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don't, then you are inviting this bill. If you do, then why not say to the committee, if I found someone who was putting out something that is deceptive or is not a fair measure, I would see to it that either directly, through my association, or through the Federal Trade Commission, that it was corrected.

Which is which? Which position would you take?

Mr. GAMBLE. Let me answer that question.

Senator COTTON. I have asked the question as well as I could. Now I will give you a chance.

If

Mr. GAMBLE. No. 1, we have indulged this assumption, if there was flagrant violation. I have attempted to state my own observations that there are very few flagrant violations that we uncover. there were flagrant violations that were doing harm to my company or to the industry, obviously I am not going to stand back and watch somebody abuse the law.

On the other hand, I want to-and I apparently didn't make this point well to Senator Lausche or to anybody-I don't feel it is my prerogative or my responsibility to assume the position of enforcement for my competition.

I think there is a difference only from the standpoint that if it comes to our attention, and if it would be an obvious and a flagrant violation, that is one thing. On the other hand, I am not going to staff legally or in terms of our quality control groups that measure weights of competition, et cetera, et cetera. I would end up with an enforcement staff comparable to what the Food and Drug staff has. I can't afford it. And I don't feel there is a responsibility of my company. This is the only point I am attempting to make.

Senator COTTON. To what extent do you as a company check and familiarize yourself with the goods of your competitors?

Mr. GAMBLE. We frequently check the goods of our competitors. Senator COTTON. You watch them fairly closely, don't you? Mr. GAMBLE. We not only check their weights but we will be more interested in the quality and in the shelf lives, et cetera et cetera. Senator COTTON. Everybody in business, if he has his sense at all, watches his competition. And if they have a good idea, he tries to meet it.

Mr. GAMBLE. I attempted to watch them very carefully.

Senator COTTON. So that in anything that you are dealing with—I don't know just where you draw the line between a violation and a flagrant violation-any particular commodity that you are producing and selling, you staff enough so that you know what other people are producing and selling, and you know pretty quickly if they put out a more attractive package than you have that is dangerous competition.

Is that right?

Mr. GAMBLE. Right.

Senator COTTON. If they were putting out something that was not only more attractively packaged but was misleading to the housewife and purchaser, if it is something you sell, you would know it quickly without increasing your staff?

Mr. GAMBLE. I would know it quickly. And, again, we are indulging an assumption that I find numerous and flagrant violations on my competition's products, and I didn't.

I would like that to be in the record. This gets back to the point I tried to make earlier. I could go through this supermarket, and I would find it-I would be hard pressed, I am sure, to find one package in a hundred that was

Senator COTTON. I couldn't agree with you more. I think most businesses are honest businesses. The point is that we have a bill before us that is based on the presumption that there are rotten apples in every barrel, and that there is something going on here that ought to be stopped by the Government.

You say, and I am inclined to agree with you, that it is unnecessary. What I am trying to find out is when this committee goes into executive session and the hearings are over and we begin to get down to brass tacks, is this bill needed?

I would like to know whether industry polices itself on these things or whether it doesn't. That is one of the factors we have to think about.

Mr. GAMBLE. I would say, No. 1, companies police themselves. I think this is very important. We police ourselves not just because we have rules and regulations and laws on the books, at the Federal level or State level. We police ourselves because our life is dependent upon satisfying the consumer. And if we can't satisfy her, in an honest, reputable manner, she is not going to vote for us a second time and we are not going to be in business very long. This is the whole key. This is a much greater sobering factor than is all of the laws that we could put on the books.

I think our American industry is many times not able to make the point that we are interested in a fair return on a basis of satisfying a consumer's wants. This is why we are in business, to satisfy this gal. Senator Bass. Mr. Gamble

Senator COTTON. Excuse me, Mr. Chairman.

You say that each company polices itself. Do you police each other to any extent? I am not talking about your personal practice. I am talking about the industry. Through your associations, or through competition, would you say that industry policed itself, not just one company policing its own method and satisfying your own conscience?

Mr. GAMBLE. To the best of my knowledge, most of our trade associations and this covers a broad number of trade associations-are not in for the purpose of policing products. And I don't think it is necessary as a practical matter.

Again, we have overstated the abuses that are being supposedly perpetrated as far as the public is concerned, and it doesn't exist to any substantial extent.

If it did exist, I get right back, we have many opportunities with our present status to control it.

Senator Bass. Along with what Senator Cotton asked, in a few brief words, you at present are one of the biggest food processing companies in the world. The bill was inspired for some reason. Almost

every piece of legislation that gets this far in the Congress was inspired for some reason.

