What is the present investment in this market on the basis of what facility you have now? Mr. GRAHAM. $700,000. Mr. McINTIRE. How much of that is involved in this long-term loan or 10-year loan? Mr. GRAHAM. $400,000. Mr. McINTIRE. The $300,000 came from what source? Mr. GRAHAM. Private capital. Mr. McINTIRE. Is that a loan, too? Mr. TROTTER. No. Wait a minute. Mr. JOHNSON. That is stock, I suppose. Mr. TROTTER. I am not sure I can completely answer that. I think it is probably in the form of both but I would not like to take a positive stand, make a firm statement. The CHAIRMAN. It points out what the gentleman said. Mr. Graham said that they could not have had the market without the foresight and courage of Mr. York. Mr. TROTTER. We could not go out and sell a stock subscription, if that is what is in your mind. They tried to get the municipality, the chamber of commerce, to sponsor it and they would not do it. They tried to get several organizations to do it and they would not do it. Finally Mr. York took the dice and gambled. They just went ahead and did it. Mr. McINTIRE. There is an area of risk capital. Mr. TROTTER. $300,000. Mr. McINTIRE. Now, you are meeting the terms, but on the basis of $400,000 and not on the basis of the $300,000 equity, right? Mr. GRAHAM. May I inject this to clarify that statement by Mr. Trotter? The reason that this private capital was interested in it: Now the chamber of commerce was not able to finance it, they were interested and did sponsor it. I am a member of the agricultural committee of the Chamber of Commerce in Raleigh, which is very vitally interested and the Raleigh Kiwanis Club was interested. Mr. York would never have undertaken this if it were not presented to him as a great need by all the civic people in the area there. I just work for him, and I am not familiar with all the financial aspects but I know he has had to strain a lot, and where he got the capital, I do not know. Mr. McINTIRE. What I was interested in was to know what financial load you are carrying at present out of your operating income of this facility, whether you are carrying the $400,000 loan and find that a rather tight situation. Mr. TROTTER. Yes, it is basically the $400,000. Mr. McINTIRE. What a volume of produce moving through your market is handled on a commission basis? I mean, the regular commission merchant, the middleman so to speak, in contrast to the volume which is being brought in by farmers and sold by them over the floor? Mr. TROTTER. There is no commission merchant, no commission charge by the market. The wholesale merchants that do the business within the market pay a flat rental. The farmer who brings his produce in can sell to them or to different outlets. The wholesale people are handling 75 or 80 percent of the volume that comes in. It is transported in from other areas of the country. Mr. McINTIRE. But three quarters of the volume is coming in from other points of assembly and coming in for transfer and sale rather than from the local agriculture for assembly and market within that facility? Mr. GRAHAM. Yes, but as that increases, we recognize we must have additional services to render to this farmer because of the smallness of the volume, you see. And in order for the farmer, for us to do a better service to the farmer, we have to have ample grading facilities, other sheds so we can process his product, as he comes in with it. And once we ever get that, it is hard to tell, it is hard to estimate what the volume would be. Mr. McINTIRE. These services you mention are the same services that are provided at shipping points for other quantities or supplies coming into the market? Mr. GRAHAM. Yes. You see, this is the only market of its kind in North Carolina, the only market of its kind between Baltimore and South Carolina. Now you take 2 years ago, carrots were sold with tops on them, but now they come to you and your wife in a cellophane bag. Radishes are coming in in a cellophane bag of the same type; spring onions are put up in these bags. We have to have some way to present the farmers with these types of services. The CHAIRMAN. You say if you can't get some help, you are going to have to abandon the farmers' part of the market? Mr. GRAHAM. Yes, sir. The CHAIRMAN. You want to expand and provide better facilities for the farmers? Mr. GRAHAM. Yes, that is why I am here. Mr. ANFUSO. Mr. Chairman, may I ask Mr. Graham this question: Nobody is going to lose any money in that project, are they? None of these investors of either the $300,000 or the $400,000 are going to lose any money? Their investment is perfectly safe, is it not? Mr. GRAHAM. We hope they do not lose any money. It is hard to say, as you know, you get any business started and you have an opening and all and you go through a period of time there. You see, we are just a year and a half away from our initial start. It is hard for me to answer that question, although I would like to be able to answer it. We are determined to do something about it so that they will not lose any of their money. The CHAIRMAN. The banks evidently thought you were going to be successful and so did these chainstores or they would not have put those expensive buildings there. Everything seems to encourage me to believe it will be successful. The only thing is, you are going through the pains of developing the market and as it grows in volume, naturally your burdens, financial burdens, will become lighter. Mr. GRAHAM. Yes, sir. If we could extend the length for our borrowing capital, sir, that would make it easier all the way around. Mr. ANFUSO. What I am trying to bring out is that these people showed