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(m) "Custom feedlot" means any facility which is used in its entirety or in part for the purpose of feeding livestock for the accounts of others, but does not include feeding incidental to the sale or transportation of livestock.

2. A new regulation designated as $201.708 would be added to read as follows:

§201.70a Packers not to own or finance custom feedlots; custom feedlots not to own or finance packers.

(a) No packer, officer, agent, or employee of a packer, or person who owns a substantial interest in a packer, shall independently, or in combination with others, or through any corporate or other device, own, operate, finance, or control a custom feedlot or participate in the management or operation of any such custom feedlot; nor shall any custom feedlot owner or operator permit a packer, or officer, agent, or employee of a packer, or person who owns a substantial interest in a packer, independently or in combination with others, or through any corporate or other device, to have any ownership interest in, finance or participate in the management or operation of such custom feedlot.

(b) No custom feedlot owner or operator, or officer agent or employee thereof, or person who owns a substantial interest in a custom feedlot, shall independently, or in combination with others, or through any corporate or other device, own, operate, finance or control a packer or participate in the management or operation of any such packer; nor shall any packer permit a custom feedlot owner or operator, or officer, agent or employee thereof, or person who owns a substantial interest in a custom feedlot, independently or in combination with others, or through any corporate or other device, to have any ownership interest in. finance, or participate in the management or operation of such packer.

Matters relating to custom feedlots have generated widespread interest throughout the livestock marketing and meat packing industry. Therefore, notice is hereby given that a public hearing with respect to the proposed regulations contained in this notice will be held on February 26 and 27, 1974, commencing at 10:00 a.m., in the Frontier Room of the Holiday Inn Downtown, 1050 6th Avenue, Des Moines, Iowa 50314.

Interested persons will be afforded an opportunity to present any relevant data. views, or arguments they wish to offer at the hearing. Persons who wish to be heard are requested to notify the Administrator, Packers and Stockyards Administration, Washington, D.C., by February 6, 1974, stating how much time they need to present their statements. However, any person who wishes to be heard at the hearing will be afforded opportunity to be heard, whether he has given such advance notice or not.

Any person who wishes to submit written data, views or arguments concerning the proposed amendments may do so by filing them in duplicate with the Hearing Clerk, U.S. Department of Agriculture, Washington, D.C. 20250, on or before March 18, 1974.

All written submissions filed pursuant to this notice, together with the transcript of the oral hearing, will be made available for public inspection during normal business hours at the Office of the Hearing Clerk, U.S. Department of Agriculture, Washington, D.C. 20250.

After the hearing, the Department will evaluate all relevant material presented at the hearing, filed with the Hearing Clerk within the time specified above, or otherwise in the possession of the Department and will determine what action should be taken with respect to the matter.

Done at Washington, D.C. January 11, 1974.

MARVIN L. MCLAIN,
Administrator, Packers and
Stockyards Administration.

[FR Doc.74-1411 Filed 1-16-74;8:45 am]

FEDERAL REGISTER, VOL. 39, NO. 12--THURSDAY, JANUARY 17, 1974

HEARINGS ON PROPOSED AMENDMENT

Mr. EVANS. You held a public hearing on the proposed amendment the latter part of February in Des Moines, Iowa. Was there great interest expressed? Were you pleased with the number and variety of people who came, and the interest represented?

Mr. MOLAIN. We had it in two locations. We also had one in Phoenix, where the prime area for custom feedlots is, and the opposition to what we were doing, and we had the other in the Midwest area, but we tried to make it convenient for anyone to be there.

As I said, there were 44 in Des Moines, and 40 at Phoenix. Mr. EVANS. Is this in your opinion a small number, or what? Mr. McLAIN. A good number, a very good number, because it involved all segments-a very good number, and we have had, as I said, up to today, March 19, about 300 communications since then. We will probably receive many more by the April 1 deadline.

CHANGES IN WEIGHING REGULATIONS

Mr. EVANS. You recently adopted changes in livestock weighing regulations under the Packers and Stockyards Act. Briefly summarize the changes for the Committee.

