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Fifth, make false reports about the finances, management or activities of such associations, or interfere in any way with the efforts of such associations in carrying out the legitimate objects thereof.

WHAT ARE THE PENALTIES FOR VIOLATION?

Section 4 would provide for a criminal penalty and damages in case any person violates section 3. Any person who was found to be in violation and convicted would be punished by a fine not to exceed $1,000 or imprisonment not to exceed 1 year, or both, in the discretion of the court.

Any person who felt that he was injured in his business or property by reason of violation of section 3 could sue in his own district court and could recover triple damages he might have sustained and the cost of the suit including a reasonable attorney's fee.

The proper State courts would not be deprived of jurisdiction of any action that might be taken in them for damages.

WHAT IS THE PURPOSE OF THE SECTION DEALING WITH AFFILIATION OF

ASSOCIATIONS?

Section 5 recognizes the right of an association of producers to be affiliated with other agricultural associations or organizations in carrying out its objectives. There is nothing in the law at present which prohibits such an affiliation. However, section 5 would further clarify this matter.

SUMMARY

Because of the increasing importance of marketing and bargaining associations in agriculture, growers feel very strongly that they should have the right to organize voluntary associations of this type without fear of reprisal or the conducting of unfair trade practices on the part of processors or other handlers. They believe there is an urgent need to have legislation which will spell out the law so that appropriate action can be taken in the future to prevent such unfair trade practices. Failure to meet the situation will mean that in the future this type of voluntary marketing association will be severely handicapped in its ability to adequately serve the needs of farmers as it attempts to improve their marketing power.

Senator JORDAN. I would like at this point also to put in the record a statement from Senator Lausche.

(The statement referred to follows:)

STATEMENT OF HON. FRANK J. LAUSCHE, A U.S. SENATOR FROM THE STATE OF OHIO

I appreciate the opportunity of appearing before your Committee in support of S. 109, a bill which I have co-sponsored with Senator Aiken and other members of the Senate.

The purpose of this bill is to protect the rights of agricultural producers to join and belong to associations which are designed to facilitate the marketing of their products and to increase their bargaining power.

It should be a matter of great pride that the American farmer has developed in this free society of ours an agricultural industry second to none in the world. In a world where two-thirds of the population is hungry and undernourished, Americans are provided with a great bounty of food of remarkable variety. Of course, it is possible to cite many reasons for this, but I feel we sometimes overlook the primary reason which, I believe, is the unmatched industry and initiative of our agricultural producers.

The American family farm has achieved a remarkable record, and I believe their efforts should be properly rewarded in the market. The family farm operation of today is an efficient and modern unit of production. It can be maintained, and it should be. But it is essential that we protect the rights of these independent producers to organize for the purpose of marketing their products. Such associations should be voluntary, nongovernmental, and controlled by the farmer members. I firmly believe that we do not protect the rights of farmers when we deprive them of their freedom, and I am very much afraid that many of our efforts in the past have tended to forget this principle. I do not believe that it is in the best interest of farmers for government to set

or manipulate prices of their products. Many federal farm programs do that today. I do not believe the best long-term interests of farmers will be served if their future is based on government allocation of the right to produce through acreage and marketing allotments.

We should never forget that approximately 75 percent of the gross income of American farmers is from products which are not government managed. Last year total gross sales of farmers amounted to approximately $37.8 billion, all but about $9.5 billion of this came from products which did not have government controls.

It is significant that most of the hours and days that this great legislative body has spent on agricultural problems has been devoted to those products which are subject to government controls.

As we look to the future, I believe we should spend more time in investigating those means by which we can help farmers help themselves rather than devoting our efforts to programs which attempt to control agriculture from Washington. This means a rededication toward the market-price system and the establishment of proper safeguards so that farmers can obtain a fair price and equitable treatment in the market. The enactment of S. 109 would be an important step in that direction.

As the Committee reviews the food processing industry, it will become apparent that there are several very large companies which do much of the processing and preparation of the farm products for the consumer. It is with these multimillion dollar companies that individual farmers must bargain separately unless they are organized in marketing associations. Obviously, when the individual farmer attempts this by himself, there is not equality of bargaining power. This is why many farmers have decided that marketing associations are beneficial and needed. These associations can help growers negotiate for favorable marketing terms, including prices, grading, and delivery conditions. By assuring a supply of quality products, the association can also perform an important service to the processor. These associations can help growers in many other ways-by providing information on market needs and conditions in other production areas. They can conduct research on consumer preference and can facilitate orderly marketing.