enough vision in making this investment in the public interest. Mr. GRAHAM. Yes. Mr. ANFUSO. They were really performing a public function and they had the vision to do it, and I think the Government should cooperate more fully now in expanding the project in the public interest, is not that so? Mr. GRAHAM. Yes. Mr. ANFUSO. Wouldn't you say by having good markets all over the country we would increase consumption of food products? Mr. GRAHAM. Yes. Mr. ANFUSO. And it would help the health conditions by getting better food cheaper. Mr. GRAHAM, Yes. Mr. ANFUSO. I do not see how it could do anybody any harm. Mr. JOHNSON. I visited your market a year ago with the committee. I was very impressed by it. Where your farmers bring in their commodities there fore sale, you have the different commission merchants bidding on the farm produce as well as the chainstores that are there. It is not a closed market-do your prices vary from day to day, is there competition in the bidding? Mr. GRAHAM. Yes, there is competition in the bidding, Mr. Johnson. When a farmer comes in there, he has 4 or 5 different units to sell in addition to that wholesale merchant there, he has the chainstore buyer which they tell us once we get a volume through there of acceptable merchandise, they will shop the market. If you get the wholesale merchants, the chainstore buyer, the restaurant trade, the housewife and itinerant truckers, that will give the farmer a pretty fair shake when he brings his produce into the market. Mr. JOHNSON. I was noticing the chainstores in some of the southern cities put up markets of their own. And in a market like that, it would seem whatever the chainstore wanted to pay that particular day would be the price, but in your particular market, you have free enterprise which we are all so much in favor of. Mr. GRAHAM. I am glad since you were there, I think you can understand what I mean. You are familiar with the farmers' shed that you saw. Mr. JOHNSON. The bad thing about it was the time we were there there was not any farmer, no farmers there with produce. It was the wrong time of the year. Mr. GRAHAM. Yes, the point I am trying to make is that we have got to add additional services to that facility for the farmer to process, package, prepackage his produce. Over three-fifths of the produce today is prepackaged. We have to get it in a prepackage condition so the wholesale merchant can handle it. Mr. JOHNSON. What I thought-I noticed the various wholesalers were doing a certain amount of processing in their own plants. I do not know where the products had come from. Mr. GRAHAM. We have a tomato repackaging firm there, and you have a picture of that, and they package tomatoes at all seasons of the year. Starts at California, Texas, Mississippi, comes on up through Florida, Georgia, South Carolina, North Carolina, up through Virginia and the Eastern Shore of Maryland. The CHAIRMAN. Thank you very much. Mr. Trotter, do to add anything else to what has been said? you want The CHAIRMAN. I want to put in the record a statement by Mr. James G. Patton, president of the National Farmers Union, and a letter from Kenneth Cribb, of Spartanburg, S. C. Without objection, they will be put in the record. (The statement of Mr. Patton and the letter of Mr. Cribb follow :) STATEMENT OF JAMES G. PATTON, PRESIDENT, NATIONAL FARMERS UNION Mr. Chairman and members of the committee, we want to commend Congressman Cooley for his continued efforts to have enacted by the Congress his bill, H. R. 4504. We want also to commend Congressman Anfuso for joining Mr. Cooley in its sponsorship, and the members of the committee who have supported these bills. Such support and the joint effort of Congressmen Cooley and Anfuso is symbolic of the values which will accrue to farm families and city consumers alike. This proposed marketing facilities improvement program will raise farmers' prices and incomes and insure lower prices to ocnsumers for perishable farm commodities of higher quality, without reducing the income or profits of anyone. This apparent magic results from the use of research and credit to eliminate waste, reduce inefficiency and lower marketing costs between the prices received by farmers, and those paid by consumers. In our thinking, Mr. Chairman, the public record is sufficiently adequate to show the urgent need for your bill. Evidence to this fact, is the bringing of your bill to the House floor last year. It is unfortunate that this important legislation was not debated and acted upon in accordance with the rule approved by the House last year. If the House had acted, we are sure that the vote would have been favorable. We sincerely hope that this bill will be brought to the House floor and passed as early as possible this legislative year. There is little reason for our testimony to be lengthy in view of the history of support from members of this committee and the Congress. However, I shall set down briefly the reasons why the members of National Farmers Union have supported the measure since it was first introduced. The reasons why we favor enactment of this bill are strongly and adequately set forth in the declaration of policy in the bill itself. There are many cities that are greatly in need of modern terminal marketing facilities. The major roadblock to meeting this need is that resulting from the reluctance of potential creditors to take the unfamiliar risks involved, either to modernize existing facilities or to finance the new facilities which are required in most instances to fully rehabiiltate market facilities. It is our belief that many cities now unable to act to modernize market facilities