The Future of the American Cattle Industry Hearing
Total Page:16
File Type:pdf, Size:1020Kb
S. HRG. 99-857 THE FUTURE OF THE AMERICAN CATTLE INDUSTRY HEARING BEFORE THE SUBCOMIITTEE ON AGRICULTURE AND TRANSPORTATION OF THE JOINT ECONOMIC COMIMITTEE CONGRESS OF TIE UNITED STATES NINETY-NINTH CONGRESS SECOND SESSION MARCH 31, 1986 Printed for the use of the Joint Economic Committee U.S. GOVERNMENT PRINTING OFFICE 63-225 0 WASHINGTON: 1986 For sale by the Superintendent of Documents, Congressional Sales Office U.S. Government Printing Office, Washington, DC 20402 JOINT ECONOMIC COMMITTEE [Created pursuant to sec. 5(a) of Public Law 304, 79th Congress] HOUSE OF REPRESENTATIVES SENATE DAVID R. OBEY, Wisconsin, Chairman JAMES ABDNOR, South Dakota, LEE H. HAMILTON, Indiana Vice Chairman PARREN J. MITCHELL, Maryland WILLIAM V. ROTH, JR., Delaware AUGUSTUS F. HAWKINS, California STEVEN D. SYMMS, Idaho JAMES H. SCHEUER, New York MACK MATTINGLY, Georgia FORTNEY H. (PETE) STARK, California ALFONSE M. D'AMATO, New York CHALMERS P. WYLIE, Ohio PETE WILSON, California DANIEL E. LUNGREN, California LLOYD BENTSEN, Texas OLYMPIA J. SNOWE, Maine WILLIAM PROXMIRE, Wisconsin BOBBI FIEDLER, California EDWARD M. KENNEDY, Massachusetts PAUL S. SARBANES, Maryland SCOTT LILLY, Executive Director ROBERT J. TOSTERUD, Deputy Director SUBCOMMITrEE ON AGRICULTURE AND TRANSPORTATION SENATE HOUSE OF REPRESENTATIVES JAMES ABDNOR, South Dakota, Chairman OLYMPIA J. SNOWE, Maine, MACK MATTINGLY, Georgia Vice Chairman LLOYD BENTSEN, Texas CHALMERS P. WYLIE, Ohio FORTNEY H. (PETE) STARK, California JAMES H. SCHEUER, New York (QI) CONTENTS WITNESSES AND STATEMENTS MONDAY, MARCH 31, 1986 Page Abdnor, Hon. James, chairman of the Subcommittee on Agriculture and Transportation: Opening statement......................................................................... 1 Husted, Roger, president, South Dakota Stockgrowers Association ...................... 2 Gallagher, Bill, chairman, Legislative Committee, South Dakota Stockgrowers Association..................................................................................................................... 9 Schnell, Raymond, cattleman, Dickinson, ND ........................................................... 28 Vinton, Pat, vice president, Nebraska Stock Growers Association ........................ 40 Spencer, Tom F., cow-calf rancher, Pueblo, CO ......................................................... 51 Courtney, Jim, Montana Stockgrowers Association .................................................. 54 Strain, Jim, chief executive officer, American Cowmen's Association .................. 57 Fisher, Marie, spokeswoman, South Dakota WIFE (Women Involved in Farm Economics)..................................................................................................................... 70 Potter, Mel, cattleman, Marana, AZ ........................................................... 74 Hales, David, market analyst, Cactus Commodities, Boulder, CO ......................... 81 Harris, Philip E., assistant professor of agricutural economics and law, Uni- versity of Wisconsin, Madison .................. ......................................... 93 AFrERNOON SESSION Davis, Hon. Robert R., Commissioner, Commodity Futures Trading Commis- sion ........................................................... 105 Knop, Fred, editor, the Drovers Journal, Shawnee Mission, KS ............................ 134 Lodwick, Hon. Seeley G., Commissioner, U.S. International Trade Commission 139 McCulloh, Jack, South Dakota Stockgrowers Association ....................................... 149 Nix, James E., agricultural economist, World Agricultural Outlook Board, U.S. Department of Agriculture ........................................................... 150 Janklow, Hon. Bill, Governor, State of South Dakota .............................................. 171 SUBMISSIONS FOR THE RECORD MONDAY, MARCH 31, 1986 Hales, David: Prepared statement................................................................................ 86 Harris, Philip E.: Prepared statement......................................................................... 97 Husted, Roger and Bill Gallagher: Joint prepared statement ............... ................. 11 Schnell, Raymond: Charts reflecting cattle prices and retail beef prices, 1970- 85..................................................................................................................................... 34 Strain, Jim: Prepared statement.................................................................................. 67 Vinton, Pat: Prepared statement.................................................................................. 44 AFTERNOON SESSION Davis, Hon. Robert R.: Prepared statement ........................................................... 