consuming public, and if there is some condition that is allowing uninspected meat, and perhaps meat that is out of condition, to come into the market, even though it comes from a Federal-inspected plant, I think we ought to know the facts about such an operation. Do you have any such facts?

Mr. MAYER. I don't, sir. What has happened is that the Department has established a committee to consider this whole situation, look into it, and that committee will undoubtedly report.

DEPARTMENTAL INSPECTION SERVICE PERSONNEL

Senator HOLLAND. Well, we shall certainly go into that matter thoroughly with the Department witnesses.

In the meantime, I appreciate your having mentioned this, and may I say this: That, so long as the hearings are underway, if there comes to your attention any further facts in connection with this, involving other plants or involving personnel of the inspection service, or anything else about this whole matter which you think this committee would properly have jurisdiction of, I suggest that you report it to the committee, even up to the date of the going to print of the final record of the hearing.

Mr. MAYER. We will, sir.

Sir, I don't want to leave an impression that the inspection services are not doing their job. We believe they are. We believe they are doing a very good job. This is a situation which has developed. What the problem is is not really known yet.

Also, there are areas like locker plants that are outside of the inspection services' authority, so I want to make the record perfectly clear that we believe both meat inspection and poultry inspection have done very good jobs.

ORGANIZATIONS OUTSIDE INSPECTION SERVICE

Senator HOLLAND. These organizations that are outside of the inspection service: Do you have any facts as to the volume which they handle, and do you have any facts that would indicate that their products have gone into interstate commerce, as contrasted with intrastate commerce?

Mr. MAYER. The consumer messages which both President Kennedy and President Johnson sent to the Congress and which urged an increase in the inspection coverage estimated the amount of meat which is not inspected currently to be about 18 percent of that slaughtered in the United States; that is, not inspected by the Federal Government. Some of it is inspected by State governments. Some of these inspection programs are fairly good. Some of them are not. They are widely varying programs. Most States do not have any inspection programs at all.

Senator HOLLAND. Do you have any facts indicating that the product of these intrastate plants, so-called, has gone into interstate commerce?

Mr. MAYER. No, sir; I do not have that fact.

Now, if that means interstate commerce in terms of the 1906 act, no, sir; we have no such evidence. In terms of interstate commerce as now interpreted by other legislation, yes; but that is legal. Because

the 1906 act interprets interstate commerce simply as meat moving in interstate commerce and according to that interpretation, we have no evidence now.

Senator HOLLAND. You have no evidence of any such product moving actually across State lines?

Mr. MAYER. No, sir; we do not.

LEGISLATIVE REQUIREMENT

Senator HOLLAND. It occurs to me that perhaps the problem which you are talking about is one that involves a change of legislation, rather than a matter to concern the Appropriations Committee.

Mr. MAYER. Exactly. That is the point I wanted to make, sir; yes. I meant to mention this in passing, because it is an area which we believe Congress should consider, that, as President Kennedy and as President Johnson requested, we believe that meat inspection should be increased in coverage and this does require additional legislation from the Congress.

Senator HOLLAND. Do your statements in this regard apply only to the so-called red meat products, or do they apply also to poultry? Mr. MAYER. Also to poultry, sir.

Senator HOLLAND. Is there anything in this New York development which you have mentioned that relates to poultry? Mr. MAYER. No, sir.

Senator HOLLAND. Thank you very much.

PROPOSED LEGISLATION TO CHARGE INSPECTION COSTS TO INDUSTRY

Mr. MAYER. Now, Mr. Chairman, on another point of legislation, the President has asked in his budget message that the cost of poultry and meat inspection be passed on, be charged to the packers and processors, rather than having it paid out of the Federal Treasury. This, also, if this proposal were to be put into effect, would require new legislation.

We oppose this proposal. We frankly believe that this is a consumer protective function; it is a function, therefore, the cost of which should be borne by the Federal Government. If the packers and processors were forced to pay for meat and poultry inspection, the cost would be borne by the public, anyway, because the cost would be passed on to the consumer. However, we seriously question the wisdom of doing that, because we believe that whoever pays initially for the inspection will also control it, and that control should be lodged in the Government in order to protect the consumer fully. As stated before, Mr. Chairman, we support fully the appropriation requested in the budget estimate for meat and poultry inspection. We are very grateful to this committee for what it has done in the past for providing the adequate funds to keep these important consumer protective programs going.

Thank you very much, sir.

Senator HOLLAND. Did you have any other material that you want placed in the record?

