The records show that through February 29, 1964, approximately 60 percent of the 1963 apple crop had been sold. The average price received for the apples sold to February 29 was less than the grower's cost of production. This cost of production does not include any wages for the grower. Apple prices have gone up somewhat in the last 10 days and if the market continues the growers may be able to avoid red ink for the season. However, growers for their work will receive less than the average per hour wage throughout the United States. From the foregoing it is obvious that our applegrowers cannot stand the increased cost of overtime which would come into effect if H.R. 9824 is enacted into law. Additional help is not available. Employment cannot be expanded, so the packinghouses would have to either pay overtime or reduce the volume of their operation. In this connection I want to point out that our fruits are not a price-support commodity. The fruit industry has never sought to be covered by price supports which in effect guarantee a profit, but has only asked an oppportunity to stand on its own feet without additional shackles. The Congress has manifested great concern over the problems of agriculture because a healthy and prosperous agriculture contributes substantially to a healthy economy. Imposition of the additional overtime, which would be required by H.R. 9824, would constitute a heavy burden and seriously threaten the solvency of many fruitgrowers, not only in Washington and Oregon but throughout the United States. Now, from the standpoint of the employees. Almost all of the employees want to work more than 40 hours a week. Many quit jobs in plants which go on a 40-hour week to work in plants in the area of production where they can work longer hours, and have a shorter season. So, the employees would also lose as the 40-hour week is made mandatory. Their per week earnings would be reduced; in the case of less perishable products the season would be lengthened and no greater total income. As sinall growers are forced out, total employment and wages would be reduced. Proposals to reduce or eliminate the number of exempt weeks under 7(b) (3) and 7(c) were presented to the 86th and to the 87th Congresses. They were rejected in each instance. We believe the judgment of the Congress in providing the exemptions of sections 7(b) (3) and 7(c) when the Fair Labor Standards Act was adopted, which judgment has been reaffirmed a number of times, most recently by the 86th and 87th Congresses, should be affirmed. The 87th Congress directed the Secretary of Labor to study the complicated system of exemptions now available for the handling and processing of agricultural products under the act and particularly sections 7(b)(3) and 7(e) and 13(a) (10) and to submit a report to the 87th Congress with recommendations for further legislation designed to simplify and remove the inequities in the application of such exemptions. The present legislative proposals would not remove the inequities; if anything, it would enlarge them by discriminating more against the small grower. The obvious way to remove the inequities is for the Congress to maintain the present exemptions and to establish a realistic workable definition of "area of production" in lieu of the unreasonable definition established by the administrator which completely ignores the function performed in the area and substitutes therefor a population test. CONCLUSION The proposed amendments to which we object, which would restrict the exemptions provided in the current law, are not in the best interest of the economy of the United States. Removal of these exemptions would discriminate against the small grower; would place an additional financial burden upon the already overburdened farmer whose income per hour of work is generally less than the hourly rate of pay throughout the United States. Under present economic conditions, the imposition of an additional financial burden upon the farmer is unwarranted, unjustified, and uneconomic. The exemptions, partial or total, currently provided in sections 7(b) (3) and 7(c), should not be restricted. Imposition of the 40-hour week by reduction of the present exemptions would result in less work and lower earnings for the employees. All concerned. growers and workers alike, would lose. Respectfully submitted. ERNEST FALK. INTERNATIONAL LONGSHOREMEN'S ASSOCIATION, GENERAL SUBCOMMITTEE ON LABOR, HOUSE COMMITTEE ON EDUCATION AND LABOR, HONORABLE REPRESENTATIVES: The International Longshoremen's Association, AFL-CIO, wishes to go on record in support of H.R. 9824 and its companion bill S. 2487. We urge one change in this bill, that section 7(b) (3) of the Fair Labor Standards Act to be repealed instead of amended as provided in section 301— along with sections 7(c) and 13(a)(10) of the act. Repeal of section 7(b) (3) would remove all overtime exemptions for workers engaged in agricultural processing. We are particularly interested in the exemptions for handling, packing, and processing farm products. Workers processing agricultural