could and would act if adequate credit were made available at reasonable rates of interest. With adequate, low-cost credit possible through a program of Federal insured loans as would be possible under H. R. 4504, cities could undertake a complete project with firm assurance of attaining their objective— completely new and modern marketing facilities. KEEP INTEREST RATE LOW We want especially to point out Mr. Chairman, that paragraph 8 (c) (6) is essential to a successful market modernization program. "Hard money" rash is breaking out and the cure (mistakenly in our view) of the administration is to recommend and to proceed with interest-rate increases on loans, either made directly or insured by the Federal Government. We do not know of any desire on the part of anyone to raise the interest level in paragraph 8 (c) (6); however, we just wanted to state clearly for the record our opposition to any increase in the interest rate set as a maximum in this paragraph. In this connection, school construction bonds are being bid in at interest rates ranging from 3.75 to slightly above 4 percent. Purchasers of school construction bonds are not as yet protected by a program of Federal insurance. Lenders of funds to construct modern marketing facilities would, on the other hand, be making loans under such a Federal program. Under the circumstances, we feel that the 4 percent interest maximum should be retained in paragraph 8 (c) (6). The committee may wish to raise somewhat the $45,000 minimum investment required of the borrower. While we do not want the amount raised to the point that improvement would be discouraged, the investor, whether municipality, public corporation, or other political subdivision should be required to invest sufficient money to insure top priority to planning, management, and promotion of the marketing facilities that would be constructed. Colorado, North Dakota, and Illinois farmers, who produce fruit or vegetables, have a direct economic interest in the efficiency of the Chicago, New York, and Philadelphia produce markets that may receive the product of their work. They know that to leave to New York bankers the initiative of making loans for construction of modern terminal markets will mean little or no progress toward closing the gap between the outdated marketing facilities and the facilities needed to cut marketing costs, In closing, Mr. Chairman, I should like to point out that some recent studies have been made by the Department of Agriculture which highlight the rising cost of transportation and related costs. Some of the facts resulting from these studies show conclusively the need for more modern marketing facilities as a means of cutting handling and marketing coats. In miscellaneous publication No. 738, for example, reference is made on page 19 to a study in which it was found that "Traffic delays and waiting time at poorly organized markets increase the charges (marketing)." Reference is made to the exceptionally poor marketing facilities in New York City. In this same publication, reference is made to increasing marketing costs. The report states: "The total bill for farm-grown foods produced in this country and sold, within its own borders, at retail amounted to an estimated $46.3 billion in 1955 * * Of this sum $18.3 billion went to the farmer and the remaining $28 billion was absorbed in the marketing process. "Marketing' as used here, *** includes the transportation and warehousing of these foods in every farm and their wholesaling and retailing. "The charge for transportation forms a substantial portion of the total spent for marketing. In 1955, the transportation bill for food was estimated at $3.70 billion. *** This figure comprised 13 percent of the marketing portion of the food bill. "If we ** * look at the years since the end of World War II, the increase in the transportation bill for food is even more striking. Between 1945 and 1955, the bill rose from $1.34 billion to $3.70 billion, 24 times as much. In the same period total food costs increased only 90 percent.' Mr. Chairman, there are other factors besides the cost of handling food at the terminal market which have influenced the increase in transportation costs. (For example, the railroads have been granted a number of general increases in the last 10 years. The most recent one took effect in March of 1956.) This is all the more reason, in our thinking, why we ought to pass your bill, the objective of which is to attack this problem of increasing transportation and marketing costs at one point where something can be accomplished to help both farm families and consumers. Representative HAROLD D. COOLEY, TROY H. CRIBB & SONS, INC.. Spartanburg, S. C., March 18, 1957. Chairman of the House Committee on Agriculture, United States House of Representatives, Washington, D. C. DEAR MR. COOLEY: We understand that public hearings are being held on bills proposing to encourage the construction of modern wholesale produce markets through a program of insured mortgage loans administered by the Secretary of Agriculture. Mr. Troy H. Cribb, president of our firm, testified in favor of such a proposal in 1950. We still think that the bill would mean a great deal to the farmers of South Carolina. Although we cannot appear at your hearings, we want to tell you that all of the farmers that we represent as selling agents will be vitally interested in seeing such a bill enacted. We are advising South Carolina's Senators and Representatives of our interest in the bill, and requesting that they do all that they can to help its passage. Call on us if we be of any help. Very truly yours, KENNETH CRIBE. |