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I think that is rather a righteous statement, and we can refer back all the way to the NRA days, when I believe poultry came in to the line to a certain extent, and certainly—with OPA, I and many other produce men and producers from all over the country served on the national advisory committees, and we tried desperately to come out with an OPA regulation that would work. Despite the fact that this regulation which was supposed to be abided by by every poultry producer on the smallest farm in the country finally contained some 70 pages and some 29 amendments. It still did not work, even patched up as it was. The same applied to eggs.
The small unit of production was such that it could not be enforced, and we could not find any way of enforcing it.
As I said, we represent producers and processors and distributors of both poultry and eggs, and we feel that price control is certainly not needed in the poultry industry, and that if applied to the poultry and egg industry can only fail to achieve the desired results.
As one example of that, I have a report and information taken by Northwestern University which will show that 41 percent of the fresh eggs consumed in this country are either purchased direct from the farmer or from an egg man who is a peddler, ostensibly purchasing on the farm directly to the consumer. This is a Chicago report made by Northwestern University. Forty-one percent of the products move directly from the farm to the consumer. It is pretty hard to expect the egg peddler or the producer to understand a regulation which is so complicated that OS attorneys quite often differ in their own opinions. These egg producers
Senator Benton. I just glanced to the left and discovered that Senator Frear has joined us, and I want to call that to your attention, because I had previously pointed out my regret, coming from our biggest poultry State, not being on hand to greet these witnesses who are speaking on behalf of an industry in which he has a special interest.
Senator FREAR. Yes. They have done a marvelous job in increasing their production.
Senator BRICKER. Senator Williams is producing chickens, not Senator Frear.
Mr. Franz. Item III on page two of our statement, "Price controls on poultry products are unwarranted and detrimental to consumers and the national economy."
I think that was very nicely shown by the charts previously, and requires no further comment.
Senator BENTON. Do you expect your prices to go above parity? Mr. FRANZ. Sir, we certainly do not think that they will.
Senator BENTON. If they do not go above parity then you have no reason, have you, for any concern about price controls?
Mr. FRANZ. I think I might break at that point and try to answer your question, because I was coming to it, and I see no better point than right now.
Gentlemen, section 402 (d) (3) of the Defense Act of 1950 refers to the fact that no ceiling shall be established or maintained on any agricultural product selling below 100 percent of parity.
Senator BENTON. Where are you in the price level that could furnish the parity?
Mr. FRANZ. In the low nineties.
Senator Benton. So you could go up a full 10 percent before you even were subject legally to price control?
Mr. FRANZ. Legally, sir.
Senator BENTON. I would gather that you and your associates must anticipate that rise of 10 percent or you would not be so concerned here about this subject of price control.
Mr. Franz. As Dr. Carpenter mentioned before in response to Senator Capehart, the clause is in the Army contract already and is effective, I believe, for this reason, which was not brought out in the previous questioning. Gentlemen, your law mentions ceiling prices, and when poultry reaches ceiling prices then that section comes into effect.
Senator BENTON. You mean goes above parity? Mr. FRANZ. It says ceiling prices in that particular statement. I believe I am correct.
The general price ceiling regulation issued by the OPS with respect to items selling below 100 percent of parity uses the words "ceiling price" seven times within the space of a couple of paragraphs.
Senator BRICKER. In this law parity would be ceiling price.
Senator BENTON. That is 10 percent higher than their present prices, though.
Mr. FRANZ. Approximately.
Senator BENTON. I know in my own business I would be glad to take a price freeze if I could get a 10-percent price increase. I only suggest that you seem to be in a rather unusual position when you have not had your 10-percent price increase, being as alarmed as you are at the prospect of getting a price control at that point.
Mr. FRANZ. Gentlemen, our OPS advisory committees are already meeting on poultry, and if you have heard about Long Island ducks, they were unfortunately frozen completely. They were ceiling price
Senator BENTON. The duck question is different, is it not?
Mr. Franz. Yes, sir; it is. But ceiling prices are mentioned seven times, and I do not mean that they are just mentioned academically.