Basically, however, it should be the farmer who decides whether or not to belong to such an association. S. 109 does not attempt to make this decision for him. I do not believe that government should make this decision for him. Membership must be voluntary. But the decision should be a free decision without improper restraint or coercion. It should be made clear that S. 109 does not

Force the recognition of any marketing association.

Require negotiation with any marketing association.

Require membership by any farmer in any marketing association.

S. 109 leaves to the association the job of attracting and and maintaining membership. It is only through voluntary membership that the association will gain recognition by processors and achieve the benefits of effective bargaining.

This bill merely attempts to create "rules of the road" and prevent improper conduct. If farmers attempt to market their products in a private, competitive market system with processors, they are free to make their choice.

S. 109 would make unlawful such practices as boycotts or other economic coercion against farmers to prevent them from exercising their right "to join and belong to an association of producers of agricultural products." Farmers could not be discriminated against as to "price, quantity, quality, or other terms of purchase" of their products because of such membership. They could not be coerced or intimidated in cancelling their membership, nor could false reports be issued in regard to their association's activities.

I believe that there are very few processors in this country who would engage in or even condone such practices. But I also believe that we must remove the possibility and the threat of such practices if we are to protect farmers' rights to form such associations.

However, the marketing of food increasingly is becoming a matter of interstate commerce and I believe that it is a matter for federal legislation so that all farmers can be assured that they can join an association of their choice without fear of reprisal or discrimination.

As we look to the future, I believe that it is possible to vastly underrate the tremendous importance of the enactment of S. 109 at this time.

Senator AIKEN. I have a letter which was received by Senator Len Jordan of Idaho which he referred to me. I think perhaps that letter to him from John H. Brandt of Nampa, Idaho, should be made a part of the record.

Senator JORDAN. You would like to make that a part of the record? Senator AIKEN. Yes.

Senator JORDAN. So ordered.

(The letter referred to follows:)

Hon. LEN JORDAN,

Senate Office Building,

Washington, D.C.

NAMPA, IDAHO, May 31, 1966.

DEAR SENATOR JORDAN: In January of 1965 there was introduced by Mr. Aiken a bill to amend the act authorizing an association of producers of agricultural products by adding certain new sections. This was apparently read twice and referred to the Committee on Agriculture and Forestry. It is our fervent belief that this should be resurrected and amended. We shall appreciate your looking into it and letting us hear from you.

We had a good illustration of the need of such amendments this year. We had a marketing association composed of growers of potatoes which had been acting as a negotiating agency with Simplot and with Ore-Ida. The association also negotiated regarding inspection and grading and so on. This year the growers and processors could not agree as to price immediately. Consequently the processors encouraged outsiders to take contracts and made every effort to get members to abrogate their agreement. Furthermore, later after the agreement had been reached as to price, the companies refused to issue contracts to some members of the association who had been the leaders or had been somewhat active in the negotiating. I can attest these leaders were not radical or unreasonable, but they have nevertheless become the victims. The situation definitely needs remedying.

Respectfully yours,

JOHN H. BRANDT.

Senator AIKEN. Also a letter from Curtis B. Warnke, State representative, 22d District, Yellow Medicine County, Wood Lake, Minn. I think maybe that ought

Senator JORDAN. So ordered.

Senator AIKEN (continuing). To go into the record at this point,

too.

(The letter referred to follows:)

Hon. GEORGE D. AIKEN,

U.S. Senate,

Senate Office Building, Washington, D.C.

WOOD LAKE, MINN., March 3, 1965.

DEAR SENATOR AIKEN: It is my understanding that you have introduced a bill in the Congress providing for legislation to protect farmers and members of farm cooperatives from coercion by food processors and others. It is also my understanding that this bill would add a third section to the Capper-Volstead Act.

I feel that it is generally agreed that the present Federal Anti-Trust Laws do not deal effectively with certain unfair trade practices which are carried on by some food processors. I have a farm constituency which is keenly and vitally aware of this problem and the farm community generally is becoming quite aroused.

For this reason I am in the process of having legislation drawn to at least make an attempt to do something in this regard. Thus I would appreciate it if you could send me a copy of this bill that you have introduced and any other pertinent information which you may have at your disposal which may be of some help to me.

In closing I would like to take this opportunity to commend you for your interest and help in sponsoring this legislation in the Congress.

Sincerely,

CURTIS B. WARNKE,

State Representative.

Senator AIKEN. That is all I have to say now unless there are questions.

Senator JORDAN. Well, I do not have one yet.

There may

be a lot of them before this is over.

Mr. Abrahamsen, I appreciate your being here with your associates, and we will be glad to hear from you at this time.