Mr. MCLAIN. We tried to bring the scale ticket requirements upto-date to better fit present-day livestock marketing conditions, because this thing is changing so rapidly. We had almost unanimous consent on the part of the industry that this was a good idea. I'll b glad to insert in the record the details of it. [The information follows:]

SCALE REQUIREMENTS

The amendment to section 201.49 of the regulations which cover scale requirements will:

(1) Eliminate reference to scale tickets for live poultry as this is now covered in another section of the regulations.

(2) Eliminate reference to National Bureau of Standards specifications for scale tickets and reference to type-registering weighbeams since the regulations now require stamped or printed weights.

(3) Add language to exempt markets which use automatic weighing and recording equipment from issuing scale tickets when the weight value is recorded directly on the account of sale or other basic record provided to the sellers or cosignors.

(4) Delete requirements for correction tickets or slips as this appears to be an unnecessary requirement on the industry.

Mr. EVANS. And would you also describe for the committee the benefits you expect to get from these changes?

Mr. McLAIN. Primarily, to clarify the regulation and make it easier for the people we work with.

CHANGES IN INDUSTRIES

Mr. EVANS. In your justifications, you say that the livestock, meat th and poultry industries are continuing to undergo vast changes in marketing structure including concentration of buying power, new merchandising and pricing pr ment methods.

Will you give us some exa

which you refer?

Mr. MCLAIN. Well.

you're trying to interpret the act, because we're for change, we've got all kinds of changes, it should not be our job to stop changes.

This whole custom feedlot thing, of course, is one of the major shifts we've seen in the industry, where now, 55 percent of all fat cattle marketed from about 700 feedlots.

We have to adjust to that. We have to because the market system is there, we have to advise people who buy and sell cattle, in a customer feedlot to register and bond like any other market, that's one of the best examples, and we've got many, many more that we'd be glad to include if you'd like.

Mr. EVANS. If you would, so that we can have the record showing the kinds of changes that your department is facing.

[The information follows:]

CARCASS PURCHASE

The marketing of livestock on a carcass grade and weight basis continues to increase. Carcass purchases of hogs have increased from 2.6 percent in 1963 to 5.2 percent in 1972. This is a much slower rate of growth than for the carcass purchases for cattle which increased from 7.9 percent in 1963 to 22.6 percent in 1972. Hog carcass purchases doubled while carcass purchases of cattle expanded nearly three times.

Packers in the west north-central region led the other regions in purchases on a carcass basis, both in numbers and in the percentages of total slaughter, for all cattle and for hogs. In this region about 30 percent of the cattle and 10 percent of hogs were bought on a carcass basis. About half of the cattle in Colorado and more than one-third of the cattle slaughtered in Iowa, Minnesota, South Dakota, and Nebraska, were bought on dressed weight.

EFFECT OF MARKET CHANGES OF PROGRAM

Mr. EVANS. Marketing conditions for livestock and meat fluctuated rather extensively during the past year as a result of changes in supply and demand, increased production costs, a consumer boycott, and price controls. To what extent did this unusual situation cause additional demands and problems for your bureau?

Mr. MCLAIN. Any period of rapid changes in prices and costs or in market receipts creates additional enforcement problems for this agency. This is particularly true of any major break in prices since it may seriously weaken the financial position of dealers and other buyers. During these periods we receive more complaints concerning financial matters such as insufficient fund checks, failure to pay promptly, operating without bond, misuse of custodial funds, failure to comply with purchase contracts for both livestock and meat and inaccurate weighing and accounting problems.

Also, rapidly increasing prices of feed, labor, and materials will result in a corresponding increase in the number of requests for rate increases and the necessity for prompt relief for these applicants. Since the major downturns in prices have occurred during fiscal 1974, the number of complaints for this period is not yet available. It is believed the total for 1974 will exceed the previous year.

COOPERATIVE PROGRAM WITH STATES

Mr. EVANS. Describe the cooperative programs you have with States whereby they assist your agency in carrying out such activities as scale testing, check weighing, and licensing and bonding.

Mr. MCLAIN. This agency maintains a very close working relationship with the various States. Most States have laws and responsibilities related to weights and measures and licenses and bonds which complement and in some instances overlap our authority under the act. This could lead to conflicts seriously affecting the ability of each agency to carry out its responsibilities and to duplication of effort which would not only be expensive but unnecessarily harrass the industry.