Senator BENTON. I do not like the phrase either.
Mr. Franz. It says "Any ceiling price previously determined under this section."
Now, according to our understanding of section 402 (d) (3), no ceiling price shall be established or maintained. OPS states, “Any ceiling price previously determined under this section," and continues to use the term for a total of seven times with reference to agricultural products selling below 100 percent of parity.
Senator BRICKER. But there has not been any ceiling price below parity
Mr. Franz. They have, we think, achieved the same result, sir, in this way: That if I pay 2 cents a pound more for poultry tomorrow, which I am permitted to do on the free market, if I may, wish tomorrow to bid on an Army requirement of dressed poultry, before I can make that bid I must, sir, send a registered letter to the OPS in Washington stating my previous cost, my previous margin, my previous selling price, my new cost, add the same margin, establish
my new ceiling price, and dispatch that by registered mail to the OPS in Washington.
Senator BENTON. Before you can charge 2 cents more to the armed services?
Mr. Franz. Yes, sir; that is correct. That is a pretty good practice for a control, if it is not a control in itself. Senator BENTON. I certainly share your feeling
about ceiling prices and controls from that remarkable chart Mr. Carpenter just showed us. It would seem to indicate that under the OPA in the last war there could hardly be another industry that did as well as your own. So sometimes even if we live with evil and objectionable practices, we are able to live and grow and do pretty well under them. You were the boom industry of the war, it would seem to me, from looking at this chart that Mr. Carpenter has just shown us.
Mr. FRANZ. Gentlemen, during the past war, under OPA, you had a percentage of the industry which because of its size and responsibisities abided by the ceilings. You had a terrific black market in poultry.
Senator BENTON. Is that chart just on the legitimate business?
Mr. FRANZ. That is a report of total volume; yes, sir. Now, it had been said to us during the war it is unfortunate that this may be unfair on certain elements of the trade, but it has a braking influence on the rising price.
Senator BENTON. Now that I look at the chart it did not go up as much as I thought it did. Those two little bumps are somewhat deceptive. This other chart here shows that eggs—where is that chart that shows eggs and chickens just skyrocketing starting in 1942? It is a question of whether you break down the commercial broilers. That is the chart I have in mind.
Mr. Franz. That is consumption per capita.
Senator BENTON. Your segment of the industry-I mean the commercial processors—did not do particularly well under the OPA, although the total production went up enormously.
Mr. Franz. I think the whole structure of my own in our organization's stand with regard to price control is that it completely impedes normal price merchandising and marketing, and that we are unable to operate in the normal manner in which we have developed.
For instance, as Dr. Carpenter mentioned, a commercial producer expects to lose on one crop out of the year. Now, gentlemen, if you are going to have ceilings which do not permit him to gain back by. a high price at another time of the year, he cannot cover that loss.
Senator BENTON. Well, I accept that formula.
Also, when it does go up to this high peak, immediately your placements of baby chicks increase terrificly and bring that price right back down.
Senator BRICKER. It is controlled more by production than any other agricultural product.
Mr. FRANZ. Because of its 13-week cycle.
Senator BENTON. Would you concur in that statement by Senator Bricker?
Senator BRICKER. It is more controllable by production?
Mr. FRANZ. Yes. I wanted to catch that word "control."
Senator BRICKER. Your emphasis on consumption in the years 1943 and 1944 was because of that rationing of meat ?
Mr. Franz. To a great extent, sir, and the increased demands of the Armed Forces, who felt that chicken was a great morale-building food.
Senator BENTON. You have made an interesting statement, and I hope we can avoid these controls. Most of this material is material that I know you are presenting to Mr. DiSalle's people and more suitably should go to them for review than to us.
Mr. Franz. Gentlemen, it has been to them, it certainly has, and we are under the marginal controls right now.
Senator BENTON. I hope he shares the view of this committee that you are one of the last
Mr. FRANZ. I think one of the Senators made a remark that quite often the agencies do not exactly reflect the views of Congress.
Senator BENTON. That has been made by more than one Senator, that remark.
Mr. FRANZ. We do feel that these marginal controls did not come within the realm of your thinking.
