Farm prices reached a peak last summer as the Administration tried to control the inflation which it had unleashed with its own farm level policies by putting price ceilings on the wholesale level. As of the third quarter of 1973, the food bill for the average American family, as computed by the USDA, had risen to an all-time high of $1,603.70. This was an increase of $273 a year over the level for the fourth quarter of 1972, when Phase III was in gestation. Out of this $273 in increased cost paid by consumers, $226, or 83 per cent, had gone to pay higher prices at farm levels.

In the fourth quarter of 1973, some decline showed in farm prices, most significantly in the prices of cattle and hogs. But only a minor fraction of these reductions were passed on to consumers. Food processors and retailers operating under "profit margin controls" brought their net income levels for the year up to and sometimes beyond permissible maximum.

By the first months of 1974, farm prices are again showing sharp gains. From December to January, the price of food at farm levels rose by 8.2 per cent. The price of processed foods rose by 4.1 per cent and the price of food at retail, as registered in the Consumer Price Index, rose by 1.8 per cent. Such trends will continue. Higher fuel costs, for example, have yet to spread their impact fully through the food economy.

Efforts have been made to reverse the scarcity policies basically responsible for 1973's food price inflation. Reportedly some additional 25 million acres have been opened for livestock grazing. This creates some possibility of higher farm outputs this year. But even these hopeful prospects are heavily endangered by the energy crisis. The ready availability of fertilizers and insecticides needed to obtain maximum crop output in 1974 is open to serious questions. The manufacture of these farm supplies is heavily dependent on petroleum products.

Also, the figures on livestock supplies are not reassuring. As of January 1, the number of cattle and calves on feed in the 23 major feeding states was down 6 per cent from the number on feed as of January of 1973. Actual placements of cattle and calves in the 23 states during the fourth quarter of 1973 dropped by 15 per cent from the comparable period of 1972. Actual slaughter rates for cattle in the fourth quarter of 1973 were running only 4 per cent below the same period of the previous year. There is no evidence that any increase in placements of cattle in feed lots has occurred in January and February. These statistics suggests a sharp reduction in the total numbers of cattle to come to slaughter in the first seven or eight months of 1974.

PRICE AND WAGE TRENDS, DECEMBER 1971 TO DECEMBER 1973

II. DISASTER OF FOOD WAGE CONTROLS IN 1973-74

In our testimony last year, we presented case studies of the rigidity, arbitrariness and unfairness of the old Pay Board in Phase II. We showed how our members were systematically denied meaningful wage increases and how slowly the bureaucracy of the Pay Board functioned.

The advent of Phase III and Dr. John Dunlop was to bring about a new flexibility and equity to wage controls. Our members were to be kept under mandatory controls, while all other workers-except those in the construction and health, as well as food industries-were to be under voluntary controls. But this great discrimination was to be somewhat compensated by a new rationality and fairness.

Our Union accepted these assurances. We joined in the tri-partite Food Wage and Salary Committee, which is composed of an equal number of labor, management and public members. The Committee was supposed to apply the new principles in deciding the merits of contract wage increases which exceeded 5.5 per cent, including those increases in contracts which had been negotiated during Phase I and II.

The Committee was vested with advisory powers only. The Administrator of the Office of Wage Stabilization, Donald M. Irwin, was given final authority over the Committee's decisions whenever the Committee was not unanimous. The majority and minority on the Committee were to file separate reports with the Administrator. The latter was then to consider the issues and make a decision which was to be final. A petition for review by an aggrieved party was to be permitted and to be considered.

BITTER REALITY

From the start, we have been bitterly disappointed. The new program did not live up to its advance billing. The new principles of flexibility and equity are still to be put into operation. The new system has certainly been as harmful to workers as the old one and in many cases even more so.

We soon found that:

Split decisions between management and labor on the Committee are the rule and public members generally vote with management in an alliance.

Committee actions simply become an extension of management's bargaining with our Union in that management representatives try to win from us what they could not get in the original bargaining.

The Administrator's umpire function is meaningless. He simply and always rubber-stamps the management-public member majority positions against those of the labor minority.

The review function available to an aggrieved party about a decision is meaningless. It is pro forma in that it takes place before the very same Advisory Committee which originally heard the case and split on the decision. The Administrator never attends. In fact, in no case involving our Union has the Committee or the Administrator reversed the original opinion.