commodities earn some of the lowest wages in the United States of America. In part, this is due to the exemptions under the act. With automation, American labor rightfully looks forward to a shorter workweek. All American workers, including those in food processing, have a right to share the Nation's economic gains. Yet only in the farm products processing industry are the workers denied overtime rates of pay for overtime work. We must create new jobs and repeal of section 7(b) (3), 7(c) and 13(a) (10 would help us reach this objective. The bases on which the exemptions in section 7(b) (3), 7(c), and 13(a) (10) are permitted differ substantially. Under one of these sections, whether an employee obtains the benefits of the act depends on the specific duties of the individual employee, under another upon the activities in which the employer is engaged, under a third upon the nature of the industry itself. Some employees are exempt and some are not. This caused preferential treatment for some employers in the industry and discriminates against others. The U.S. Department of Labor since 1945, has proposed revisions of the complicated system of exemptions provided under the Fair Labor Standards Act. The Wage and Hour and Public Contracts Division has commented on these exemptions as follows: "There is no valid reason for exemption from the minimum wage provisions such as is provided in section 13(a) (10). There is no sound justification, either economic or social, for the year-round overtime exemption provided for in section 13(a) (10) and part of section 7(c) and for the unlimited workweek for 14 weeks provided for in the other part of section 7(c), even though the industries involved may handle perishable commodities.” Other industries, such as the meatpacking industry, also have to adjust their operations to meet peak seasonal demands and extend their weekly work schedule. However, in these industries, the standard workweek is 40 hours. The food processing industries today are large industries, composed of largescale corporations with plants operating throughout the United States. They can well afford to meet the requirements of the Fair Labor Standards Act. Many of them are nonunion, their workers are without union protection, and work unlimited hours without overtime pay because of the exemptions in the act. Sections 7(b) (3), 7(e), and 13(a)(10) of the Fair Labor Standards Act should be repealed because: 1. Congress did not intend a double workweek exemption under sections 7(b) (3) and 7(c). 2. An exemption of 28 weeks far exceeds actual needs. 3. At peak periods, the canning and processing industries average less overtime than other industries whose workers are covered by the Fair Labor Standards Act. 4. Productivity in canning and preserving has risen faster than most other industries and manufacturing combined. 5. Food processing workers' earnings are behind other factory workers' wages. 6. The food processing industries are industrial in character. They are a multimillion dollar industry with large companies. Food processing plants are becoming fewer and larger. 7. Technological developments in canning and processing permit high volume, speedy processing, minimize problems of perishability and reduce needs for labor. 8. Many employers under union contract, in these industries have recognized the basic inequity of the overtime exemptions by eliminating them or limiting their application. 9. The availability of labor is a minor problem. 10. Seasonality and perishability have become less significant as factors warranting exemption. 11. The industries involved can afford to pay the minimum wage and overtime pay. The President of the United States has declared a war on poverty. An expanded and strengthened Fair Labor Standards Act is part of the necessary ammunition for fighting this war. The President stated in his State of the Union Message on January 8, 1964: "We must extend the coverage of minimum wage laws to more than 2 million workers now lacking their basic protection of purchasing power." By removing the present exemptions in the act, as provided in H.R. 9824, including the repeal of section 7(b) (3), you will be helping in the battle against poverty. The needs of the economy, the demands of social justice unite to call for the passage of H.R. 9824. The International Longshoremen's Association, AFL-CIO calls upon you to pass H.R. 9824. Respectfully yours, THOMAS W. GLEASON, President, International Longshoremen's Association. INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN, AND HELPERS OF AMERICA, Hon. JAMES ROOSEVELT, Chairman, General Subcommittee on Labor, March 16, 1964. DEAR MR. ROOSEVELT: On March 9, 1964, during the course of testimony by Mr. Sidney Zagri, legislative counsel of the International Brotherhood of Teamsters, on H.R. 9824 (to extend coverage of the Fair Labor Standards Act), several members of the committee in attendance raised the question of what had happened to the prices of agricultural commodities, in view of the fact that output per man-hour of production workers in canning