Mr. Bowes. As I understand it. I know I am. The CHAIRMAN. And they arranged for you to come here and tell us why it is bad?

Mr. Bowes. Why I felt it was bad, in my own experience.

The CHAIRMAN. And then you say at the same time you are not willing to take any assignment that might be helpful to the Secretary and his associates in improving these standards?

Mr. Bowes. No, sir, because the problems you are trying to solve are not standard problems. We have wasted time and money in the last 28 years in trying to improve the standards. Every time you change the standards you only change the problems.

The CHAIRMAN. Are you a meat expert, generally?

Mr. Bowes. To some extent. I work on other meats at times.

The CHAIRMAN. Do you think that grading for beef is all right? Mr. Bowes. No, I do not.

The CHAIRMAN. Do you object to that?

Mr. Bowes. I am not against grading; I am against the fact that grading has been used to solve problems that are not grading problems in the first place.

I am against the misinformation that has been used to promote the idea that consumers should buy by grade.

The CHAIRMAN. We have had information to the effect that the Department, through the grading system down there, has been downgrading the lambs to the detriment of the producers. Now, the Department wants to upgrade the lambs which would be beneficial to the producers. And yet the producers are appearing here this morning opposed to that.

Where does the public come in?

Mr. Bowes. Where does the public come in? From the public standpoint all lamb makes good eating, at the young age, at the narrow range of ages at which it comes in.

When we put grade names in like "Prime," "Choice" and "Good" we are inferring that this kind of lamb is better than the leaner kind of lamb, and this is not necessarily the case.

The CHAIRMAN. Mr. Jennings' lambs are more tender than those living in the mountains of Colorado, are they not?

Mr. Bowes. I am sorry, I did not hear you.

The CHAIRMAN. The lambs raised in Mr. Jennings' territory are more tender than those living in the mountains of Colorado, are they

not?

Mr. Bowes. I would imagine so.

The CHAIRMAN. I would imagine that lambs grade differently in different areas?

Mr. Bowes. Yes, definitely. This is one of the problems. As long as you have lambs coming from different areas that are different types of lambs, and lambs going to different segments, where the consumers want different things, I do not think it is possible to develop a set of standards that will do the job.

The CHAIRMAN. This is voluntary for the producers. They do not. have to use this grading service, unless they want to, is that not correct?

Mr. Bowes. That is right.

The CHAIRMAN. Let those who want it use it, and those who do not want it decline it.

Mr. JENNINGS. I would like to hear from Mr. Hendler. This is contradictory to what he said in his statement.

The CHAIRMAN. I did not see how anyone could object to it if it is voluntary.

Mr. Bowes. It is not the fact that it is voluntary as opposed to mandatory. It is the fact that the grading program has been used to solve problems, or an attempt to do so, that are not grading problems, in the first place. It is a fact that a substantial share of misinformation as to what grades will do for the consumer have come from the Department of Agriculture and from State colleges whose professors use grades as a teaching tool.

The CHAIRMAN. You heard Mr. Hendler's testimony a moment ago. You heard his statement?

Mr. Bowes. I did.

The CHAIRMAN. You heard him testify as to the importance of the grades, and he stated he would provide grading service if the Government did not provide it?

Mr. Bowes. Right.

The CHAIRMAN. And how about the little packer, the unknown packer?

Mr. Bowes. Mr. Chairman, can you name me a city in the country where there is not a small packer running rings around the big packers? I cannot. And I cover 48 States. The products on which they run rings around the big packer are their branded and their unbranded, and not the graded products. The branded products, like their hams, bacon, and so on, and their sausage items, and their cooked meats these are the items on which the small packers are running rings around the big packers. They are not doing it on the grades. In fact, the graded products are the ones that they are in trouble with. Mr. SHORT. I just want to clarify a little bit this question that I think comes to a lot of people's mind as to why if grading is voluntary, why does anybody carry on the grading operation. The pure and simple answer is that the packer provides to his customers what they request. When somebody asks a packer to furnish them a carload of dressed lambs graded "Choice," they will put that grade on it. And if they ask for it without the grade, they will do that, will they not?

