APPENDIX-TABLE I Average price of choice steers, Chicago, per hundredweight. Average price per hundredweight, choice steer beef, Chicago, 600 to 700 pounds wholesale. Average price per pound, choice beef at retail (cents).......... Consumer price index, all items.. Average cost all food purchased by consumers.. Average cost all consumer services, less rent.. Average hourly earnings, nonagricultural.. Average weekly earnings nonagricultural.. Per capita disposable income... Per capita expenditures for food. Per capita disposable income spent for food, percent.. Per capita expenditures for other goods and services.... Per capita disposable income spent for other goods and services, percent Food consumption per capita............ Pounds of beef consumed per capita....... 1 Livestock and Meat Statistics, Statistical Bulletin No. 230, U.S. Department of Agriculture, June 1960, pp. 112 and 127. 2 Livestock, Meat & Wool Market News, weekly summary and statistics, U.S. Department of Agriculture, vol. 38, No. 6, p. 130; No. 7, p. 153; No. 8, p. 177; No. 9, p. 201. 8 Ibid., vol. 38, No. 6, p. 138; No. 7, p. 161; No. 8, p. 185; No. 9, p. 209. Livestock and Meat Statistics, Statistical Bulletin No. 230, U.S. Department of Agriculture, June 1961, p. 132, and U.S. Department of Agriculture information not published. U.S. Department of Agriculture, information available, but not published as of Apr. 10, 1970. • Index. 7 Economic Indicators, Council of Economic Advisers, prepared for the Joint Economic Committee, March 1970, p. 26. Ibid., March 1970, p. 15. Ibid., December 1969, p. 5. 10 Ibid., March 1970, p. 5. 11 Marketing and Transportation Situation, U.S. Department of Agriculture, August 1969, p. 10. 12 Ibid., February 1970, p. 2. 13 Ibid., August 1969, p. 10. 14 Ibid., February 1970, p. 2. 15 National Food Situation, U.S. Department of Agriculture, February 1970, p. 13. 16 Animal products. 17 Crop products. 18 Livestock and Meat Situation, U.S. Department of Agriculture, November 1968, p. 26. 19 National Food S tuation, U.S. Department of Agriculture, February 1970, p. 15. Mr. MAGDANZ. We appreciate the courtesy. With that, unless there are questions that someone would like to ask us, that will conclude the oral presentation we make. Mr. BURLESON. Mr. Schneebeli, do you have any questions? Mr. SCHNEEBELI. No, Mr. Chairman. Mr. BURLESON. Thank you very much. We are pleased to have you. Our next witness is Mr. Ira H. Nunn, representing the National Restaurant Association. Will you identify yourself and those accompanying you, please, sir? 1 STATEMENT OF IRA H. NUNN, COUNSEL, NATIONAL RESTAURANT ASSOCIATION; ACCOMPANIED BY ROBERT B. NEVILLE, AND JOHN S. MOORCONES Mr. NUNN. Good afternoon, Mr. Chairman and gentlemen of the committee. First, I would like to thank the committee on behalf of the restaurant industry for permitting us to testify today on this very important matter to us. We appreciate the opportunity very much. Mr. Chairman, my name is Îra H. Nunn. I am the Washington counsel for the National Restaurant Association. I am accompanied here today by Mr. Robert B. Neville, on my right, and by Mr. John S. Moorcones, on my left, both of whom are attorneys in the office of the Washington counsel for the National Restaurant Association which I represent today. This association is a trade association with approximately 13,000 members of its own and which through its affiliation with 137 State and local restaurant associations represent about 110,000 eating and drinking establishments in all parts of the country. The National Restaurant Association has members in all types of food service, institutional feeding and industrial catering as well as drive-ins and restaurants of all types. Our members do not import meat. Our interest in this matter is views on legislative proposals now pending before Congress which would place more stringent limitations on the quantity of fresh, frozen, and chilled meats that can be imported into the United States. Our members do not import meat. Our interest in this matter is identical to that of the American housewife who seeks to provide nourishing, palatable foods to her family at a cost consistent with her budget. In other words, we are here as consumers. The restaurant industry is the second largest consumer of food in the United States. We are second only to the American housewife in that regard. We buy from 20 to 25 percent of all food bought in this country and we pass it along to those who eat it, that is, to our customers. It happens that perhaps beef as a commodity is the largest single item that we buy and sell. We believe that, with the current market demand for beef, any further restriction in the supply is certain to raise the price of hamburger and hot dogs. To the best of our knowledge, those who are in favor of greater restrictions on imports of meat do not contend otherwise. I refer specifically to beef, because beef is the central issue in this matter. Over 90 percent of all imported meat is beef. The target of lower quotas is beef. There is a sound reason why beef is the leading imported meat product. It is in great demand by the consumers. The per capita consumption of beef in the United States in 1945 was 59.4 pounds. By 1957 this had risen to 84.6 pounds, and per capita consumption today is over 