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Mr. Dixon. The statement was made by Mr. McLain that we should encourage sheep raising because we do not produce enough for our domestic consumption.
Is there any danger of creating surpluses through the incentive payments ?
Mr. CLYDE. Well, I would not worry about a surplus for some years to come. Production increases will not come rapidly due to the nature of our production. I am sure it is not going to grow into any immediate problem.
Mr. Dixon. What do our defense people say as to the minimum amount that we should produce domestically?
Mr. CLYDE. I don't know that I can answer that, Congressman Dixon.
Mr. Dixon. What was the aim of that act, through the incentive payments, to increase how far?
Mr. CLYDE. Up to 300 million pounds of shorn wool.
Mr. CLYDE. Well, last year I think we produced 226 million. So we would be 74 million pounds away.
Mr. Dixon. We are a long way short of what we need.
Mr. Hill. In 1938 we produced 360 million. That is in 1938, and that is 20 years ago.
Mr. CLYDE. Yes, sir.
Mr. Hill. So we have a long ways to go. And the number of sheep given here in the information is that at one time we had in 1942 49,346,000 head of sheep. Now we have 26,370,000 so we can go quite a ways. And when you consider the increase in population, there is no time in the near future when we would be producing anywhere near as much wool as we consume. I don't think there is.
Mr. Dixon. I, certainly, appreciate your testimony, Mr. Clyde, and your coming here. We are proud of you. Now that our chairman is here, I would like to thank him personally for scheduling these hearings, so that the men from way out West could appear before the ommittee while they were here in Washington. We appreciate it.
Mr. MATTHEWS. Thank you, Mr. Dixon. And I would like to introduce to this group, although I do not think he needs any introduction, Mr. Harold Cooley, the chairman of the committee. We still have quite a few witnesses to go—we have had several already.
Mr. Cooley. Thank you very much. I do not wish to ask any questions at this time.
Mr. MATTHEWS. Thank you very much, Mr. Clyde.
Mr. CLYDE. We would like to thank you for your courtesy in extending the hearing while we are here.
Mr. Matthews. Our next witness is Mr. James H. Lemmon, from Lemmon, S. Dak., president of the National Wool Marketing Corp.
We are delighted to have you with us and you may proceed as you like.
But before Mr. Lemmon starts, I notice that we have Mr. Paul Etchepare, from Colorado, who has to catch a 2 o'clock plane today.
Mr. Lemmon, would you prefer that I let Mr. Etchepare speak first? Is your statement very lengthy?
Mr. LEMMON. I would be glad to let him go first if you do not mind.
Mr. Matthews. If you do not mind, suppose we call on Mr. Etchepare, from the State of Colorado. Would you like to introduce him, Vír. Hill?
Mr. Hill. I would like to say that he is from the great State of Colorado. And he is the immediate past president of the National Lamb Feeders Association in my area in the South Platte Valley of Colorado where we feed thousands of head of lambs every year. We are doing very well this year and have for the last 2 or 3 years.
We are proud to have you here this morning, and I am sure that the committee will be enlightened by your statement.
STATEMENT OF PAUL ETCHEPARE, REPRESENTING THE
NATIONAL LAMB FEEDERS ASSOCIATION, DENVER, COLO.
Mr. ETCHEPARE. Thank you. I do want to thank you for the courtesy in asking us to appear before this committee. And I, also, want to thank you for this opportunity to present my statement at this time so that I can catch that 2 o'clock plane this afternoon.
Mr. Chairman, members of the committee, my name is Paul Etchepare. I come from Denver, Colo. I represent the National Lamb Feeders Association of which I am the immediate past president. This is a nonprofit organization made up of some 5,000 active lamb feeders. We have members ia every lamb-feeding area in the United States.
I was raised on a Montana sheep ranch. I have managed both commercial and purebred sheep operations. Later, I served as secretary of the Montana Wool Growers Association and then worked for one of the larger meatpackers. For some years I have been an independent livestock operator and lamb feeder.
Our people are vitally interested in the measure before you. Prior to the passage of the 1954 Wool Act, the biggest problem of the lambfeeding industry was instability of market. The act has provided & means by which a greater stability has already been created, and extension of the act holds out the hope to us that the future car bring an even greater stability.
