Mr. McKERNAN. Yes, Mr. Pelly. You especially, and also other members of this committee, have struggled with those of us in the executive department now for 10 years at a minimum to attempt aggressively to do something about the plight of American fisheries. Excellent legislation has come out of this committee in regard to this segment of our community, and there is no question but what the hardest his segment of the American fishing industry are the American fishermen. The American fishermen have tended to take the brunt of instability, supply and demand, so that it is easy for us together to recognize that something additional to what we have done so far is necessary to help bring about a stable and perhaps better condition for the American fishermen.

The price paid per unit of catch of most species of fish in the United States simply has not changed appreciably in the past 15 or 20 years, whereas the price of fish on the market, of course, has increased tremendously.

There are some very good reasons why the increase in retail price is greater than one would expect compared to the increase in the raw product.

Mr. DINGELL. Is it not a fact that this is a problem we have all the way through marketing food and fiber? The initial producer, farmer, or fisherman, has been getting a continually diminishing share of the market? The processor has been getting a constantly expanded share of the market. This has been true in almost every agricultural product. As a matter of fact, Congress right now has authorized an investigation to find out why this is going on.

Mr. McKERNA. Yes, Mr. Dingell, you are precisely right.

In the case of fishery products it is quite plain to me that the fishermen would be expected to get a somewhat decreasing share of this increased price because of the sophistication of packaging, the increased problems brought about by consumer demands to have highly processed fisheries products, for example, fish sticks and fish portions. This means that the share of processing, distribution and packaging are increased disproportionately when compared with the time when you simply sold the raw fish across the market.

Even so, the difficult position of the fisherman, is that his catch is stable and his price also has been constant. Yet he is paying a great deal more now for his equipment and grocery bill. It is a very serious problem and it behooves all of us to think very deeply about this and to attempt to help the position of the basic producer of American fisheries products.

Mr. PELLY. Have you read Mr. Vance's statement which he made before this subcommittee yesterday on the legal aspects?

Mr. MCKERNAN. I am sorry, I do not have it available.

Mr. PELLY. I am sorry more people have not read it. It was very convincing to me. I hope you will read that testimony when you get a chance.

This legislation is the only door I can see which opens up a solution to the problems which exist for one reason or another in the fishing industry. I think it would be helpful in New England and other places, too. Wherever you bring in a supply of fish that would spoil you are at a great disadvantage in trying to negotiate because a packer can

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just sit tight. You are not allowed to throw the fish overboard and you have no free collective bargaining as such.

Certaintly an independent fisherman is the furthest thing from being independent. He is positively under the control of the packer who is loaning him the money to buy a boat and keeping him in constant debt really. That packer really is the only source for the sale of the fish? How can you freely collective bargain with a packer who has the only cannery there and you are out fishing for him? When you come in you have to get the price he is willing to pay. Is that right?

Mr. McKERNAN. Yes, that is right. However, I am not quite so critical of the American processor perhaps as your last statement.

I am fully aware of his problems, also, in dealing with products from foreign countries which are competing rather hard. He simply has to watch his pennies in every way he can.

I think some of the legislation this committee has recently passed will help to put the basic producer in a more competitive position with the foreign producer and with other sources of meat protein. I do not think it is the whole answer, and I believe that this legislation seeks to add to what this committee already has done to help the American fisherman. Again the question is whether or not this is in absolutely the proper form at the present time.

Mr. PELLY. When I see what is done for milk producers, for example, and talk about price fixing and buying up of surpluses of milk which is not used, what the Government does for the farmer and does not do for the fisherman is to me difficult to reconcile.

Mr. McKERNAN. There is a great difference, no doubt.

Mr. PELLY. I want to take this opportunity to express to you my appreciation for your very fine statement and for your unfailing sympathy and understanding and support of some of our problems in the fishing industry.

Whenever I turn to you I get help and information from your Department and I know in your heart you basically support the objectives of this legislation and will do anything you can to try to resolve some of the impediments to its passage.

Mr. MCKERNAN. Thank you very much, Mr. Pelly.