Senator BRICKER. Of course, if the Army wanted to do it in the purchase of supplies for the Army, they could require all the information that you now have required through OPS.
Mr. FRANZ. Yes; they could so require it. However, the Army bids are, as you know, on a competitive basis, and they are awarded each day, and they carry a ceiling-compliance clause, also, at the present time.
Senator BRICKER. They can do that without regard to it, because they don't have to buy.
Mr. Franz. That is correct. We have quite often seen the Army switch from one type of poultry in temporary shortage to another in plentiful supply.
Senator BRICKER. What about the turkey production? The turkey market at the present time?
There are a lot of them consumed by the Army at the present time; aren't there?
Mr. FRANZ. Yes, there are. We also represent the National Turkey Federation. Their feeling is the same as you have heard from every witness who has a crop in the field, you might say, and is wondering what the whims of OPS may do to him before the crop goes to market.
Senator BRICKER. Do you have any figures on the production of turkeys, the quantity of production?
Mr. FRANZ. We have reasonably good figures.
Mr. Franz. Yes; the consumption of chicken and turkey. Apparently the intention, at least, for this year, as to turkey production, is no decrease over last year. We have the turkeys raised for each year from 1940 to 1950, and in 1950, sir, we raised 45 million head of turkeys. In 1951, the intention, the forecast, is 47,500,000. However, it should be said that the small, table-sized bird, we still count by head count, but the small table-sized bird is coming into popularity so that the tonnage may be only about the same as last year.
Senator BRICKER. Why hasn't the turkey industry increased its production comparable to chickens? Because of the hazards of the industry?
Mr. Franz. It is the longer time, the longer turn-over, and they have, sir, kept adequate production to keep the price floating at a level which is at times even below the cost of production.
Now, if there was a greater demand for turkeys
Senator BENTON. It is a much more seasonal business, too, thus a more risky business.
Mr. FRANZ. Yes; it has the longer time for production. The crop is started in the spring and marketed in the fall, but I think that under our free economy, if there were a greater demand for turkeys, the price would be raised, because of the consumers' willingness to pay it, and therefore the production would be increased very rapidly.
At the present time, from a producers standpoint, we have thousands of turkeys in the field, we will study the September October outlook versus the present outlook, and we have the choice of killing those turkeys as broiler turkeys, or carrying them through to maturity, so the price outlook will determine to an extent the crop that will be marketed in the fall.
Senator BRICKER. I can't understand why there hasn't been a comparable increase in production, when relatively they are the same kind of food.
Mr. Franz. I think to a great extent, sir, the retail market and the housewife demand covers that.
Senator BRICKER. The egg situation might have a lot to do with it, too.
Mr. Franz. Turkey eggs are available for all who wish to buy them, in general.
Senator BRICKER. But they are not used generally.
Mr. FRANZ. As a table food? Oh, no, sir; but the housewife wants to go into the retail store and buy a small unit, and that is where your frying chickens comes to the fore, and that accounts for the great increase in production.
Senator BENTON. We will insert your complete statement in the record, Mr. Franz. Maybe Senator Frear has some questions.
Senator FREAR. Yes; I do.
In the present price ceiling regulation, the price to the producer is increased. The price on the New York market can also be increased by the same amount; can it not?
Mr. FRANZ. Literally, that is true. You have gone from an individual to the New York market, which is a quoted market.
Senator FREAR. Well, as a quoted market, because that is really the quoted market; is it not ?
Mr. Franz. Yes; that is basically true.
Senator FREAR. If the price the producer decreases, does it necessarily mean that the New York price decreases by the same amount ?
Mr. FRANZ. No, sir; it does not mean it, and I think that indicates one of the inflexibilities of controls. I can see your point that it would be just as fair for it to go down as to go up, but physically impossible to do.
Senator FREAR. That is what I can't understand: How it is physically impossible to do, why you can't decrease if you can increase. I don't mean you. I mean the industry.
Mr. FRANZ. I understand. As a producer and processor, may I describe that you have poultry for which you have paid a certain price,