GENERAL FARM PROGRAIVI 821 



ing margin on meat and the farmer's share of the consumer's meat 

 dollar. 



In brief, the marketing margin which was 20 cents on the dollar 

 in June 1946 had jumped to 36 cents on the dollar in January 1949. 

 This increase of 16 cents in less than 3 years amounts to 80 percent. 

 About half of the marketing margin on meat is normally accounted 

 for by retail charges, with the rest mainly attributable to the packer 

 both as processor and wholesaler. 



I attach great importance to this matter of the marketing margin. 

 Analysis in detail of the month-to-month changes in margin over the 

 period just cited, 1946-49, I am sure will provide strong circumstan- 

 tial evidence of collusive action at the wholesale — ^that is, packer — ■ 

 price level in this period. In practice, the only packers capable of 

 such collusion are the largest companies. Again, I call attention to 

 the very detailed charges specified by the pending action instituted 

 by the Department of Justice. 



This whole question of margins calls attention to a potential danger 

 that might easily undermine the otherwise well conceived program of 

 Secretary Brannan which seeks to achieve income parity for the 

 farmer and, at the same time, adequate supplies of food within the 

 reach of the low-income consumer. 



This is the problem, as I see it. Secretary Brannan's plan, in effect, 

 assumes that lower livestock prices — -irrespective of whether or not 

 they fall below the support levels— will automatically be passed on in 

 lower prices to the consumer. Our examination of the record on 

 marketing margins for meat during the past few years raises a serious 

 question about the validity of any such assumption. 



For such an assumption amounts to believing that we have free, if 

 not perfect, competition all along the line, from livestock producer to 

 retailer, and also among consumers in their competition for the avail- 

 able meat supply. If, however, the Packing Trust constitutes, at the 

 very least, a partial monopoly which, in its strategic middleman posi- 

 tion, is able to raise or lower the tolls it levies, on the basis of the 

 public's ability to pav, then the assumption of the beneficent results 

 of free competition are not warranted. 



The practical conclusion I draw relative to this serious threat to 

 Secretary Brannan's program as it now stands, is that the program 

 should be extended to include over margins at the very least, at the 

 processing and wholesale levels. 



Although our evidence in support of this conclusion is chiefly based 

 on knowledge of what has happened dm-ing recent years in respect to 

 livestock and meat, I am sure that restraints on competition are not 

 confined to the packing industry. I have heard of the Dairy Trust. 

 And I believe the long-delayed decline in the price of flour following 

 tne big drop in wheat prices indicates that there is not complete and 

 perfect competition among the large flour millers. 



Consequently, the case for the exercise of control by the Depart- 

 ment of Agriculture over marketing margins is much broader than 

 that of the extremelv important area of marketing the Nation's meat 

 supply. I respectfully suggest that this committee thoroughly look 

 into this whole problem of margins. For there exists here a probable 

 weakness which could easily endanger — or even wreck — an otherwise 

 admirable program. 