Mr. MAYER. No, sir. Thank you very much.

CERTIFIED LIVESTOCK MARKETS ASSOCIATION

STATEMENT OF C. T. SANDERS, GENERAL MANAGER

PREPARED STATEMENT

Senator HOLLAND. The next representative scheduled is Mr. C. T. Sanders, general manager of the Certified Livestock Markets Association of Kansas City, Mo.

Are you here, Mr. Sanders?

Mr. SANDERS. Yes, sir, Mr. Chairman.

Senator HOLLAND. You may proceed.

Mr. SANDERS. With the chairman's permission, I would like to submit the statement that has been prepared as a part of the record and briefly summarize and comment upon it.

Senator HOLLAND. Without objection, the entire statement will be placed in the record, and you may now summarize it in your own words.

(The prepared statement of Mr. Sanders follows:)

Mr. Chairman and members of the committee, my name is C. T. "Tad' Sanders. I am the general manager of the Certified Livestock Markets Association, which is a business trade association of nearly 800 livestock auction market businesses located in some 42 States. I present this statement in behalf of such organization.

PURPOSE OF STATEMENT

The purpose is to briefly state the position of the trade association, and the livestock market businesses of which it is comprised, in respect to those parts of the current budget estimates of the U.S. Department of Agriculture relating to the Agricultural Marketing Service (now Consumer and Marketing Service). More specifically, it is limited to the request and estimates designated "regulatory activities" to the extent they cover costs for administration of the Packers and Stockyards Act.

According to the information made available to me, present 1965 fiscal appropriations for this purpose amount to $2,330,000 which is about the same as for fiscal 1964 when additional pay act increases are taken into account.

The amount requested for fiscal year 1966 is $2,532,000 and represents an increase of $202,000 believed to have been stated as requested for the purpose of employing an increased number of fieldmen.

We are opposed to this increase in funds for administration of the Packers and Stockyards Act under the present policies and means employed by the USDA in discharging the administrative responsibility delegated by Congress.

TYPE OF BUSINESS

In order that the committee might better understand the basis for this position, I would like to briefly outline the nature and type of the business involved in that of a livestock market.

"Public livestock market" is a term that best describes all types of livestock market businesses consisting of the management, facilities, and the services which are rendered.

Such businesses are most commonly denoted as terminal markets or livestock auction markets.

"Terminal stockyards" consist of the facilities as owned by a stockyard company and operation of them. It provides stockyard services as involved in the care, handling, feeding, and weighing of livestock for sale and sold. In such facilities, separate commission firms function as market agencies in the competitive selling and buying of livestock on a commission basis, generally by private treaty. These combined functions and services comprise a terminal market, with established schedules of charges for the services as rendered.

"Livestock auction markets" likewise consist of stockyard facilities for the care and handling of livestock, together with competitive selling services by auction to accomplish the sale and purchase of livestock as consigned to it for sale.

There is one management involved for the entire business conducted with one schedule of charges for the services involved.

An increasing number of the terminal markets in recent years have adopted selling by auction as an alternate means of service, generally under some form of combined management of the stockyard company and commission firms.

Those livestock auction markets making up the trade association I represent are denoted by the trademark name of "Certified Livestock Markets" through their pledge of adherence to an adopted code of business standards in relation to their separate and independent businesses. That code describes such market as a business that constitutes a public livestock market where, in proper facilities, it renders complete and productive stockyard and marketing services to livestock owners in respect to their livestock as assembled for sale, and which it sells on the basis of competitive bids by auction.

Copies of the code of business standards to which I have referred are separately made available to the committee.

Each Certified Livestock Market business is subject to the provisions of the Packers and Stockyards Act as a posted stockyard and likewise subject to the act, and the many regulations promulgated under it, as a registered market agency, and generally also as a registered dealer.

As posted stockyards and registrants, these businesses are the victims of overzealous regulation and needless harassment by the Department of Agriculture. At the same time, other businesses partially or wholly subject to the act, but not registered under it, are nearly ignored. This leads to a lack of flexibility on the part of the owners of these market businesses necessary to properly meet competitive conditions as they arise in the sale of livestock in nonmarket channels.

OPPOSING POLICIES

The statement contained in the budget estimates for the U.S. Department of Agriculture under "Regulatory activities" states: "These include the administration of regulatory laws such as Packers and Stockyards, Standard Container, U.S. Warehouse, and Federal Seed Acts, to assure fairplay in the marketplace; to protect producers and handlers of agricultural commodities from financial loss due to careless or fraudulent marketing practices; and to preserve free and open competition in the marketing of farm products."