and preserving had risen 19.6 percent between 1958 and 1962 as compared to only a 15.9 percent rise in the hourly earnings of these workers in the same period. During the ensuing discussion, the question was variously phrased as: "Has the consumer benefited?” "How did this affect the price to the housewife?" The Bureau of Labor Statistics' Consumer Price Index (1957-59=100) for the years 1958 to 1962 are given below for the following groups: All Items; Food at Home; Canned Fruits and Vegetables, and Frozen Fruits and Vegetables: Even a casual inspection of this table will show that the "all items" index, which includes all commodities and services, has risen more between 1958 and 1962 than any of the food categories. Not only has the "all items" index increased to a greater degree than the others from 1958, but, using 1957-59=100, the "all items" index also exceeded the rise of the various food components of the Consumer Price Index. The lower unit labor costs arising from the marked rise in man-hours productivity has more than compensated for wage increases received by food processing workers (which have fallen behind productivity increases) and some of the resultant savings have been passed on to consumers in the form of relatively stable food prices. In brief, therefore, food prices at the consumer level have increased less than other major commodity groups that make up the Consumer Price Index and any increase in the minimum wage or removal of the overtime exemption for agricultural processing workers will have a minimal impact on consumer prices. Retail prices of fresh produce have risen more than those of processed products, according to the U.S. Department of Agriculture. Retail prices of fresh fruits averaged 43 percent higher in 1962 than in 194749; retail prices of fresh vegetables were up 35 percent. Processed fruits and vegetables showed a smaller rise-17 percent. (U.S. Department of Agriculture, Economic Research Service. November 1963, pp. 4, 20.) Your committee may be interested to know that the food component of the Bureau of Labor Statistics Consumer Price Index, in the newly revised index effective January 1964, represents about 22 percent of all items in the new index as against 28 percent in the old index. With respect to fruits and vegetables specifically, the new index gives them a weight of 3.02 percent as against 4.46 percent in the old index. Thus, any changes in the price levels of the food group as a whole, or of fruits and vegetables specifically, will have less impact on the level of the overall index. Your committee has heard testimony from several witnesses to the effect that there is already too great a disparity between prices paid by farmers for what they buy and prices received for what they sell and that the farmer's share of the consumer's dollar has declined. (See, for example, statement of Willis R. Deines, executive vice president, Texas Citrus and Vegetable Growers and Shippers, Mar. 9, 1964.) This statement ignores the simple economic fact that added values are created by the essential services of distribution and processing which are necessary to bring food from the farm to the table. Wheat stored on a farm has no value to the farmer or the consumer. Only when it is converted into a useful form like flour or bread, and made available in a grocery store, does it acquire real value. Thus, the more services provided by the marketing system in bringing farm products to the consumer's table, the greater the price spread between the prices farmers receive for raw agricultural commodities and the prices the consumer pays at the grocery store for the products made from them. There is no question that the marketing system provides more services today than ever before in bringing farm products from the farm to the store or consumer. These services "add quality and convenience or substitute for work formerly performed by the consumer. These services include more sorting and grading, trimming, packaging, processing, storage, and other operations, many of which add to the cost of food. * Not all services necessarily increase cost to the consumer. The extra cost of processing and packaging may be offset by reduction in waste and spoilage and lower cost of shipping and handling." Other examples of today's increased marketing services cited by the U.S. Department of Agriculture, which account for the drop in the farmer's share of the food dollar are the following: 1 "Consumers are less dependent on nearby producing areas for their fresh produce. This means more fresh foods are available year around but more refrigeration, longer transportation hauls, and more handling of produce are necessary. "More foods are being packaged. "Foods are being packaged in smaller sizes because consumers want to buy their foods in smaller units. "Many products are now ready for cooking when the housewife buys them." Thus, depending on the amount of transportation, processing, packaging, and handling required in making the raw farm product into a form demanded by consumers, the percentage of the consumer's