average for 1947-49; though by increased productivity, total labor costs were held at 39 percent above the average for 1947-49. Wages in food marketing for September 1955 were 44 percent above the average for 1947-49. Current rail freight rates on major agricultural commodities are 24 percent above the average for 1947-49.1 Actually food processors' profits after income taxes amounted to 1.8 percent of sales for 1954; down 21.7 percent from 1947-49. Food wholesalers' profits after income taxes for 1954 were 1.0 percent of sales; down 41.2 percent from 194749. Chain retail food store profits after income taxes for 1954 were 1.0 percent of sales; down 28.6 percent from 1947-49.' We ask that the present 2-year statute of limitation be left unchanged. We ask that no change be made in the present provisions of the act relating to basic coverage. We ask that none of the existing exemptions be restricted or repealed. We ask that the act be amended as follows: (a) That section 3 be amended by adding at the end thereof a new subsection (p), as follows: "(p) "The area of production' of any agricultural or horticultural commodity, including livestock and poultry, includes all of each county in which such commodity is produced in commercial quantity. (b) That section 7 (c) be amended by adding at the end thereof the following new sentence: "For the purpose of this subsection (c) the term 'first processing' shall include all operations prior to, including, and through the completion of such first processing, whether performed at the same time or at different times, in one or more places, or by one or more employers." (c) That subsection (a) of section 13 be amended by striking out paragraph (10) and inserting in lieu thereof the following new paragraph (10): "(10) The employees of an employer who is engaged within the area of production in the preparation for market or handling of any agricultural or horticultural commodity, including but not limited to the handling, packing, storing, cleaning, dressing, eviscerating, extracting, grading, ginning, compressing, pasteurizing, drying, canning, cooling, or freezing of any such commodity, or in the making of cheese, butter, dairy or similar products; or" THE GRAIN & FEED DEALERS NATIONAL ASSOCIATION, SENATE SUBCOMMITTEE ON LABOR, GENTLEMEN: Under instructions from the executive committee of this national association, we enclose copy of a statement concerning amendment of the Fair Labor Standards Act of 1938, as amended. Telephone conversation with your committee staff a week ago indicated that this could be filed this late. It was desirable that we have approval from our committee before submitting it. Sincerely yours, R. B. BOWDEN, Executive Vice President. STATEMENT To: The Senate Subcommittee on Labor. From: The Grain & Feed Dealers National Association. Re: Proposals to amend the Fair Labor Standards Act of 1938. Identification.-The Grain & Feed Dealers National Association is a nationwide, voluntary trade association of the grain and feed trade. Organized in 1896, its membership now includes about 1,000 member firms, and 54 affiliated State and regional grain and feed trade associations, with estimated membership of about 12,000. Authorization. This statement is specifically authorized by the executive committee of this national association, and conforms to resolutions adopted by the 1 USDA Agricultural Marketing Service, Agricultural Situation, December 1955, vol. 39, No. 12, p. 9. membership in annual meetings. This statement is being referred to affiliated associations, but it is not represented as being approved by such associations. COUNTRY GRAIN WAREHOUSES New definition proposed Because we maintain that the present definition issued by the Administrator as required in section 13 (a) (10) is unrealistic, discriminatory, and not responsive to the clear meaning of language in the act, we propose that the Congress itself define the "area of production" reparately for the different activities listed in the section. We propose that the definition that applies to employees of country grain warehouses should have a general meaning as follows: "any individual employed in an establishment whose principal business is the receiving, handling, storing, cleaning, drying, and preparation for processing or sale, of grain received from producers in wagon or truck lots." This would restrict the exemption to employees of those primary assembly stations where grain is received direct from farms. But it avoids the discriminatory and illogical restrictions involved in the present tests as to size of town where located, airline miles of extent of the area, and nearness to urban communities all of which, we maintain, are restrictions which negate the common understanding of English words used in the phrase "area of production." This proposed definition is offered because of our obvious objections to the Administrator's present definition. "Size of town" where an establishment is located cannot, we insist, be an interpretation of an “area.” It raises a question of unfair and unwarranted discrimination between country grain warehouses which, in fact, may be only across the road from each other. "Airline miles" of distance within which commodities may be received from producers is a fictional factor which does not pretend to describe an area of “production." It sets up a technical test which cannot be exactly interpreted nor fairly enforced. It probably is not even within the competence of a surveyor to determine accurately the airline miles from farm to grain warehouse, yet an arbitrary decision by a wage-hour examiner could put the burden of proof on the warehouseman and make him seek a defense which is as impossible as it is ridiculous. The amended definition which we propose for employees of country grain warehouses would avoid these confused and arbitrary factors of definition, but would not change the present situation as to the general exemptions available to such employees, nor would it tend to lower the specific or average wages paid to country grain warehouse employees. Extension of coverage opposed Although we have proposed a redefinition of the "area of production" as applying to country grain warehouse employees, we realize that you are now faced with opposite proposals, proposals to narrow or erase these exemptions. We oppose any weakening of the exemption available under section 13 (a) (10), for these reasons: 1. Increased cost of labor, in a country grain warehouse where labor is about 60 percent of the total cost of operation, would be an increase that almost surely would be passed back to the farmer. The country warehouseman obviously cannot pass increased costs on to markets, processors, and consumers who buy grain on an auction basis. Increased operating costs must be reflected in increased charges against farmer-producers. 