Otherwise the Department frankly expresses, through various spokesmanofficials, a concept of a far broader and comprehensive authority, with disregard for the position of competitive business enterprise which is involved.

The Department likewise maintains within its structure a judicial officer before whom Packers and Stockyards Division formal complaints are filed, heard, and determined involving application and administration of the Packers and Stockyards Act and regulations.

Contrasted to this, certified livestock market businesses function on a competitive business enterprise basis under high standards of public responsibility which go to make up free and open competition in marketing livestock. They maintain it and seek to expand it, mindful that prices obtained for livestock are competitively determined.

The right to a fair and fully judicial hearing is fundamental to our system of government. It should not be circumvented by any administrative authority as is the case with the U.S. Department of Agriculture in the administration of the Packers and Stockyards Act and the maze of regulations promulgated under it.

The role of Government under this authority in the hands of the U.S. Department of Agriculture, and overplayed by it to the extent it is in respect to administration of the Packers and Stockyards Act and regulations, suppresses free and open competition in marketing livestock rather than encouraging it, let alone preserving those principles.

LEGISLATION TO AMEND THE PACKERS AND STOCKYARDS ACT

The U.S. Department of Agriculture is presently deeply involved in drafting, promoting, initiating, and supporting legislation in this session of Congress which, modestly speaking, would further expand its power, authority, and means for arbitrary decisionmaking, through extensive amendments to the Packers and Stockyards Act.

This is embodied in the provisions of H. R. 7527.

Such legislation as authored in the several levels of the U.S. Department of Agriculture is more truly indicative of its far-out ideas of free-and-open competition in marketing livestock than such descriptions as I might attach to them.

NATIONAL COMMISSION ON FOOD MARKETING

Congress has enacted Public Law 88-354 establishing a bipartisan National Commission on Food Marketing, as this committee is aware.

I would simply like to emphasize here that the law directs the Commission to study and appraise the marketing structure of the food industry, including:

"(5) The effectiveness of the services, including the dissemination of market news, and regulatory activities of the Federal Government in terms of present and probable developments in the industry.”

It will make such interim reports as it deems advisable and a final report of its findings and conclusions to the President and to the Congress.

Public hearings have already been held at Cheyenne, Wyo, and Forth Worth, Tex.

From the quoted paragraph above, it seems assured that the U.S. Department of Agriculture, whether it chooses to call its activities services, powers, or authority, comes within the scope of the Commission's study in respect to administration of the Packers and Stockyards Act. These reports should give to Congress those facts upon which appropriate action may be based.

CONCLUSIONS

The business trade association and its livestock market businesses appreciate the courtesy this committee has extended in allotting the time for the presentation of these views.

In the light of these developments involving

(1) Prevailing policies and procedures employed by the U.S. Department of Agriculture which unduly extend and expand the role of government to the point of an overpowering exercise of authority in respect to the livestock market business in its administration of the Packers and Stockyards Act; (2) The concerted activities of the U.S. Department of Agriculture which seek to expand its power and authority through extensive amendments to the Packers and Stockyards Act by Congress; and

(3) The present study underway by the National Commission on Food Marketing in respect to regulatory activities of the Federal Government; we urge that appropriation of funds for administration of the Packers and Stockyards Act by the U.S. Department of Agriculture not be increased.

Congress may be expected to have before it for study, hearings, and resulting action, those facts concerning these developments in order that the issues may be properly resolved in the best interests of the public.

DEPARTMENTAL REGULATORY ACTIVITIES

Mr. SANDERS. My name is C. T. Sanders.

The Certified Livestock Markets Association is a trade association of about 800 livestock market businesses, a number of which, I might add, are in the good State of Florida.

Our comments are directed to the item of the budget entitled "Regulatory activities" that exceeds, I think, about $4 million and, more specifically, our comments relate to that portion of that item which we believe to be about $2,532,000 representing a $202,000 increase over present appropriations for administration of the Packers and Stockyards Act.

Senator HOLLAND. An increase of $200,000, you say?

Mr. SANDERS. Yes, sir; $202,000, if my computations are correct. Senator HOLLAND. I see.

Mr. SANDERS. We are opposed to this increase for administration of this particular act. The basis of our opposition is the current state of facts pertaining to the industry, and to the administration of the act, itself.

No. 1, the prevailing policies and procedures which have been employed by the Department, through its various agencies, would appear, in our opinion, to unduly extend and expand the role of govern