MARKETING FACILITIES FOR PERISHABLES WEDNESDAY, MARCH 20, 1957 HOUSE OF REPRESENTATIVES, The committee met pursuant to notice at 10 a. m., in room 1310, New House Office Building, Hon. Harold D. Cooley (chairman) presiding. Present: Representatives Cooley (chairman), Grant, Gathings, Albert, Abbitt, Thompson, Watts, Hagen, Johnson, McIntire, Smith, Krueger, Teague, Tewes, Anfuso, Bass, Knutson, Jennings, and Matthews. The CHAIRMAN. The committee will please be in order. Mr. Joseph Shelly, will you have a seat at the witness table. STATEMENT OF JOSEPH S. SHELLY, EXECUTIVE SECRETARY, VEGETABLE GROWERS ASSOCIATION OF AMERICA Mr. SHELLY. Mr. Chairman, I am Joseph S. Shelly, executive secretary of the Vegetable Growers Association of America. The Vegetable Growers Association of America is the only national association of vegetables growers, with 42 affiliated associations with membership in 30 States. This association is in general agreement with the objectives set forth in the several bills on marketing facilities financing now before this committee. It is needless to dwell in length on these objectives or to enumerate the many deplorable conditions row existing in many terminal or public markets where perishable agricultural commodities are handled. At the last annual meeting, held in December 1956, the voting delegates adopted the following resolution: We believe efficient marketing is essential to successful agriculture and that proper marketing facilities tend to bring better returns to the grower and better distribution to the consumer because of less waste of time, labor, and produce. We approve legislative principles which encourage the improvement and development of marketing facilities and facilitate the financing of them by use of a market mortgage insurance fund. No one is aware any more of the inadequate and obsolete facilities for handling perishable agricultural commodities at public and terminal markets than the vegetable growers of the country. Vegetable producers are aware of the obsolete and inadequate market facilities, reflecting so realistically the inefficiency of marketing and lower returns received for commodities. There are, however, several points in this legislation with which we are not in complete agreement. We urge the committee to give consideration to these two economic factors. We recognize the invaluable services the United States Department of Agriculture has rendered through its market research under the Agricultural Marketing Act of 1946 in pointing out the need for the more efficient marketing facilities. These needs have been emphasized by the tremendous changes which have taken place in the marketing functions and practices of perishable agricultural commodities. We certainly urge the continuation of these functions. Recognizing these tremendous changes and the trend toward even more revolutionary changes, we question the wisdom of the Federal Government's investing 85 percent of the total cost for a period of 40 years. It is entirely possible that in this period of time changing conditions may adversely affect the market facility, resulting in even greater burdensome costs and obsolescence with which many of these same markets are afflicted today. Such conditions may completely nullify the definition of establishing reasonable rentals and other charges as specified in section 10 (f) necessary to defray costs of maintaining and operating the market. facility. It is the opinion of the association that local groups should be stimulated to carry by themselves as much of the cost as possible. Government paternalism merely tends to overproduce, overextend, and overdevelop such undertakings. Where local market authorities cannot completely develop needed facilities the association considers it as a more realistic policy to invest up to two-thirds of the total cost for a period of not more than 25 years. This, we believe, is an acceptable principle in real estate economics and would avoid government foreclosures where facilities could no longer pay their way due to obsolescence and would rotate the fund faster, which would be desirable. Vegetable growers believe that the Federal Government should do only that which people cannot do for themselves. To go beyond that point destroys initiative, limits freedom, and thwarts individual decision making so essential to our American system. The CHAIRMAN. Thank you very much, Mr. Shelly, for your statement. I don't believe there is anything in your statement that is incompatible with the real premises of the legislation. Now, you spoke of the Agricultural Marketing Act of 1946. The act came into being, because of the interest of the committee, here in this committee room. It did not originate in the Department of Agriculture and I take great pride in what has been done in that agency. The question of 85 percent for a period of 40 years could be changed. 75 percent for 30 years, 25 years. It certainly is not the purpose of this legislation to bring into being any agency of the Government that is going into the marketing business. It will only be an agency charged with certain responsibility and authorized to underwrite certain of these undertakings. You have clearly indicated that the members of your organization are fully aware of the deplorable situation existing in some of these terminal markets and of the waste and loss of time and labor and produce. Now, the fact is that these obsolete marketing facilities are continuing to exist and while it is well enough to say that the private industry should do something about it and new facili ties should be financed with the aid of private lending agencies, the fact is that the credit is not available on the terms and conditions set out in this bill. As I understand it, you have no objection to the basic idea involved, but you do think 85 percent is too much and the 40-year period is too long. Mr. SHELLY. That is right. I think there are several examples, Mr. Chairman, of privately sponsored marketing authorities that are doing a good job. I believe the market now being built in Philadelphia is one being financed through a local authority and we certainly would favor, wherever possible, local authorities do as much as possible. The CHAIRMAN. You realize, of course, how important this is in the New York area and you recognize, I am sure, how inadequate the marketing facilities are in the city of New York. Mr. SHELLY. It is probably the country's worst. I think one of the problems they are faced with there is, Where are you going to put the new market? The CHAIRMAN. There is a group up there that is unfarovarble to putting it anywhere. We saw a very interesting motion picture yesterday morning, brought to the committee room by representatives from the Department of Agriculture. It certainly did not overdramatize the situation there. That market is important to every farmer in the country. Mr. Shelly, as I say, I realize that all legislation is a subject for compromise and these are the figures we had in the last draft of the bill. We will consider your suggestions, of course, when we go into executive session. On behalf of the committee, I want to thank you very much for appearing. Mr. Hagen? Mr. HAGEN. On page 4 of the bill there is a restriction on the financing of cold-storage warehouses. We saw this movie prepared by the USDA, and from