Mr. BUTZ. At the same time, Dr. Dixon, the personnel we have had in the field have also been available for investigations of discriminatory and unfair trade practices by packers, et cetera.

Mr. DIXON. I know you have inherited a whole chain of nonen forcement; how many cease-and-desist orders have been brought in 26 years for engaging in unfair trade practices involving sale of meat products?

Mr. BUTZ. Mr. Bucy has that record; could you summarize it briefly?

Mr. Bucy. I assume that you are not talking about the whole act. You are just talking about title II of the act?

Mr. DIXON. Title II; yes.

Mr. Bucy. There have been 78 formal proceedings instituted since the act was enacted under title II of the act, and of those dockets there were 50 involving the restraint of trade and monopoly in merchandising of products; there is presently 1 pending. And there were 11 cease-and-desist orders issued in that field of restraint of trade and monopoly. There were 28 formal proceedings in that field, that were held in abeyance after institution upon a stipulation of the party involved to cease and desist from the violations alleged.

There were 27 dockets involving livestock transactions under that title, under which 21 cease-and-desist orders were issued.

Mr. DIXON. If I might proceed a bit further, Mr. Chairman?
The CHAIRMAN. That is all right, you may proceed.

Mr. TEWES. Will you yield? It is my understanding that legislation is intended to take out those institutions not primarily packers, and who have thereby attempted to escape regulation by the Federal Trade Commission, and your questioning seems to be leading toward the complaint that those who are packers are not under the regulation of the Federal Trade Commission; is that correct?

Mr. DIXON. The food chains were under the Federal Trade Commission, and are now moving over under USDA as packers. Why are these food chains flocking under the USDA? What is the reason?

Mr. BUTZ. Let me repeat again, that in recent years they have not been flocking under the USDA. Most of these acquired their interests in packing plants when meat was difficult to get, to assure their supply, and now by virtue of the existing law they come under the authority of the USDA.

Mr. DIXON. I believe that we have brought out in the testimony that $200,000 which you gentlemen asked for which you probably needed or felt was needed for enforcement, was rejected; wasn't it? Mr. BUTZ. We transferred some additional funds into the enforcement of the Packers and Stockyards Act.

Mr. DIXON. You were turned down for the $200,000 that you asked for.

Mr. BUTZ. I think it is completely consistent that we should enter in the record whether or not the Federal Trade Commission did get its

request.

Mr. DIXON. Would you say, Secretary Butz, that there is adequate money for enforcement in your department?

Mr. Burz. I have never seen an enforcement agency yet that had adequate money. It has always used what it had as effectively as it possibly could.

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Mr. DIXON. I might ask now what part of your budget has been used for title III, that is for enforcing inspection and insuring that the money goes to the stockyards where the agriculture people sell? What part do you think has been going to title III for enforcement? Mr. BUTZ. We do not segregate those two because they work together. A moment ago you said we had 1 man and 1 woman in the enforcement of title II; enforcement is also in the field. The people we have out in the posted stockyards, also, may be engaged in work under title I. When a case arises, we transfer personnel to where the work on a case needs to be done.

Mr. DIXON. You do not have a check on how much of your budget you spent for enforcement, and how much you spent for these other supervisionary functions?

Mr. Chairman, I think that is an anomaly, that title II has been very much neglected, and that enforcement is continued through the USDA, where we have a situation of lack of enforcement over the last several years. All of my livestock people in 25 counties complain that packers have feeding lots and chainstores have feeding lots. There are all kinds of opportunities for manipulation. Our livestock growers feel they are not getting a fair break.

As far as there being no complaints, I certify that last summer I heard complaints wherever I went.

The CHAIRMAN. I should like to have you specify the nature of the complaints; would you do that?

Mr. DIXON. One is with regard to these feed lots. Where the food chains and the packers have feed lots, they can give their own livestock every advantage.

The CHAIRMAN. I know that is perfectly reasonable and proper, so long as there is no law to prevent it.

Mr. DIXON. It is in restraint of the free market.

The CHAIRMAN. Why would it be in restraint of the free market? Dr. Butz, please comment on that. That is perfectly legal, isn't it? Mr. BUTZ. Yes.

Mr. DIXON. Before you go on with that, I would like to ask one more question.

The CHAIRMAN. Go ahead.