Mr. Bowes. They will.

Mr. SHORT. The retailer and the distributor uses that grade or thinks that he can use it, as a device to get a better market for what he is selling. As you have pointed out many times, that grade is incorrectly used as a measure of the quality of the product that is being offered.

Mr. DIXON. May I add this? As to the question of grading being voluntary, I wonder how voluntary it is on the part of these growers

here.

Mr. SHORT. The grower has nothing to do with it.

Mr. DIXON. How long have we had it? Is the grower getting what he wants?

Mr. Bowes. It becomes mandatory for the individual packers who are trying to sell to certain chainstore people who have adopted grades for two or three reasons that really do not make sense.

May I mention here that I spend about one-half of my time on this work speaking and writing. I spend the rest of my time working with supermarket operators who are unhappy. I work on a performance basis. If I do not turn the meat operation around, if I do not increase their profits, they do not owe me anything.

One of the causes of low prices on lamb is that they are buying on Government grades, because they are not buying the kind of lambs that will let them serve the consumer at a reasonable cost, at prices that the consumer is willing to pay. We have fallen into this situation for a couple of reasons.

These chains have grown faster than their meat department management. And they have resorted to grades because it looked like a simple buying guide.

No. 2, from the standpoint of the president of the company, who does not know meat, he wants to give his customers the best. And at first sight the best is Choice. But only when he starts having trouble getting his meat department into the black does he start looking at some of these factors.

The CHAIRMAN. All right, we thank you very much.

Mr. HAGEN. Isn't it time that not only are the standards bad but also there is gross disparity in the application of the standards by different graders?

Mr. Bowes. Here again I am not qualified to discuss grading, because these standards change. In fact, today you will find different standards being applied in Salt Lake City than in San Franciscodifferent in Chicago than in New York City by the individual graders. I am not blaming the graders for this. The men in the grading service are trying to do their jobs.

For my money the men in the grading service have a thankless job, because they have been asked to solve problems that are not grading problems, in the first place.

The CHAIRMAN. Thank you very much.

Mr. JENNINGS. I would like to hear Mr. Hendler's reaction to some of the charges that have been made here, because they seem to be in opposition.

The CHAIRMAN. Mr. Hendler.

Mr. HENDLER. I appreciate the demonstration. I think that Mr. Bowes is a very good man with a knife and does a nice job of cutting lamb.

I want to bring one fact to your attention.

We have seriously considered the suspension of lamb grading. We made preparations, in the event that lamb grading was suspended, for that. We have worked out a proposal for our own personal lamb grading for our plant comparable to what we thought the Government grading should be. We thought that we would put our own names on for each particular grade of lamb. And I would like to submit for the record the Goldring Packing Co.'s lamb-grading program under our own personal brand names, in the event lamb grading is suspended. Possibly, they can adopt part of our proposals and incorporate them in their grading system and get something that will be equitable and feasible, and something that will please the lamb industry as a whole.

The CHAIRMAN. That may be made a part of the record.

(The document entitled, "A Proposal for Lamb Grading," is as follows:)

A proposal for lamb grading-Minimum quality requirements

(1) None, (2) practically none, (3) traces, slight, (4) small, (5) modest, (6) moderate, (7) slightly abundant, (8) moderately abundant, (9) abundant, (10) very abundant, (11) extremely abundant.

(1) Lambs to be divided into only two age groups, young and mature.

(a) Young to be defined as boned up to and including slightly flat bones; color of flank up to and including light red.

(b) Mature to be defined as moderately flat to flat bones; slightly dark red to dark red in flanks. (2) The Prime grade must possess minimum quality requirements regardless of the extent conformation may exceed minimum requirements.