You as a businessman oppose the legislation. I want you to tell thiscommittee what you think inspired this legislation.

Mr. GAMBLE. That is a very good question. It is a difficult one to

answer.

Maybe we should direct it to Senator Hart

Senator Bass. No, no. He can answer it. He is the author of the bill. I know the reasons. I want you as a businessman, sitting in St. Louis, the president of your company. All at once you get this piece of legislation. You and your legal staff start reading it. In your mind, as the president of the Pet Milk Co., I want you to tell this committee what you think inspired the legislation in your own view, not in Senator Hart's view, not in somebody else's view-in your

view.

Senator HART. And don't be embarrassed if you want to use some of the reasons assigned by the trade press.

Mr. GAMBLE. No; I wouldn't do that.

Senator Bass, again I think that-and I can place some reference to what Mrs. Peterson, as an example, said at a meeting I attended in New York 2 two weeks ago, when she started telling about the letters she receives, in terms of consumer complaints. Then she developed this into the need for additional

Senator BASS. You tell me what you are talking

Mr. GAMBLE. I am trying to do this in line with Senator HartSenator Bass. As a businessman, tell me what you think we are doing here.

Mr. GAMBLE. As I look at this, and I have read it several times, it is not only redundant, but it carries forth into this whole standardization concept, and we eliminate when we eliminate "cents off”—apparently there has been feeling that there has been confusion.

If you look at the objectives of the bill, "To prevent unfair or deceptive methods of packaging or labeling," apparently it was felt that there are these kinds of practices in existence and that we can't control them with the laws on the books, and we must have some new laws. We don't quite take the same position, as I have attempted to state here this morning. We feel that there is not the abuse that has been indicated, that has been reflected as it relates to everything that I have seen on some of the testimony in conjunction with these hearings.

We, as an industry, feel that we have an excellent record, we see no ground swell as it relates to any consumer dissatisfaction. To the contrary, I think you had the president of the Opinion Research give you the results of a very broad opinion sample of the American consumer as it relates to what she thinks of the food industry as compared to other industries, and I think we came out No. 1 with some 80-percentplus completely satisfied with the manner in which the food people are bringing new products, new services, et cetera, to her.

When quizzed further as to does she want further regulation or does she feel further regulation necessary, I think 1, 2, or 3 percentage points felt that further regulations were necessary.

Again, I inject this and say when I sit in St. Louis and try to read this and try to interpret the need for it, I find it difficult as a practical matter to see wherein we don't have already existing the opportunities with proper laws, rules, and regulations to do exactly what this bill sets forth in its objectives to do.

Again, I would state that I see, from my standpoint, some implications here that I think are dangerous. I think they are counter to our American policy and our American philosophy. No. 1, as it relates to-we didn't get into it, and started to the "cents off." I think this again is a matter of certainly a prerogative of mine as a manufacturer to price my products and to promote my products, as long as I do it in an ethical fashion.

This is what I attempted to do.

Senator BASS. Any further questions of Mr. Gamble?

Senator LAUSCHE. Let's call the next witness.

Senator Bass. Mr. Gamble, thank you for your appearance before the committee.

The committee will now hear the witness who was not present and scheduled to appear first, Mr. Blue Carstenson, executive director of the National Farmers Union.

STATEMENT OF BLUE CARSTENSON, EXECUTIVE DIRECTOR, SENIOR MEMBER COUNCIL, NATIONAL FARMERS UNION, WASHINGTON, D.C.

Mr. CARSTENSON. Thank you, Mr. Chairman.

Senator Bass. Mr. Carstenson, I see that your testimony, probably if read in toto, would consume more than the normal 10 minutes that has been allotted to each witness in the formal testimony. We would appreciate it very much if you would summarize your statement and keep it within the 10 minute limit.

Mr. Carstenson. I will do so.

(Prepared text follows:)

TESTIMONY OF THE NATIONAL FARMERS UNION BY BLUE CARSTENSON,

EXECUTIVE DIRECTOR, SENIOR MEMBER COUNCIL

I am here to testify on behalf of the families of rural America who are both producers and consumers of food. We are aware that the problems in food packaging are only a part of the larger picture. We see the practices in packaging as a logical extension of the practices in the rest of the food processes and distribution system.

The prices paid for food by the consumer have increased 34 percent since 1935, but the prices paid to the farmer have dropped 15 percent. A lot of people are beginning to wonder about where the record $80 billion they paid for food last year went. We know that farmers netted about $12 billion out of the $80 billion.