Mr. DIXON. Mr. Butz, it concerns your assignment of enforcing the act. It seems to me that enforcement is inimical to the whole Department. The Packers and Livestock Branch, in order to function, should depend of the good will of the packers and their cooperation for data. on marketing their livestock, slaughtering, sales, and so forth.

You depend upon the packers for cooperation. You are part of the Livestock Marketing Division. For the proper functioning of one phase of this Division you must have the good will and the full cooperation of the packers. How are you going to have it when the other part of the same division has the assignment of instituting proceedings for unfair trade practices?

Mr. BUTZ. You have got about a 3-barreled question there, Dr. Dixon. In the first place, of course, we want the cooperation of all of the agencies that we work with. But we do not necessarily have to depend on that.

The law requires them to give us certain information that we want, and that information is forthcoming. With respect to segregation of responsibility, we have that already segregated within the Live

stock Division. The Packers and Stockyards Branch of the Livestock Division is responsible for the enforcement of this act. The market news reporting work is another branch. We have that separation.

Mr. DIXON. What did the Hoover Commission recommend then?
Mr. BUTZ. Will you answer that, Mr. Bucy?

Mr. Bucy. They recommended in one of their reports that there be set up a regulatory division transferring all regulatory acts to it. However, they also recommended that some regulatory functions presently in HEW ought to be transferred to Agriculture for ad

ministration.

Mr. DIXON. They recommended an independent enforcement divi

sion

Mr. Bucy. It would still be subject to the Secretary of Agriculture, who has the responsibility for all of these other programs.

Mr. DIXON. I want to thank Mr. Butz and express my thanks to him for the wonderful service he has given us. I compliment him on his service to USDA and our committee. We are losing a very valuable servant and Purdue is acquiring an outstanding dean.

I speak thus because of the concern I have at heart for our livestock growers.

The CHAIRMAN. Before you get away from that point, may I ask him specifically about these alleged violations? What is the nature of the complaints you received, and how is the stockman being mistreated at the present time?

Mr. DIXON. I will tell you just what they say. It is that the food stores have their feed lots, which enables them to put their livestock on the favorable markets when they want to do it. We had a drought in Utah in 19 of our counties. Producers had no feed. They had to put their livestock on the market, regardless of price, and they were at the mercy of the buyers.

The CHAIRMAN. How did it come into that sort of situation?

Mr. DIXON. Packers and food chains that have feed lots can pick up grass-fed livestock on glutted markets, feed them and put them out on the most favorable markets, and buy from the growers on the unfavorable markets.

The CHAIRMAN. There is nothing unusual about that. Suppose you did not have that chain store available to purchase the livestock, what would you do with it?

Mr. DIXON. But our growers feel, as a matter of fact, that they are not getting much for their meat. Somewhere in the line between what they get and what the consumer has to pay there is an increasingly wider spread.

The CHAIRMAN. I would like to know specifically, for the record and for my own information, just what some of these alleged violations involve.

Mr. DIXON. That the packers who manufacture ice cream and other products can escape the Federal Trade Commission by going under the nonregulatory policy of the USDA. They can make money through those other products, and in that way squeeze out the little packer in competition with them.

The CHAIRMAN. All right. I follow your idea, but I still do not see any legal action involved in what you say. So long as we have free enterprise the man can hatch the egg, can grow the chicken and

sell the chicken to a restaurant. I do not know anything in the law to prevent it.

Mr. DIXON. The Federal Trade Commission brought action against Swift for its ice-cream business, an unfair trade practice. Swift & Co., making money under that practice, could, if it wanted to, sell meats below cost and freeze out packers in any section in competition with Swift who do not have such outside profits.

The CHAIRMAN. That is the same with the country groceryman. He finds it difficult to meet competition of the chainstores. Until some act of Congress makes it illegal for these tremendous, gigantic operations to continue, I do not know of any violation of the law involved. Mr. DIXON. My point is that Swift should be under the Federal Trade Commission, so it would have to operate under unfair trade practice with its activities.

The CHAIRMAN. All right.

Mr. BUTZ. I want to comment on that briefly, because this is a case that is currently in the news.