(3) A development of quality which exceeds minimum requirements for the Prime and Choice grades may compensate, on an equal basis, without limit, for conformation which is inferior to that specified for the Prime and Choice grades.

Mr. JENNINGS. You believe in grading?
Mr. HENDLER. I believe in the standards.

Mr. JENNINGS. Do you believe in grading?

Mr. HENDLER. Grading at either the Government level or the packinghouse level.

Mr. JOHNSON. Some of these witnesses have the idea that all people in the chainstores will buy without the grading. Is that not going to be the result?

Mr. HENDLER. All that Mr. Broadbent and others would like to do would be to stay in business, as every other businessman, and make a profit.

Mr. JOHNSON. Will the suspension of grading enable him to make a profit, or will he have the same trouble as now?

Mr. HENDLER. They will have to figure that out in the future. In other words, you can take these growers not as individuals, but as a whole. Circumstances have placed the growers in a very untenable position. They are fighting a very, very bad proposition. They cannot make their lambs work economically, because every man is in business primarily to make a living.

The situation has made it difficult for them to make a profit. So, naturally, they are looking for alternatives, which you would do, too, if you were in business.

Mr. JOHNSON. Do you think it will help their business, with the quality of lamb that the public wants-if you do not have the lowest price?

Mr. HENDLER. The chainstores will recognize our standards, probably, and ask us to bid.

Mr. LEVERING. It has been indicated this morning that the decline in the price of lamb is attributable to the grading system.

It has, also, been indicated that the sheepgrowers derive their income from the sale of the lambs and the sale of the wool on about a 50-50 basis.

I would like to ask what has happened to the wool business in the industry?

Mr. JOSENDAL. In answer to that question, the wool business is now operating on a free market.

During the war years and the subsequent years the Commodity Credit Corporation purchased all of the wool in the United States. We are now on a free market.

In 1954 this committee had a great deal to do with writing the National Wool Act, which provides for a subsidy, a payment, percentagewise, in relation to the level set by the Department of Agriculture and a limit set by Congress.

And according to the price that the wool is sold on the free market. The grower sells on a free market.

The wool market itself last year, 1958, reached a 17-year low, which caused very high payments that you gentleman are well aware of. Mr. JENNINGS. Is that a direct payment plan?

Mr. JOSENDAL. It is a direct payment plan.

Mr. LEVERING. If I may continue.

You do not experience any particular distress in the wool end of the industry at the present time?

Mr. JOSENDAL. I might say that the whole textile industry is recovering from the depression. And the wool industry is improving considerably. But I think that when you gentlemen wrote the National Wool Act, you had in mind that that was only part of our income. In many sections of the United States as much as 80 percent of the income is from the lambs. That is not true in all sections.

In Texas it is, probably, 50-50.

Mr. LEVERING. You do attribute the relative security in the industry to the direct payment for the wool, so far as wool is concerned?

Mr. JOSENDAL. That is, certainly, very beneficial. We would not underrate that a bit. I think that you gentlemen intended that we were going to sell our wool at a good advantage, to the best advantage that we could, and that we were going to sell our lamb to a good advantage, to increase our income. Certainly, we are very concerned with both.

At present the lamb part of the business is very crucial.

Mr. Chairman, might I take the liberty of answering a question you raised a few minutes ago? I do not think it was satisfactorily answered.

The CHAIRMAN. Yes.

Mr. JOSENDAL. It was in connection with this program being voluntary, and with only 35 percent of the lambs presently graded under the voluntary program, why are we complaining at all. I think that is an excellent question. In the case of most processors, part of their trade must be with chainstores and such retail outlets who have made a practice in their advertising of advertising U.S. Choice as the type of lamb that they sell. Because of that no processor dealing with that type of trade will purchase any other grade and, consequently, when he buys lambs he is going to be very sure that the lambs he buys will grade Choice. He is going to buy with that in mind, if he can, because he has to be able to bid on that chainstore market.