Mr. DINGELL. Mr. McKernan, I have been sitting here going through the report of the Department of Justice with regard to the impact it would have on the antitrust laws.

If you will turn to page 2, line 25, beginning with the words "and provided further, that the making of any such agreement or agreements between such an organization or organizations," and so on. Read that through to the end of page 3.

As I read that language that would literally make any terms involved in such agreement or agreements on any subject legal even though they might be otherwise in violation of the antitrust laws. Is that correct?

Mr. McKERNAN. This is the way I would read it, too, Mr. Dingell. I am not an expert in this, but insofar as I understand the language, I would be inclined to agree with your interpretation.

Legal counsel might well find otherwise, but I would certainly agree with you that this is very broad language.

Mr. DINGELL. The Department of Justice says, in referring to that language:

Agreement between buyers as to the price to be paid for fish or other aquatic products is considered in violation of the Sherman Antitrust Act and are not authorized by the present Act which permits only fishermen to act collectively.

That broadens the exemptions afforded to buyers on matters much more broad than simply the price of fish.

I would like to ask some questions about what this would do, referring to H.R. 3955, as an actual practical matter to help the fisherman who is in the position that you and Mr. Pelly were previously discussing. I refer to the fisherman who has borrowed money from the packer or the fishhouse operators to go out and catch fish. How would this act to benefit him or his crew?

Mr. MCKERNAN. Mr. Chairman, at the present time the fishermen employees in Alaska, and if I may use the example of Bristol Bay which is a clear-cut case where it seems to me that an important if not the most important condition exists, the employee fisherman can bargain with the cannery, and the fishermen's associations, which incidentally in many of these areas of Alaska have not been particularly strong partly because of the distance and the isolation of the individual fishermen themselves and it is very difficult to get together and communicate adequately to even form effective associations, can also bargain with the cannery separately.

The bill itself would allow the union fisherman and the boatowner fisherman to join together to collectively bargain with groups of buyers if they wanted to. This is if the buyers form such a group.

The advantage here, of course, would be that the fisherman could speak with one voice, as they can in many other industries in bargaining for a better price.

What has arisen is that the employee fisherman bargains separately quite often in Seattle. The resident fisherman in Alaska has little or no voice in this bargaining, and he is forced by the present form of bargaining to take what somebody else in some distant place has finally agreed to.

This bill would allow this resident owner-fisherman to join with the unions, if he so chose to do, and to bargain as a single unit.

Obviously this would put him in a much stronger position, and I think in addition to that it would bring about what has been obvious to me for years, as bad feelings and an unstable condition in the industry structure within Bristol Bay. I am using that as an example but it has occurred elsewhere.

Mr. DINGELL. You say this would permit the vessel owner to join with the unions to bargain over the price of fish. Is that the principal point of this legislation, the principal benefit sought to be conferred by this legislation?

Mr. McKERNAN. I cannot speak for the people who drafted this legislation or the Congressman who instituted it, but this is in my opinion a valid objective which would accrue from the passage of this legislation.

I would like to add one more thing, Mr. Chairman, for clarification. When one usually thinks of vessel owners one thinks of vessel owners of large or medium-sized fishing boats. However, in Alaska,

and especially in the example I used, the vessel owner is sometimes the same man who last year was the employee fisherman. There isn't the difference either in investment or training in Alaska between fishermen themselves and vessel owners that we have in most areas of the United States or in most industries of the United States. These are really one and the same person.

The individual owner in Bristol Bay, for example, is a fisherman who has put a small amount down in general. There are exceptions, of course. In general he has put a small amount of money down on his boat, and perhaps purchased or again borrowed from one of the operators money for his gear, and he operates a small boat either by himself or with one other man aboard.

These are relatively small boats.

Mr. DINGELL. Does he sign an exclusive sales contract with the fishhouse owner who loans him the money?

Mr. McKERNAN. It is my understanding that in general he does. If he is, in a sense, an independent fisherman, if he fully owns his boat, he maneuvers around and attempts to get the very best price. There are some of these people.