To avoid this possibility, the States and this agency have over a period of some years developed an effective cooperative working relationship. This agency currently has formal agreements with 60 State agencies in 47 States in the scales and weighing and licensing and bonding fields. None of these agreements provide for reimbursement to States for services furnished. As examples of this cooperation, all States have amended their statutes so they could accept P&S bonds and 32 Commissioners of Agriculture and other State officials have agreed to serve as trustees on P&S bonds. P&SA provides the necessary investigations and audits. States now provide approximately 54 percent of the scale tests on livestock scales and 28 percent on monorail scales and have assisted this agency in providing training for nearly 4,000 weighmasters in the past 7 years. Also, this agency has provided training or assistance for State testing personnel, particularly with respect to heavy duty and electronic scales.

We continually attempt to make the administration of the act responsive to the needs of individual States. We meet regularly with State officials to obtain their advice and recommendations concerning marketing conditions in the respective States which should receive our attention and incorporate their requests in our work schedules.

All assistance furnished by States to this agency is on a purely voluntary basis without compensation of any kind. During the past 10 years no serious conflicts have developed between State agencies and P&SA. In our opinion the combined costs of the Federal and State programs have been less than otherwise would have been the case and the results more productive with minimum inconvenience to the regulated industry.

TERMINAL MARKETS

Mr. EVANS. You say that the decreasing importance of terminal markets is continuing. What is causing this?

Mr. MCLAIN. There are a number of factors that have contributed to the lessening of terminal markets' importance. Probably one of the most important is the location of meat packing plants at points away from terminal markets. Another factor is the importance of truck transportation with the network of highways providing numerous marketing alternatives. A third factor is the urbanization around terminal markets making the property more valuable for alternative uses. Packers and dealers have established country buying stations particularly in dense hog production areas. Growth in numbers of auction markets has provided a high competitive alternative marketing outlet. The large feedlot owners prefer to keep feed cattle in their pens until the cattle are sold instead of committing them to a distant market. Mr. EVANS. What is the significance of this trend?

Mr. MCLAIN. Historically, the terminal markets have served as an important source of pricing information for livestock. As the terminal market's importance decreases, accurate price information must be developed from other sources.

There will be less movement of slaughter livestock prior to slaughter, particularly with the growth of large feedlots with bargaining between the feeder and the packer and movement of the livestock direct to the packer.

To offset decreased receipts in slaughter livestock, some terminal markets have become specialized in certain classes of livestock such as feeder cattle and feeder pigs.

CONCENTRATION IN MEAT PACKING

Mr. EVANS. One of the phases of your activity is the review of market concentration on a nationwide basis of the largest slaughtering firms. What are the trends in this connection?

Mr. MCLAIN. In the United States, concentration in the cattle and hog slaughtering industry has been declining since 1920. I would like to insert a table into the record. The table shows that the decline is most apparent for cattle slaughter. The four largest firms accounted for almost 50 percent of cattle slaughter in the twenties; their share was consistently under 25 percent in the sixties. For hogs, the declining concentration has not been as marked. The four largest firms killed about 40 percent of the hogs in the twenties and 30 to 35 percent in the sixties. For lambs, the four-firm concentration ratios have not declined much since the early sixties.

[The information follows:]

PERCENT OF U.S. COMMERCIAL LIVESTOCK SLAUGHTER BY THE 4 LARGEST FIRMS, SELECTED YEARS, 1920–72 1

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Since 1960, the 4 ranking firms include 1 or more firms other than the original "Big Four" (Armour, Cudahy, Swift, and Wilson).

Source: 1920-56: Record of Civil Action No. 58 C 613, United States v. Swift & Company, et al., Government exhibits 5A, 58, 5C, 5D; and 1957-69: annual reports of meatpackers filed with the Packers and Stockyards Administration (P. & S.A.-125) Statistics compiled from annual reports of meatpackers usually were livestock purchases for slaughter which are comparable to slaughter statistics differing primarily as a result of inventory changes in packer feeding and holding activities. Most major packers report on a fiscal year ending about Oct. 30.

Mr. EVANS. What do you consider would be the optimum conditions in this respect?

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