First, let me say that the Department of Agriculture has proceedings against Swift on ice cream. I want Mr. Bucy to comment on that. Mr. Bucy. On the ice-cream situation that Congressman Dixon refers to, the Federal Trade Commission had an extensive investigation, they came up with a number of firms that they alleged were violating the provisions of the act. Incidentally, the provisions of the Packers and Stockyards Act with respect to unfair trade practices are far broader than the Federal Trade Commission Act. They found among these firms Swift & Co.'s ice-cream operations were brought into question. The other firms were basically dairy companies, or ice cream companies that were not in the meatpacking business. The Federal Trade Commission instituted a proceeding against these other firms.

The Department of Agriculture has presently pending a formal proceeding and some hearings have been held already on it. The Federal Trade Commission has been holding hearings for the last year and a half with respect to these other firms; the Department of Agriculture is proceeding against Swift & Co. in connection with the same trade practices that are involved in the Federal Trade Commission proceedings.

The CHAIRMAN. That is what I wanted to know. What are the unfair trade practices?

Mr. Bucy. They involve the question of eliminating competition, taking business away from others by giving undue allowances, equipments, and advantages in order to take business away from others or to restrain trade. That is the general field that is covered in those particular proceedings.

But the point I want to make is they talk about escaping the jurisdiction of the Federal Trade Commission. From a legal standpoint, it is jumping from the fryingpan into the fire, because the Packers and Stockyards Act is broader than the Federal Trade Commission Act in its prohibition.

Mr. BUTZ. The amendments that we suggest here to the bill before the committee would give the Secretary of Agriculture authority to transfer jurisdiction in this case to the Federal Trade Commission so that it could move simultaneously against all parties involved. Mr. HILL. Have you finished?

Mr. DIXON. I would like to know why the USDA wants to transfer this back to the Federal Trade Commission.

The CHAIRMAN. What you propose to do is to take chainstore operations and fertilizer maufacturers, and so forth, and put them under the Federal Trade Commission, and hold on to the stockyard end of it for Agriculture. That is the sum and substance of what you are proposing to do.

Mr. BUTZ. Stockyard and meat processing and merchandising. The CHAIRMAN. Änything having to do with agriculture?

Mr. BUTZ. You are correct.

The CHAIRMAN. Separate it from manufacturing and processing and such things as sporting goods and fertilizer?

Mr. BUTZ. Yes, sir.

Mr. Bucy. The packers under the Hill bill who would remain under the jurisdiction of the Secretary of Agriculture, would be under his jurisdiction with respect to all of their operations. With the proposed amendment that the Department has put forward, in a case such as Wilson & Co., for instance, if a trade practice matter came up in connection with their sporting goods part, and it had nothing to do with their meatpacking operation, the Secretary of Agriculture could make a determination that it is in the public interest for the Federal Trade Commission to proceed.

On the other hand, there may be some livestock products which are the inedible products, and you might have an unfair trade practice or a restraint of trade which involved both meat merchandising and nonfood products. They might be giving an allowance on one in order to restrain trade in the other. There might be an intermingling so that in such a case the Secretary might say that, "The primary point in this case is in the meat food and livestock product field. Therefore, we will keep the whole package rather than break it up."

The CHAIRMAN. Do you contemplate, with the enactment of this amendment, a general regulation applicable to all of the situations or do you deal specifically with each case as it arises?

Mr. Bucy. Basically, to deal with each particular case when you get into the involved field of merchandising or into the field of manipulation or restraint of trade, it is next to impossible to draw a clear and distinct line through cases. You have got to look at the situation in the particular case, whether the impact of that case is going to be in the meat food field or in the livestock field, or in the nonagricultural field.

The CHAIRMAN. First, an examination would have to be made by the Secretary of Agriculture regarding prosecution.

Mr. BUCY. With respect to people who are principally packers? The CHAIRMAN. Yes.

Mr. HILL. I would like to ask a question or two of Mr. Butz. I want to correct an impression before I do that, that Congressman Dixon gave you that the cattlemen are all opposed to his legislation. First of all, the American National Cattlemen's Association composed of 28 States favor my bill by resolution, and this is from W. I. Driggers, of Santa Rosa, N. Mex., with 5,000 cattle producers who support this legislation, and John H. Guthrie, California Cattlemen's Association; and I believe California has made the largest increase of any State in the Union in the number of additional packing plants in the last few years-and they favor this legislation.