. I am wondering, Mr. Strathearn, if you could send to the committee copies of the material used in California that you referred to. Mr. STRATHEARN. Yes, sir, we will be glad to.* Senator LEAHY. One thought that occurred to me on the way over here today, which the staff has also raised, and it may not be fair to ask you this question, but in terms of the assessment or deduction we were talking about here, is this going to be an income tax deduction? Mr. STRATHEARN. The 30 percent? I mean the three-tenths of 1 percent? Senator LEAHY. Is that an income tax deduction? I am particularly wondering insofar as you have the option of asking for it back. Mr. STRATHEARN. I am not sure I could answer that question legally, or technically, but I think there is somebody in the room that probably could answer it. Charlie? Mr. BARRON. We think that it will be tax deductible. It is a cost of doing business. Senator LEAHY. Has any discussion been had with the IRS on that, Mr. Barron? Mr. BARRON. We have not contacted them yet, but we will. STATEMENT OF JOHN L. HUSTON, VICE PRESIDENT, BEEF PROGRAM, NATIONAL LIVESTOCK AND BEEF BOARD, CHICAGO, ILL. Mr. HUSTON. There is a precedent. The deductions of 10 cents invested in the State Beef Council, and the voluntary 3 cents a head invested in the National Livestock and Meat Board are tax deductible. On the basis of that precedent we think this will be tax deductible. Senator LEAHY. Thank you very much. Do you have anything else you would like to add? Mr. STRATHEARN. No, nothing more. Senator LEAHY. Thank you very much. [The prepared statement of Mr. Strathearn follows:] STATEMENT OF GEORGE W. STRATHEARN, MANAGER, CALIFORNIA BEEF COUNCIL, BURLINGAME, CALIF. I am George W. Strathearn, a cattle rancher from California. At the present time, I am manager of the California Beef Council and have held that position since 1971. The California Beef Council is the oldest recognized state beef promotion organization and has been comparatively well funded. It is a legislated program enacted into law in 1957 and is financed by the California beef industry on a 10 per head assessment each time an animal is sold. The purpose of the Council is to act as a liaison between the beef industry and California consumers. Our basic objectives are divided into four broad categories each of which I would like to briefly discuss : • The information is retained in committee files. 1. CONSUMER EDUCATION By far the most important part of our entire program, it includes materials for school home economics classes, newspaper food page publicity and a very limited amount of consumer service type of advertising. The school program is a continuous one with new materials being developed to best meet the needs of home economics teachers. By the time the 1974-5 school year is completed, we will have provided over 500,000 individual pieces of educational materials free to students for classroom use and eventually to be taken home for family benefit. In addition, over 1,000 teachers have been provided with free beef teaching manuals, lesson plans, charts for overhead projectors and other free materials to teach future homemakers how to identify, prepare and enjoy beef. We are presently involved in approximately 800 junior and senior high schools. This represents only about half of the public schools in our State, but it is a significant number. Most of the information about beef found on the food pages in our California newspaper is developed by our home economists. As our budget will allow, we also make available to consumers free receipe pamphlets and other helpful materials suggesting excellent ways to use beef. I only wish our funds would enable us to do more in this broad spectrum of consumer education! 2. PUBLIC RELATIONS Through press releases to some 500 newspapers and over 300 radio and television stations in California, we try to keep consumers informed about prices and many other matters concerning the Industry that the public should be aware of. We have established ourselves as a responsible and unbiased source of information on beef and the beef industry, but our reach is limited. There is a great lack of (awareness in our society as it related to the complexities of beef production and marketing.) If we are (to attain the awareness and understanding of our industry by the American public, it seems to me that a far reaching, in-depth program must be developed on a national industry-wide basis.) 3. PROMOTION Many projects are carried out each year by the California Beef Council on project basis and can be quite effective. The main thrust is to create consumer interest in beef. One example of a promotion project is providing 2,000 retail stores with three sets of four colored posters annually to be displayed at the meat counter to suggest beef to shoppers. 4. RESEARCH Funds are limited and although we budget for research, the projects are minor in scope and are selected on the basis of relevance to the California Beef Industry. One project of interest was a study in cooperation with our State Department of Food and Agriculture to determine how much beef was coming to California from other states. We found after a one year study that 40% of the beef and beef products consumed in California were shipped in from 33 other states and foreign countries. I mention this to emphasize the fact that our industry is not separated or identified by state lines and we have not nor can we expect to communicate totally with the American public on a state by state basis. The beef industry is truly national in scope; whatever happens in supply and prices of a major consequence in one part of the country affects both the industry and consumers all over the nation. In closing, I must say that we are proud of what the California Beef Council has accomplished along with the Beef Industry Council of the National Livestock and Meat Board and similar organizations in 27 other states. Much more needs to be done, however, and since the average family spends 2.6% of their disposable income for beef, we should fund ourselves properly to conduct research, develop informational programs and obligate ourselves to be of more service to the American public which in turn will serve the best interests of the |