LOUISVILLE CASE

That our hopes were to be dashed became apparent early in the operation of the Committee. We did not think that we would ever look back favorably to a decision of the old Pay Board-our past nemesis-but that is exactly what occurred.

In reconsidering our Union's agreements with Kroger and the A & P Tea Company in Louisville, Kentucky, the old Pay Board approved $1.40 of a $1.50 wage increase negotiated over the life of the contract. The Board found that the Louisville contract was patterned after and was "tandem" to contracts which had been negotiated with the retail industry, including A & P and Kroger, in adjacent geographic areas prior to the beginning of Phase I. In these adjacent areas, the companies were paying the full contract rate.

The decision affecting Louisville was handed down in February 1973, just before the new Food Wage and Salary Committee began operating under the Cost of Living Council. Our Local Union in Louisville had waited for this decision for more than one year and, according to the Pay Board's rules and regulations, the decision was final. The only resource, under those rules and regulations, was through the courts.

Instead of taking their case to the courts, however, the companies in Louisville

brought an appeal to the new Food Wage and Salary Committee. Management members of the new Committee--two of whom were representatives of Kroger and A & P-and the public members reversed the old Pay Board decision. In effect, they allowed only approximately 76¢ of the $1.50 negotiated over the contract. They cut in half the allowable wage increase permitted by the old Board.

In addition, they denied the retroactive payment of money which the old Board order had permitted. Each Meat Cutter in Louisville, therefore, lost more than $2,000 in wages which he would have received if the old Board's order had been enforced. The companies involved saved at least $1,000,000 from wages due our members under these contracts.

To reverse the old Pay Board's decision, the new management-public member alliance fabricated the rationale that Louisville was a "separate labor market" apart from the adjacent geographic areas to which the Louisville contract had historically been linked. It determined further that non-union wage rates in the Louisville area would put Kroger and A & P at a competitive disadvantage—despite the facts that (1) these two companies had always paid higher wage rates; (2) had signed the new contracts after Phase II began and, (3) were fully aware of the agreement's economic realities.

Several important factors must be noted from this case: The Committee allies were more concerned about the companies' competitive position than the companies' own bargainers were. One would assume that the bargainers knew about non-union wage rates in the area, yet they willingly signed the contract. The Committee allies, however, rolled back the increase; in part, because of the nonunion rates.

Also, the old Pay Board did not seriously consider the non-union wage rates. And, the Pay Board always permitted retroactive increases when it approved a particular wage long after it was to have been in effect. The Food Wage and Salary Committee management and public members successfully showed that they could reduce wages of workers even more drastically than the old Pay Board could.

NEW ORLEANS CASE

For members of our union, the Louisville Case marked the beginning of a history of decisions by this Committee which have worked serious economic hardships on our members throughout the country. The rationale of the Committee's management-public members alliance has swerved and zig-zagged from case to case in a futile effort to avoid collision with its own logic in previous cases.

In New Orleans, the A & P and National Tea Company have had identical collective bargaining agreements with our Union for more than ten years. Wage rates had been identical to a quarter of a cent up to the beginning of Phase II (November 14, 1971). In late 1971, our Union negotiated first with National Tea. The contract was concluded just prior to the beginning of Phase II and National Tea put the negotiated rates into effect.

The identical contract was then negotiated with A & P just after Phase II began. A & P, however, paid only 5.5 percent in wages, which left Meat Cutters in the A & P stores $15.56 a week behind the same classification in the National Tea stores. The Union appealed to the old Pay Board, but because of bureaucratic delays and foul-ups, we never received any decision from that Board.

The new Food Wage and Salary Committee took up the case but the allies did not permit A & P employees to receive the same wage paid by National Tea until one year later (November 1972). As a result, a Meat Cutter in A & P lost more than $800 in that one year-$800 which a Meat Cutter in National Tea had received.

To even matters out, the Committee allies ordered National Tea not to pay any further wage increases until they were approved by the Committee. Therefore, National Tea did not pay even the minimum permissible 7 percent, which it could have paid in the second year of the contract (1972)—an increase which it could have paid without prior approval under old Pay Board regulations. Meat Cutters in National Tea, therefore, did not receive any further wage increases until October 1973-two years later-when the Committee allies allowed them a small increase of $9.50 per week. This amount was less than even 5.5 per cent. A & P then paid the same increase on the same date.

During this two-year period, Retail Clerks employed in the same National Tea stores working under a contract which National Tea had negotiated with the