STATEMENT OF MARTIN A. ABRAHAMSEN, DEPUTY ADMINISTRATOR, FARMER COOPERATIVE SERVICE, U.S. DEPARTMENT OF AGRICULTURE

Mr. ABRAHAMSEN. Mr. Chairman, I am Martin A. Abrahamsen of the Farmer Cooperative Service.

I appreciate the opportunity of appearing before your committee. The problem to which S. 109 is addressed is but one of many confronting agricultural producers in the context of today's marketing structure and practices. The matter is receiving thorough study within the Department and our position on the bill is not yet available.

As we understand the bill, it is intended to protect agricultural producers in coping with unlawful interference by "*** any processor, handler, distributor, dealer, or agent **** in a producer's relationship with a cooperative. It provides for criminal penalties in the event any person violates its provisions. The bill also recognizes the jurisdiction of State courts in any action that may be taken seeking damages. Section 5 of the proposed bill is intended to clarify the right of an association of producers to be affiliated with other agricultural associations or organizations in carrying out its objectives.

The proposed bill addresses itself to a seemingly simple matter. The problem, however, is exceedingly complex and while the Department is in sympathy with general objectives of the bill, there may be some question whether in its present form the bill would sufficiently strengthen farmers' ability to bargain effectively.

Senator JORDAN. Is that the conclusion of your statement?

Mr. ABRAHAMSEN. That is the statement; yes, sir.

Senator JORDAN. Would you like to introduce the other gentlemen ? Are these people from the Department?

Mr. ABRAHAMSEN. Yes, they are.

At my right is Mr. Morrison Neely of the Office of the General Counsel, and Mr. David Volkin, who is Chief of the Business Administration Branch, Farmer Cooperative Service.

Senator JORDAN. Senator Aiken, would you like to ask them any questions?

Senator AIKEN. Yes.

I note that the Department is in sympathy with the general objectives of the bill. What do you understand the general objectives to be? Mr. ABRAHAMSEN. To improve the farmers' bargaining position. Senator AIKEN. And I am also interested and a bit surprised to see the Department shying away from proposed legislation which is considered complex. What is complex about this proposed legislation? Mr. ABRAHAMSEN. The legislation as such we do not say is particularly complex but the problems that are involved and relatedSenator AIKEN. "Exceedingly complex" it says.

Mr. ABRAHAMSEN. And related thereto. Yes. As a background for this, we think that such economic considerations as merger, integration, various implications as they relate to regulation and market structure, the role of retailers-these are factors that do need careful consideration in appraising the operations of the bill.

Senator AIKEN. You are in favor of farmers joining together to obtain fair prices for their products?

Mr. ABRAHAMSEN. We certainly are, yes, sir.

Senator AIKEN. Why have you not come up with any recommendations for remedying existing conditions which I am sure witnesses will show are very damaging to the farmer? What is your remedy? Mr. ABRAHAMSEN. Well, with respect to the bill itself, it has received rather continuous consideration in the Department of Agriculture. I would like to emphasize that a number of agencies are involved, and, in addition to that, there are jurisdictions cutting across Department lines involving other departments of the Government. Because of the various implications with respect to different alternatives that might be used, we find ourselves in the position where we think it needs further study on our part.

Senator AIKEN. Well, the fact is, is it not, that the Department of Agriculture has been told they have got to hold down consumer prices one way or another?

Mr. ABRAHAMSEN. Well, this

Senator AIKEN. They have. I will answer the question for you. And the farmers have authority to go into the marketplace as an organization and insist on, in so many cases, cost of production for their products, and as individuals they bargain at a disadvantage with processors, handlers, and dealers. That disadvantage has a tendency to hold down consumer prices, does it not?

Mr. ABRAHAMSEN. Well, I think the Department of Agriculture has a long history in support of the cooperative effort.

Senator AIKEN. Too bad it was not just a little longer. I agree with you. It has had a long history of supporting cooperative efforts, and, as I say, it is too bad it just did not continue.

That is all.

Senator JORDAN. Senator Young?

Senator YOUNG. No, thank you.

Senator JORDAN. Thank you very much. Either one of you other gentlemen have anything?

Mr. NEELY. No, thank you.

Senator JORDAN. Thank you very much.

I presume that you will be available if we have some more questions

later on.

Mr. ABRAHAMSEN. Yes, sir. To be called from the Department? Senator JORDAN. Yes. Thank you, sir.

Maybe they will come up with their own solution. Mr. Shuman? We are glad to see you again. Glad to have you with us this morning and we will hear from you now.

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