110 Letter to Senator Abdnor from Mr. Davis, dated April 15, 1986, supple- menting the testimony presented, together with enclosures ....................... 125 Nix, James E.: Prepared statement.............................................................................. 162 (IlI) THE FUTURE OF THE AMERICAN CATTLE INDUSTRY MONDAY, MARCH 31, 1986 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON AGRICULTURE AND TRANSPORTATION OF THE JOINT ECONOMIC COMMITTEE, Washington, DC. The subcommittee met, pursuant to notice, at 9 a.m., in the Hilton Hotel, Rapid City, SD, Hon. James Abdnor (chairman of the subcommittee) presiding. Present: Senator Abdnor. Also present: Robert J. Tosterud, deputy director. OPENING STATEMENT OF SENATOR ABDNOR, CHAIRMAN Senator ABDNOR. Good morning, I want to welcome you all to our fourth congressional hearing concerning the problems of the live- stock industry. I truly appreciate seeing this list of witnesses that we have here today, and the distances that many of you have come. I know some of you had to leave yesterday and I know that being here after Easter is not an easy thing. I appreciate the fact that you made this great effort and are willing to take the time to come from far away. This is one of the broadest groups, I think, that we have had, Bob, ever, and out here in South Dakota. And I mean, this with Washington included. This is a very, very impressive wit- ness list and that simply means that we have an awful lot to talk about. I think everyone in the room probably is pretty well acquainted with Robert J. Tosterud, who I personally selected and stole from the Department of Agriculture a couple of years ago for help. He is a vital individual who has certainly had national notoriety for his expertise, and I feel awfully good having him with the Joint Eco- nomic Committee. As many of you know, I am the ranking member of the Senate side of the Joint Economic Committee. We take full advantage of this committee, because it does allow us a lot of latitude for the kind of hearings that I feel are so necessary and sometimes are hard to bring about. We are here doing this again today. I want to welcome you all to the hearing and I want to be brief in my opening statement. As I said, this is our fourth congressional hearing concerning the problems of the livestock industry. The tes- timony and the findings of the previous three hearings dealing with the growing spread between livestock and retail meat produc- (1) 2 ers has been lifted to the Department of Justice and the Federal Trade Commission for their analysis and action. It's interesting to note that following those hearings, livestock prices rose more than $10 per 100 weight, and the retail meat prices dropped significantly. Now, perhaps, as many of my cattle friends have said, cattle and meat prices are more responsive to congressional forces than to market forces. Unfortunately, cattle prices have slid back again and it is time to turn the heat back up. We'll be holding hearings once a week if it's necessary to get the cattle up to $70 a hundred if this has anything to do with it. I will say this, this particular hearing came about because of re- quests we had from cattle friends that were more than happy to come here today. Some see the future of the American cattle indus- try as the last roundup for the traditional rancher cowboy. The challenges confronting this industry are many and have become complex. Tax shelters, cattle, beef, and cattle imports, the livestock futures market, the dairy buy-out provisions of the 1985 farm bill, the concentration in the fields, packing industries, the unrespon- siveness of retail meat prices declining, red meat consumption, and I guess the list goes on, and on, and on. But our objective here today, and in the months ahead, is to identify, discuss, and under- stand those challenges to effectively address them and to derive recommendations to improve the economic condition of the live- stock producer. So, I'm looking forward to hearing today's testimo- ny and I expect the witnesses to challenge this committee and this particular idea with recommendations which need to be pursued. I appreciate that we are here embarking upon a long, difficult, and controversial road. I want to say how grateful I am for the cal- iber of witnesses we have from States north, south, east to west, and the expertise of our group. I have three gentlemen who trav- eled all the way out from Washington who are going to make a great contribution to the hearing, and some have been wanting to talk to the joint committee for a long time. And we have somebody here today from the Commodity Futures Trading Exchange, as well as the World Agriculture Outlook Board, USDA. I think you will all agree with me that we do have an impressive group and the sooner I quit