2. Increased costs cannot be absorbed in the net income of the average country grain warehouseman. The warehouseman expects the major share of his annual income from the purchase of grain from producers in small lots, and the sale to markets in carlots. During many recent years the Commodity Credit Corporation (the CCC) has taken over huge quantities of grain in country positions. In 1954 they took over 72 percent of the wheat crop of the State of Washington, more than half the wheat crop in various States in the Great Plains area. In that program the CCC has materially reduced the normal source of the country warehouseman's income. It has increased the warehouseman's potential income from storage, but this is more theory than fact, because the storage has historically played only a minor part of country warehouse operation since few have enough storage capacity to earn income from that source alone. CCC sets the rates for storage and handling of its stocks and it has been abundantly demonstrated that these rates have not kept pace with mounting costs of grain warehouse operation. Therefore, the normal expected income of the country warehouseman has been steadily reduced, to the point that many of them are going out of business. The number of country grain warehouses signed up under the CCC storage agreement has been lessening steadily, and the total number of licensed country grain warehouses in the principal grain surplus States has dropped sharply in the past 10 years. Country grain warehousemen insist that they cannot absorb further cost increases and remain in business; that they must pass future cost increases on to others, which means pass them on to the farmers themselves. 3. Country grain warehouse labor is competitive with farm labor. Employees in country grain warehouses are recruited almost invariably from farms of the surrounding area, because it is necessary for the warehouse employee to have farm knowledge of grain. This type of warehouse labor is freely interchangeable with farms, many employees working part time on farms, part time in warehouses. Any increase in warehouse wage levels will surely be reflected in the rate for farm labor. 4. Maximum hour exemption is necessary in the country grain warehouse, because farmers face seasonal demands in their patronage of the warehouses; seasonal pressure at harvest time or at the CCC takeover time. To move their grain from the farms to these primary assembly points, farmers work long hours with modern machinery, so that grain goes to the country warehouse in a veritable flood. There are other seasons when the warehouse employee faces slack periods. 5. Country grain warehouse employees commonly are employed on a monthly or annual basis. There may be little work to do during slack seasons, but they earn their regular pay. If there is an extension of coverage which increases total labor cost, one of the first efforts of the employer will be to recapture net income by putting employees on a strict hourly basis, the employee to be laid off during slack periods. In our experience, insofar as country grain warehouses are concerned, any weakening of the "area of production" exemption would oppose the best interests of the employees themselves. 6. Country grain elevators are commonly divided as to type into cooperatives, independents, and "line" houses. A "line" is where two or more grain warehouses are owned and operated by the same firm. The three types are about equal in number in the United States. Any attempt to extend coverage to "line" houses alone would be so discriminatory as to question the essential honesty of the proposal. Some of the so-called lines are owned and operated by farmers themselves, and they have no natural advantage that calls for commercial penalty from the Congress. RETAIL FEED STORES, AND SMALL FEED-MIXING PLANTS The present regulations and interpretations of the Administrator as to employees of retail feed establishments which may mix some of the feed which they sell, are arbitrary and unrealistic. Congress has said (sec. 13-a-4) that the retail exemption shall apply even though the establishment manufactures some of the goods it sells. As to small feed-mixing plants connected with retail feedstores, the Administrator has interpreted this to mean that the exemption can be claimed only where more than half the feed sold at retail is not manufactured in the establishment, or where less than 2,000 tons annually are manufactured. Yet this arbitrary figure of 2,000 tons is less than the capacity of the smallest feed-mixing machine available to the industry. We believe that this section 13 (a) (4) was adopted by the Congress when it became obvious that the Administrator had failed to observe the clear intent of Congress in its previous legislation as to the retail exemptions. Now, in our opinion, this newest interpretation by the Administrator again corrupts the intent of the Congress. We understand that the Congress may believe that it could not express more clearly than it now has, the intent inherent in this section. We have tried to convince the Administrator that he has been unrealistic in his interpretation. We now suggest that the Congress again instruct the Administrator as to its exact intention as to the language used in this section. Extension of coverage opposed There are proposals before the Congress to cancel or narrow the exemptions available to the retail trade, when in our opinion they should be less narrowly interpreted than they are now. We oppose any such extension of the coverage, for these reasons: 1. Increase of costs for retail feed dealers, and where the retail establishment manufactures some of the feed it sells at retail, cannot be passed on to anyone except the farmer-feeder himself, and at a time when farmers are suffering a price squeeze. Increased costs must be passed on to the feeder, or be absorbed by the retailer himself. 