In the salmon fisheries in Alaska the supply itself has varied so greatly that competition and demand for fish has varied greatly, and in half the cases or more the accumulation of investment by these very, very small operators is so small that they do not have the capital when fishing season comes to operate, even if they owned their relaatively small boat. They would not have operating capital to get into the fisheries, so really, for the most part, they must be beholden in one way or the other to the buyers.

Mr. DINGELL. Is the function of this bill to get them away from being beholden to buyers, seeking freedom at the marketplace?

Mr. McKERNAN. I think that the bill would give them a stronger position in bargaining for the price of their fish.

Mr. DINGELL. Can this be accomplished by the simple prohibition against the fishhouse owner or the packer, canner, whoever it might happen to be requiring exclusive sales contracts to him as a condition of a loan to these shipowners?

Mr. McKERNAN. It could be accomplished by this means, but I would point out to you that the competition for the fish among the buyers themselves is very great. Obviously if they did not have some way of insuring that they were going to get fish to can, there certainly would be no incentive for them to put out the money necessary for the operation of these hundreds of boats and gear, so there is a problem from the processors' standpoint which cannot be overlooked.

Mr. DINGELL. There is another question I want to get down to. You mentioned that the stocks of fish and supply and demand vary rather widely.

Mr. McKERNAN. That is right.

Mr. DINGELL. That would apply to almost every species of fish? Mr. McKERNAN. I cannot answer that directly yes or no for this reason, Mr. Dingell

Mr. DINGELL. It is particularly true with regard to salmon but it applies to other fish.

Mr. McKERNAN. It is to some extent true with regard to other species, but I am sure you will recognize that where you have species

such as haddock, cod, tuna, where several classes are involved in any 1-year catch, a failure of 1-year class, for example, its survival would be buffered by the several other year classes. That is not true in salmon. In salmon you have only 1-year class. A failure of that oftentimes cannot be determined until the salmon really appear on the fishing grounds.

Mr. DINGELL. This bill essentially is aimed at accomplishing one purpose really, is it not, and that is, in the economic sense, to permit the establishment as fully as possible of price of salmon before the marketing season commences through agreements to be negotiated by and between a number of parties-packers, canners, fish house owners, their associations, and the fishermen, boatowners, skippers, and all of the elements of the industry which constitute what we might call the fishermen ?

Mr. McKERNAN. Yes.

Mr. DINGELL. This is essentially aimed at the law of supply and demand, establishing the price before you really know the number of fish that will be caught, marketing conditions and prices that will be taking place at the marketplace?

Mr. McKERNAN. I would not agree with that.

Mr. DINGELL. How are agreements of this kind going to hold up in the face, let us say, of a great glut of fish?

Mr. McKERNAN. Essentially the same way that changes in prices and demands for other products hold up in the face of labor contracts which are negotiated every year.

Mr. DINGELL. I am not talking about labor. I am talking about fish. I am talking about raw materials. How are these prices if fixed in advance such as these hold up in the face of a glut of fish any more than they would in the face of a market glutted with an excess of sugarbeets, of beef, or a glut or corn, wheat, or whatever else it might be, without some other factor such as the Government coming in and buying these stocks and storing them?

Mr. McKERNAN. There has been collective bargaining in the past and there are contracts every year, and there is a fixed price that exists.

What generally happens is that there are predictions as to the runs of fish. These often are not

Mr. DINGELL. Not completely reliable.

Mr. McKERNAN. There are wide variations because of the vicissitudes of nature, yes. What happens is this: There is adjustment by the buyers of these factors, both during the single year and in the ensuing years.

I would certainly agree that these are not perfect, but, for example, if a buyer has purchased fish at too high a price, then his price to the consumer must be higher.

On the other hand, if he has a glut of fish and he has canned so much that the supply exceeds the current demand, then he does a number of things. What he does is to reduce the price. He tends to push the product harder by greater advertising, attempting to take over some other market for a protein food, and sometimes he holds over his product which, once processed, in the case of Alaska salmon, is in a form which can be held over.