Well, a big chunk went into the net profits for the food companies and the chainstores who netted a total of $37.5 billion last year or three times as much as all the farmers put together. How much of the food dollar went into hoodwinking and fooling the consumers by these corporations will never be known. We do know they are succeeding in fooling the consumer when the American housewife is fooled into paying more for bologna than she pays for round steak. Yes, she is paying from 89 cents to 97 cents a pound for round steak-less on the specials and pays 33 cents and 43 cents for 6 ounces for the "economy meat" bologna. The packagers often cover the bologna with a pretty picture of a richer bologna as a coverup for the just plain old bologna in order to help the illusion. They force the housewife to make "blind man's bluff" purchases with their complex "cents off," odd weight, odd size, confusing packages.'

I have several brands of coffee here and I ask the committee to tell me, without using paper and pencil or computer, which is the best buy. I stood for 45 minutes in the supermarket and I couldn't.

In short-the same giants and generals of the food industry which are squeezing out the family farmer by unethical practices are also gouging the consumer.

It is the profit-monopoly system gone wild with controls and unethical practices like those of the stock market in the 1920's. The profits over investments in these food companies are tremendous, matched only by those of the drug industry and those companies involved in the race for the moon and space. The drug industry has not been known for its ethical advertising or its generosity in sharing lower costs with the consumer. The extent of profitmaking by a few of the big food and chain corporations is shown in the accompanying table. The tangled arms of these food giants are not content with these big profits but they want more. Their latest moves have been to start taking over the farm production. They have already forced out many of the small- and middle-size food producers, many of the small independent grocers, many of the small and independent distributors, many of the small- and middle-size meatpackers and many of the small shippers. The feed companies and other off-the-farm corporations control 95 percent of the chicken production. They have erected chicken factories where a million chickens are raised at a time without ever seeing the sun or touching the earth except by accident. They are manipulating the cattle markets with their feed lots in order to drive the cattle raisers out of business. Today the chains dominate our food markets. The big chains do over one-half the food retail business-even more in metropolitan areas. In Denver, our headquarters city, four chains do 90 percent of the food business. The big chains have vast purchasing power, warehouses, packaging operations, own products operations, food processing plants, and even feed lots.

Meat is a good example of how some of these chains operate. The price of beef is set by these chains every Wednesday in most markets. The leading chain lets the packer or middle-man know what he will pay for beef carcasses on that day and the price becomes the price for the other large purchasers. Domination of the market is facilitated in some instances by feedlot operations which allow the chains to get in or out of the market regardless of the supply and demand. The retail steak prices are practically divorced from the price of beef cattle.

For example, in December 1962 the National Tea Co., the third largest chain in the United States (Big D Stores) and part of a mammoth international food combine reaching into four continents and headed by W. Garfield Weston, decided to use its economic power to manipulate prices.

Normally, National Tea purchases approximately 1,500 head of cattle a week from the Government-regulated stockyard. Suddenly, it got out of the market, purchasing in 1 week as few as 11 head. Presumably it utilized cattle from its own feed lot which has a capacity of 75,000 head. The result was a catastrophic decline in the price of beef cattle which fell from 30 cents to less than 20 cents in a few weeks. As a result, thousands of feeders and ranchers were wiped out. Consumers did not benefit. The retail price of steaks and other cuts remained the same during the period.

The market power of the chains in the United States has become so great that they dominate the price of many food commodities. They use their power to switch from one similar commodity to another in their sales promotions. If chickens are high they push beef, or pork, or lamb, and when excessive supplies of broilers and other poultry push the price down they buy up these supplies at below cost of production. Feed companies having taken over poultry production now find themselves being squeezed by the chains. The big fish in America have eaten the little fish-and now are eating the medium-sized fish.

Is there any wonder that the big chains allow such practices as false colors on the picture of processed meats? Is it any wonder that they allow meats to be packaged to conceal fat or gristle? Is it any wonder that they manipulate the price of meat so that the cost of bologna is more than the price of round steak? Is it any wonder that they push sirloin steaks at a loss as "come-on" for the housewife so that she can make her other purchases in the maze of packaging? According to one source, 70 percent of all purchases in a supermarket today are unplanned, spontaneous impulse purchases. That is where the big money is— in those attractively deceptive packages and confusingly priced items. The chains and food giants promote the idea that they are efficient and clean, but the court records show that their ethics leave much to be desired. Here are a few other examples of the ethics of these giants:

The Department of Agriculture found that Swift & Co. was using a recently acquired meatpacking plant in Boise, Idaho, to break the market and the small independent meatpackers in the area by purposely selling at a loss. They es

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