dollar received by farmers will vary. The important thing to remember, however, is that, without such processing and transportation, the farmer might not be able to sell any of his produce, or might be limited to selling his commodities within a narrow geographical market. This is pointed out by the Federal Reserve Bank of Kansas City, which in its Monthly Review dated September 1961 (p. 15), stated: "The percentage of the consumer's dollar received by farmers is not necessarily an indication of the farmer's financial well-being. Farmers could, and in many 1 "Food Costs Retail Prices, Farm Prices, Marketing Spreads." Misc. Pub. No. 856, April 1961, p. 13. U.S. Department of Agriculture, Agricultural Marketing Service. cases do, get all of the retail food dollar by selling directly to the consumer. However, it is likely that in many instances additional nonfarm processing, while resulting in a lower share of the retail price to farmers, may mean expanded consumer markets and a larger return to farmers than might otherwise be possible." In the same vein, W. E. Hamilton, a member of the agriculture committee of the National Planning Association has written: "Farmers can, and sometimes do, get all of the retail food dollar by selling directly to consumers. But, the cases where this can be done on an economic basis are relatively few, as the farmer is likely to find that he cannot get very far into processing or distribution without incurring many, if not all, of the costs normally incurred by nonfarm middlemen. * * * "Breaking the consumer's dollar into the shares received by farmers and middlemen seems to suggest that farmers, processors, and retailers are all competing for a share of a fixed consumer expenditure. This is not always true. Consumers often are willing to pay more for food in order to get the convenience of added processing. Thus it does not follow that a reduction in the farmer's percentage of the consumer's dollar means a decline in farm prices or income. The reverse may be true if added processing increases consumer demand for a farm product. Consequently, it appears desirable to avoid use of such terms as the 'farmer's share' and the 'middleman's share.' "The point is that the percentage of the consumer's dollar that is received by farmers doesn't really tell us very much about either the efficiency of the marketing system or the well-being of the farmer." ("A Current Look at the Farmer's Percentage of the Consumer's Food Dollar." by W. E. Hamilton, and a statement by the NPA Agriculture Committee, National Planning Association, Special Report No. 55, November 1959, pp. 4, 5, 8. Members of the NPA Agriculture Committee signing the above statement included, among others, Donald R. Murphy (vice chairman), director, editorial research, Wallace's Farmer; W. E. Hamilton, director of research, American Farm Bureau Federation; Roy Hendrickson, National Federation of Grain Cooperatives; Frank W. Hussey, vice president, Maine Potato Council; E. W. Kieckhefer, farm editor, the Courier-Journal; Herschel D. Newsom, master, National Grange; Paul D. Sanders, editor, the Southern Planter; Frank J. Welch, dean, College of Agriculture, University of Kentucky; and Ralph S. Yoke, editor, Wisconsin Agriculturist.) In other words, without marketing and processing, or "price spread." your steak would be another steer on a western range, macaroni would be Durum wheat on the Dakota plains, cranberry sauce would be in a bog on Cape Cod, cheese would be milk in a Wisconsin farmer's pail, and our citrus juice would be on trees in Florida or California. There is no necessarily fixed relation between the price spread and the farm price. It is for these reasons that year-to-year changes in farm-retail margins by themselves do not tell us whether the farmer is better off or worse off. While farmers' percentage share of the grocery store food dollar has dropped, they are actually receiving more dollars because they are selling a larger volume of farm products due to processing and transportation. With respect to fruits and vegetables, the U.S. Department of Agriculture, in a study on food costs, stated: "Farm values declined for all the product groups in the market basket ercept fruits and vegetables." 2 [Italic added.] The House Appropriations Subcommittee, in March 1963, was informed by Nathan M. Koffsky, Economic Research Service Administrator for the U.S. Department of Agriculture that "a study of convenience foods are having little effect on food marketing costs and retail food prices—the study also showed that the cost of duplicating these convenience foods with fresh or homemade foods would have cost the housewife $1.07 more, not including any charge for the housewife's time in food preparation." (Supermarket News, May 6, 1963, p. 62. Italic added.) 2 "Food Costs-Retail Prices, Farm Prices, Marketing Spreads." Misc. Pub. No. 856, April 1961, p. 5. The family market basket of farm foods contains the average quantities of farm-produced food products purchased per family in 1952 by urban wage earner and clerical worker families. |