109 pounds. During this same period, the population has grown from about 130 million to over 200 million. Mr. Chairman, when we observe this phenomenal rise in demand, it seems we might be better occupied in assessing the adequacy of our sources of supply and expanding them, rather than considering methods to reduce that supply. The law of supply and demand operated to illustrate this point dramatically less than one year ago when ground beef rose from 55 to 66 cents per pound in a year's time and frankfurters rose from 69.6 cents to 78.4 cents a pound during the same period. This is our principal concern in this matter. We believe it is possible to price a product out of a market. However, appealing hamburgers and hot dogs may be to the American palate, prices can and do operate to change tastes. Economic pressures have induced the acceptance of substitutes in other commodities and can do the same for beef. We would prefer to avoid this and we believe it is in the best interest of our meat industry to avoid it. To our industry, the issue assumes even greater significance for we know that eating away from home, the pleasure of eating out, can diminish when the cost becomes too high. We know, too, that the principal products from manufacturing beef, hamburgers and hot dogs, are a mainstay of the low income family's diet. High prices for these high protein, nourishing meat products hit our low income families the hardest. It is our understanding that American cattle raisers want greater limitations placed on imported beef because they believe such imports compete with their product. We do not believe this to be true to any significant degree. Let me explain why. Imported beef is the product of lean, grass-fed cattle. Its normal fat content runs to about 10 percent. The great majority of such lean beef is of cutters or canners grade and is used principally in the manufacture of hamburger, hot dogs, and sausage where fat content is restricted by Government regulations. Our domestic source for this type of beef has been retired dairy herds. The number of cattle in these herds has been steadily declining from a peak of about 41 million in 1945 to about 20 million today. I heard a witness who preceded me this morning suggest that the supply of such cattle was becoming greater through the use of range cows. My information is contrary to this. I would like to read from the February 1970, Livestock and Mean Situation, on page 28-this is a document produced by the Economic Research Services of the U.S. Department of Agriculture-the material I want to quote is this: "In the mid-1950's more than a third of all steers and heifers slaughtered were marketed off grass."-one-third in the mid-50's off grass"the balance was marketed through feed lots. By the mid-1960's, the proportion of non-feds dropped to a fifth of the total, and in the past 5 years the accelerated growth of cattle feeding sharply reduced the non-fed category to about one-tenth of the total.' Coincident with this decline in supply has come a spectacular increase in demand. The efforts of our meat industry have been directed toward satisfying the ever-increasing demand for the more tender, fat marbled, table beef that is the product of our grain-fed cattle. The great bulk of our domestically produced beef, with a fat content of about 25 percent, is the product of our grain-fed cattle. This is a natural approach to the problem by our cattle raisers. The production of grain-fed cattle is more consistent with the decline in available grazing areas and, furthermore, grain-fed cattle bring higher prices to our meat producers. The lean, grass-fed imported beef is used, by and large, for manufacturing purposes. It does not compete in the marketplace with the high quality table cuts produced from our grain-fed animals. If a housewife finds that hamburger and frankfurters have become too high, she is not going to purchase a more expensive item such as a cut of steak or roast. She will turn to a lower priced food such as fish or poultry, or perhaps a macaroni and cheese caserole. These are all good foods and are available to her at lesser prices than beef. To place the issue in perspective it is worth noting that meat import law of 1964 (Public Law 88-482) is designed to limit imports to approximately 6.7 percent of domestic production. In actual operation, since the passage of that law in 1964, beef imports have represented 5.3 percent of domestic beef production in 1964; 4.4 percent in 1965; 5.5 percent in 1966; 5.9 percent in 1967; and 6.5 percent in 1968. Over that 5-year period, imported beef averaged but 5.5 percent of domestic production. So you see, Mr. Chairman, we are already operating under a statutory quota which works. It keeps imports down. It is effective. More than that, we are operating under a superimposed voluntary quota which also serves to keep us within the quota. According to the best information we can obtain on the subject, there has been an annual increase of about 22 percent in consumer demand for hamburgers, frankfurters, and sausages. In contrast to this steadily rising demand, the Department of Agriculture predicts a 4-percent decrease this year in cow slaughter, our principal domestic source of manufacturing beef. This fact simply reflects a pattern that has been