Others have pointed out that the sheep industry is unique in the field of American agriculture. The feeding segment of this industry is somewhat unique in its own right.
Feeding is a separate industry, requiring a very special knowledge, feeding plant, and financing. It is the last link in the chain of production that provides the American housewife with lamb. From the time feeder lambs are purchased 100 to 180 days may elapse before they are ready to go to market. During this time the feeder must risk his feed, work, and money hoping that prices will be high enough when he sells to prevent a loss and make a profit.
A lamb is like a ripening peach-he approaches the final state of perfection quickly. He must then be sold to a processor and cannot be held longer if he is to command the best price. With an unstable or fluctuating market a lamb with a dollar profit in him on Monday may easily become a dollar and a half loser by Thursday. That's why we are interested in a stable market.
We see such price instability not because of oversupply, but because of a narrow market. During and after the war, outlets for our product dwindled to just a few channels of demand. Perhaps Federal price controls must take the blame for a good portion of this situation.
There is little to be gained through a review of past mistakes. The essential thing at the moment is that we profit through this experience, identify and face our problems, and try to build a program that will accomplish the end that congressional, administration, and industry leaders seek—a healthy American sheep industry.
We firmly believe that this can best be accomplished through extension of the National Wool Act of 1954. At the recent convention of our association in Omaha, a resolution was passed unanimously urging that the act be extended. We are especially interested in section 708 (or the self-help provision) of the act because it has been and can continue to be a specific help for the lamb feeder.
We need a much broader market than we have now, and 708 is a means of achieving that market. The temporary seasonal gluts that we see on our narrow market can be erased by channeling some of our lambs to other outlets. Far too large a percent go to the high consumption areas of New York, New England, Philadelphia, and our large west coast cities. Successful diversion during these gluts will help us immeasurably.
These periods of heavier shipment are caused by climatic factors over which we have no control. Sheep producers must lamb their ewes when Mother Nature dictates. This means that many lambs will reach maturity within a short period, and we find it impossible to maintain an even flow to our slaughterers.
The two critical periods come in the fall when the bulk of the milk finished lambs hit the market and again in the late winter-early spring when we feeders sell most of our fed lambs.
Now that we have had opportunity to watch our own educational and advertising program in operation, we are even more convinced that the National Wool Act can cure these seasonal ills of ours and give us the stability the industry needs.
As the 708 program continues and expands, we expect to see an improved marketing of our product and a broadening of the channel through which lamb may be properly retailed. Proper retailing will inevitably result in better year-round demand and better price for lamb. This means that we, as feeders, can pay more for feeder lambs with much more confidence. In other words, 708 has already given us a firm foundation and, if continued, can provide material with which we can build a stable and profitable industry-an industry that is vital to the defense of our Nation.
Because of conditions of terrain, climate, and forage, lamb feeding is an integral part of the cycle of sheep production in the United States.
Roughly balf of each year's lamb crop goes through a feed lot. Some of these feed-lot lambs do not go for slaughter, but are ewe lambs that are returned to farms and ranches as breeding stock. Thus the feeder serves as a reservoir from wbich replacement breeding ewes may be drawn.
It is possible to attribute some of the increase in sheep numbers in the Southern States such as Georgia, Alabama, and Mississippi to the increase in lamb feeding in those States. I doubt very much that these increases would have been possible without the help of the Wool Act.
Gentlemen, any new program put into effect has growing pains in its administration and setting up the rules. In our own industry, we have experienced some of these things,
yet I want to assure you that our industry is in full accord in our overall approval of the act itself and its stabilizing effect on the industry.
Section 708 of the Wool Act, providing a method for industrywide participation in an educational and promotional campaign for the sheep, industry, is providing us with the first workable method of bringing stabilization to our market.
Remember that a referendum was conducted to see whether or not the sheep producers and feeders wanted to spend some of their own money for a program of education to expand the market for their product. Approximately 72 percent of those who voted in the referendum wanted this program.
This was not a referendum comparable with those conducted to see if growers wanted acreage controls to go parallel with a Government payment program, but instead of referendum where growers voted as to whether or not they wanted to spend their own money.