watching that I would judge that one of the problems of these terminal markets is the problem of providing some kind of refrigeration for holding this stuff overnight. Do you think this restriction on cold-storage warehouse of greater than 10,000 cubic feet capacity would take away some of the value of the legislation? Mr. SHELLY. I don't know whether I can answer your question directly, sir. I don't have a copy of that bill. I have one of the others before me. Mr. HAGEN. Mr. Cooley is trying generally to keep these public facilities out of the cold-storage category, but I understand from the movie there is a necessity for some refrigeration in these facilities just for temporary storage. Mr. SHELLY. That is right. From my association with markets, I have observed that most of the individual dealers have their own coldstorage facilities. Quite frequently vegetables and fruits may be held for a day or two in the car if there is a limited amount of space, and usually there is not too much of it goes into cold storage for any length of time because, as you know, they are highly perishable, most of the regular commodities that are handled. The CHAIRMAN. You are talking about the language in lines 14 to 16 on page 4? Mr. HAGEN. That is correct. The CHAIRMAN. We discussed that yesterday. That was put in the bill because some of the cold-storage people had been financing coldstorage operations, and that, of course, is subject to change if 10,000 cubic feet is too much or too small. Mr. HAGEN. I want to ask, then, would 10,000 cubic feet in a terminal market, say, like New York, or possibly some of the smaller ones, would that be adequate to take care of all the overnight refrigeration which would be required? Mr. SHELLY. I am really not an engineer and The CHAIRMAN. I guess Mr. Crow could answer that better than anyone else. I do not know whether or not 10,000 feet would take care of the New York market, but the idea is that no one facility would be larger than 10,000 feet. Mr. SHELLY. I am not in a position to answer that. I would say, possibly in the case of fruits, it is more desirable for larger storage facilities than it would be in vegetables. Mr. HAGEN. Mr. Cooley referred a while ago to some reasons why the local effort has not been made. Could you point out why, for example, better facilities have not been provided by local authorities in these larger cities? Does someone have a vested interest in real estate or what? Mr. SHELLY. I presume there would be numerous reasons that could be quoted, Probably there are real-estate interests in some areas. Perhaps in other areas it might be that folks cannot agree as to the most desirable place and the result is that nothing is done. But it seems to me in most cases where there has been a sincere desire to do something on the part of local people, then usually those obstacles have been overcome, and again I refer to the Philadelphia situation as being probably an example of an excellent job being done by a local group. Mr. HAGEN. They would still have those same problems, even with this legislation. Mr. SHELLY. That is right. Mr. HAGEN. But, for example, New York City has an excellent port authority. They have quite elaborate structures there in connection with oceangoing shipping, and so forth, and you would think they could have made the same provision for their interstate receipts of vegetables and fruits and so on. I was wondering if there was some reason why they had not done so. Maybe these landlords, or whoever they might be, exercise some high degree of political influence, or something that would prevent it. Mr. SHELLY. I really don't know. The association that I represent of course represents the other end of the line, the producers, so I am not too familiar with some of the problems that exist in New York or St. Louis, or Atlanta, Ga. The CHAIRMAN. I think, if I could suggest, Mr. Hagen, you probably would have different problems in different localities. For instance, I am sure in Richmond, Va., they are all set and ready to go to build a new terminal market but they have not been able to arrange for the financing. I know that testimony has been given before this committee, and in my own district, I have men from my district here this morning who will tell you about their problem. We did not have the problem in Raleigh that they have in New York or that you have in many places where the property owners put up a fight to hold on to their service facilities that they now have. Mr. SMITH. What percentage of your vegetables is sold handled direct from the producer to the big chainstores without going through a terminal market? Mr. SHELLY. I can't really answer that question. Mr. SMITH. That is a growing thing, isn't it? Mr. SHELLY. Yes, sir, and that is the thing I was pointing out as the change taking place. Mr. SMITH. I thought on the next to the last page where you referred to it, now everybody who is familiar with this, knows that the chainstores are not going out-they haven't quite started to raise their own beef, but they are feeding their own beef and all meat products come direct. And I think they may buy your lettuce and cucumbers, and so forth, direct from the producers and it never reaches the terminal market. Mr. SHELLY. That is exactly what I was trying to point out as to the great changes that have taken place in the last decade and may take place in the next decade. The CHAIRMAN. Well, the big corporations are actually doing for themselves what we are trying to provide through public marketing facilities which the farmers may use freely. In Petersburg, the A. & P., have a wonderful layout. They have a railroad to the back door and trucks at the front door. They can effect all sorts of economies in the handling of produce, whereas in the markets we saw in the picture yesterday, there is a lot of waste. That shows what private initiative, working through big corporations, can do, but a little municipality or small group of industry people are not able to put in the facilities that are desirable. Mr. JOHNSON. There would be no competition with that A. & P. market. The CHAIRMAN. I don't know how they operate. I think they do a lot of it under contract. Mr. SHELLY. Some of it is under contract and some is on a competitive basis. Of course, you have a lot of chain stores competing. Mr. TEWES. Back home I am in the plastic industry and one of the most important contributions that our industry has made is packaging for consumer items. Are your research men doing any dreaming 10 or 20 years ahead as to the advent of new packaging? Will we eliminate the present distribution techniques and warehouses of this size? Mr. SHELLY. Well, our association does not get into that type of research. We are merely a small association, serving our membership, so my statement will merely go to reflect perhaps what has been said by packaging designers in that particular field. I presume there will be some big changes in the years to come. I am not certain what the picture may be 10 years hence, because there has been tremendous change in the last 10 years and what may happen in the next 10 years may completely change the picture of what we are doing today, so it is open to change. Mr. TEWES. But you will agree when we talk about 25 or 35 or 40 years, that there are things in the market today that the housewife. |