in progress for many years. The predictable result of this steady decline in domestic supply during a period of consistently rising demand, and with import limits based upon domestic production, is a shortage of manufacturing grade beef. Some estimates of this shortage place it at 350 to 400 million pounds. With supplies falling short of consumer demand to this extent, higher prices are not just predictable-they are an absolute certainty. A short while ago a subcommittee of the House Government Opera. tions Committee held hearings on meat prices, in October 1969. The subcommittee's report of its findings was not accepted by the full committee, I understand, and it was not published for reasons which were not announced. From press reports of the contents of this unpublished report, we are told that the subcommittee found that the supply of beef, including available imports under current restrictions will be inadequate to meet demand for at least the next 6 years, and that sharply rising beef prices are in prospect to 1975. We are also told that the subcommittee recommended immediate amendment of the Meat Import Quota Act to increase the supply of imported beef. I cannot verify the accuracy of the press accounts of this subcommittee's conclusions. However, I mention them to you with the thought that you may find it useful to do so. All of the predictions we have heard or read agree that demand for beef will rise at the rate of 21/2 or 3 percent per year. Projections on the supply available to meet this demand vary, but all knowledgeable sources known to us agree that our current sources of supply, at optimum, will be hard put to match demand. With a market of this character, it seems clear that any further restrictions on imports would force the use of domestic high quality and high priced cuts for manu facturing purposes. Of necessity, this will mean a markedly higher price for hamburger and other processed meat products. Since this committee and the Congress will be considering this issue from the standpoint of national policy, it seems appropriate to observe that the principal sources of our imported beef are Australia, New Zealand, Ireland, and Mexico. These countries are allied to us politically and economically. Our balance of trade with each of them is now heavily in our favor. Australia, for example, buys twice as much in American goods as she sells to us. By further restricting the opportunity of these trading partners to sell to us, we invite restrictions by them on our products. The risk of such retaliation will not be borne by our own meat producers. Any retaliation would fall upon producers of other agricultural products or upon manufacturers of hard goods. Aside from the risk of retaliation by countries whose friendship and political alliance we need and treasure, we need also to look to the future of our protein supply. We must assess carefully whether our current restrictions are impairing supplies for future years when the need will be even greater than it is now. Since Australia may not send us all the meat she has to sell, she is seeking markets elsewhere and Russia is becoming such a market for Australian beef. In brief, Mr. Chairman, all the beef we produce today and all that we are allowed to import is consumed. No part of our production is lacking a market, even at today's prices. If importation of beef is further restricted, the higher grade and higher priced domestic product must be substituted in manufacturing. The family of modest income which has come to rely upon hamburgers, hot dogs, and other processed meats as diet staples will be faced with higher prices. So will the establishments in our industry which try to keep meals away from home within the means of all segments of our society. We believe that in today's economy, marked as it is by inflation, any action designed to raise food prices makes no sense at all. That ends my prepared statement, Mr. Chairman. I would like to make a few more remarks by way of refuting testimony which I have heard here today. First of all, in the Congressional Record in the month of April there appeared two articles placed in the Congressional Record by a Member of the House of Representatives, alleging that imported meat is not adequately inspected and might well be unclean. This was a very distressing thing to see. Inquiry was made of the Department of Agriculture and a letter from the Secretary of Agriculture stating that inspection of imported meats is as good or better than that of domestic meats was placed in the Congressional Record on June 4. We have heard mention made of the fact that imported meat may be used for other than grinding and for manufacture. It is true that some of it is. We believe it is very little. We believe it is an insignificant part. We do not know how much it is, Mr. Chairman. No one else knows at the moment, because the Department of Agriculture has just asked the Tariff Commission to make a survey of the field and find out exactly what is done in this country with meat that comes to us from abroad. Preliminary documents have been circulated by the Tariff Commission and one day we will know. There are suggestions that it may be as much as 40 percent; I seriously doubt it. There are suggestions that it may be as much as 25 percent; I seriously |