Because section 708 is new and different and designed to go hand in hand with the incentive payment provisions on shorn wool for products in deficient supply in the United States, there have been some criticisms of the program.
These critics have not come from within the sheep producing industry and they have based arguments primarily on the use of terminology rather than any failure on the part of the program. They use such terms as "checkoff," and the need for "voluntary contributions,” and the prevention of "duplication of effort.”. I am inclined personally, to brush these criticisms aside simply because they are not the thinking of the true sheep producer or lamb feeder. We find in this act an instrument whereby we can join other segments of our industry to stabilize our market to help ourselves to do a better job of distributing and marketing our products.
Beginning with the original programs of the Colorado-Nebraska Lamb Feeders Association to promote lamb over 40 years ago, our industry has tried every known method on a voluntary basis, but had never been able to devise a successful program until the Congress gave us this vehicle.
In our present program we have asked for ideas from every possible source to assure a well-coordinated program. We duplicate no other effort simply because much of the work being done under section 708 uses presently recognized organizations as a basis for expansion. I unhesitatingly challenge anyone to show that section 708 funds have been used in duplicating unnecessarily work being done elsewhere. We seek to augment-not to duplicate.
One of the things which we believe has helped make this work is is that those who contribute their money to the program know that all ideas are reviewed and all accounts are audited by the Department of Agriculture. We are thus assured that the funds put up by the growers and feeders are used within the framework of the intent of the act as passed by the Congress. This alleviates any fear that these funds might be used for any other purpose than for the good of the industry as a whole.
I assure you, gentlemen, that the lamb feeders will always be ready to accept constructive suggestions which will improve this program and we will just as readily resist any effort to unfairly discredit it.
The Wool Act has already helped us, in spite of its short life. This is a piece of legislation of which you gentlemen may be justly proud. As feeders we thank you for it, and respectfully ask that you extend it.
Mr. MATTHEWS. Thank you very much, Mr. Etchepare for your fine statement. I wonder if there are any questions?
Mr. Chairman, do you have any questions that you would like to ask?
Mr. Cooley. I want to clear up one thing. On these incentive payments, they amount to 24 percent, is that right?
Mr. ETCHEPARE. I believe that is about right.
Mr. COOLEY. In other words, for every thousand dollars you sell, the farmer receives $240.
Mr. ETCHEPARE. About 40 percent last year, I believe.
Mr. MATTHEWS. Excuse me, this gentleman did not give that particular testimony. I don't know whether he is particularly familiar with that or not.
Mr. COOLEY. I was looking at Mr. McLain's statement, to the net proceeds, that it was 24 percent, and therefore the payment would be $240. Last year, if I understand what you said it was 40 percent?
Mr. ETCHEPARE. That is right.
Mr. COOLEY. And this year under this program it will be $240. Is the Department recommending a change in the payment?
Mr. ETCHEPARE. I do not believe so.
Mr. IMMASCHE. I may help, if I may. I think that you are looking at the example in one of our exhibits. This example shows that if the average price received for shorn wool by all growers in a marketing year turns out to be 50 cents, and the incentive level is 62 cents, then we have an average of 12 cents, or 24 percent of the 50 cents received in the free market, to make payments to bring the returns of 50 cents up to a 62-cent incentive level.
Mr. COOLEY. That is right. I am sure that is right. That is in exhibit F. What was the situation in 1956?
Mr. IMMASCHE. Last year, the average price received in the free market was 44.3 cents. It took payments at the rate of 40 percent to bring this national average up to an incentive level of 62 cents.
Mr. COOLEY. Whenever a farmer receives a thousand dollars for wool he receives $400 in payments?
Mr. IMMASCHE. That is right for the 1956 marketing year. This year we think the price in the free market will average higher and the rate of payment will, of course, be correspondingly less.
That is for the 1957 marketing year we are in now.
Mr. Cooley. Do you happen to know what the payments were in 1956?
Mr. IMMASCHE. The payments for the 1956 marketing year are expected to total around $53 million.
Mr. COOLEY. Thank you.
Now Mr. Lemmon, we will come back to you. We want to thank you for yielding to your partner, Mr. Etchepare.