2. Retail feed establishments face the same economic pressures faced by farmers. Government supports the prices of grains that make up our prepared feeds, but does not support the price of finished livestock and poultry. Thus the feeder is in a squeeze and may attempt to avoid using prepared feeds by using makeshift feeds available on the farm, or just use less desirable feed. For many months the farmer-feeders have suffered an unfavorable price ratio in feeding, and for the same months the feed distributors have faced a slump in business and an increase in accounts receivable on their books. It is probable that this condition will continue for some time, as long as feeders are in this price-ratio squeeze. The feed retail establishment will not be in a position to absorb further costs. 3. In a retail feed establishment one of the strongest objections to expanded coverage and loss of exemptions would be the overtime pay, since farmer-feeders work long hours and expect long-hours service from feed dealers. Also, to put retail feedstore employees on overtime pay, while farm labor is not, would be a discrimination within the same labor supply. 4. We are obviously in a period of continued and expanding inflation, when the political pressure is to adjust individual and group incomes upward. While this is increasingly a penalty against persons of fixed income, it is questionable whether other persons or groups profit when overall inflation balances any of their short-time gains. We point out that increased inflation of the sort inferred in a proposal to extend coverage of this act, will be of immediate harm to farmers and farmer-feeders. EXHIBIT Names of grain and feed trade associations. State and regional, which are affiliated with the Grain & Feed Dealers National Association: American Dehydrators Association Arizona Seed & Grain Association Arkansas Grain & Feed Dealers Association California Hay, Grain, & Feed Dealers Association California Warehouseman's Association Central Retail Feed Association (Wisconsin) Colorado Grain, Milling & Feed Dealers Association Distillers Feed Research Council Duluth Grain Commission Merchants Association Eastern Federation of Feed Merchants Farmers Elevator Association of Minnesota Farmers Elevator Association of South Dakota Federation of Cash Grain Commission Merchants Associations Georgia Feed Association Grain Elevator & Processing Superintendents Association Illinois Feed Dealers & Mixers Association Illinois Grain Dealers Association Indiana Grain & Feed Dealers Association Kansas Grain & Feed Dealers Association Kentucky Grain & Feed Association Michigan Bean Shippers Association Michigan Feed & Grain Association Midwest Feed Manufacturers Association Minneapolis Grain Commission Merchants Association Missouri Grain, Feed & Seed Association Montana Feed Manufacturers & Dealers Association Mutual Millers & Feed Dealers Association (New York) Nebraska Grain & Feed Dealers Association New Mexico Grain & Feed Dealers Association Northwest Retail Feed Association (Minnesota) Oklahoma Grain & Feed Dealers Association Omaha Cash Grain Commission Merchants Association Pacific Northwest Grain Dealers Association Panhandle (Texas) Grain & Feed Dealers Association Texas Grain & Feed Dealers Association Utah Feed Manufacturers & Dealers Association Washington State Feed Association Western Grain & Feed Association (Iowa) Wyoming Grain, Feed & Seed Dealers Association COLORADO RETAILERS ASSOCIATION, Hon. GORDON L. ALLOTT, Senate Office Building, Washington, D. C. DEAR SENATOR ALLOTT: Our information in Colorado is that George Meany, president of AFL-CIO, and other organized labor witnesses presented a grossly unfair picture of wage and working conditions in retail stores when testifying before the Senate Labor Subcommittee on the proposal to extend coverage of the Federal wage-hour law to employees of retail stores and the service trades; also that their statements went unquestioned by any member of the committee. This report comes as quite a surprise to us. Whether or not the report is wholly factual we sincerely hope that as a member of the Senate Committee on Labor and Public Welfare you will see that the situation of retailing is properly presented to the committee. The possibility of the subcommittee reporting a bill extending coverage to retail establishments operating more than 4 stores or having an annual sales volume of $500,000 or more is quite disturbing. Such a change in the law would simply represent an attempt to divide and conquer, with the smaller type of retailer slated to be brought under the act through subsequent amendments. There are many reasons why retailing or any part of it should not be made subject to the provisions of the so-called Fair Labor Standards Act. Retailing, regardless of size, is local in character. Operations of a store are essentially local whether individually owned or a part of a chain. Each outlet is a local retail establishment in itself, serving its own trading area. It does not compete directly with stores in other states or even in other cities. A retail store competes only with stores in the same town and often only with stores in the same part of town. Retailing offers helpful employment for untrained and part-time workers, including college and high school students, housewives, and others who find it desirable to add to the family income. The opportunity for such employment would be seriously curtailed if retail stores or any group of them were brought under the Federal wage-hour law. A recent survey by the State industrial commission in connection with hearings on the question of minimum wages for women and minor employees in retail stores in Colorado showed a very healthy wage situation and one which, when all conditions are considered, retail employers can fully justify. With kindest personal regards, I am, GEO. A. FLANNIGAN, Manager. STATEMENT OF HAROLD ANGIER. CALIFORNIA GRAPE AND TREE FRUIT LEAGUE I am the general manager of the California Grape and Tree Fruit League with offices at 717 Market Street in San Francisco, Calif. The California Grape and Tree Fruit League is a nonprofit industry service organization whose grower |