I cite one little story. I went to a farm auction one time just for curiosity, I was not interested in buying but I wanted to see how they handled this farm auction. It was a good farm. I found myself halfway along standing besides Stanley Black. There were two bidders toward the end. They were bidding up fairly high. I asked Stan if he knew either of the bidders. He said he knew both. He had records of both. He predicted which one could best pay the amount that the bid had reached. The less able man, whose record was not quite as efficient, quite as successful, got the land.

A few years later I saw Professor Black. He said the buyer had lost the farm. It was in line with his own projection at the time.

I just cite that as an incident. This can't be unique about the College of Agriculture at Cornell. I think this is being done in all of the State agricultural colleges. I think they do have elaborate records of the profits and losses, the inputs and output results of the operations of these farmers. It might be that someone could look over those records for the kind of thing that this committee is investigating. It would be very useful.

Senator HUGHES. Thank you very much, Dr. Gates.
Thank you, Mr. Chairman.

Senator STEVENSON. Professor Gates, you taught at Cornell for a long time, and it is one of the great land grant colleges. Can you tell us anything about the effect of land grant colleges on either the retardation or the acceleration of concentration of landownership and the evolution of agriculture business in the country?

Mr. GATES. It is my judgment that agricultural economists generally speaking, and I have known exceptions, that agriculture economists teaching in land grant institutions are concerned with profits and losses rather than human problems. I would like to stop there on that issue.

Senator STEVENSON. Do you know any communities in this country that it would be useful to look at in order to learn a little bit more about the effect of agriculture business? I am thinking of some hypothetical community, some hypothetical rural community which has land acquired by large corporate farms.

We have heard testimony about the effect that corporate farming has on the little merchants in such communities, on the small bankers, the farm supply dealers, equipment dealers, civic activities, churches and so on. Can you think of any communities in the country that could afford us the opportunity to study the effects of corporate farming?

Mr. GATES. The case you cited, Senator Stevenson, of the Kern County Land Co., is really unusual. In the first place that land has always been in the hands of, first, Haggin and Tevis and then the present Kern County Land Co. which is a subsidiary of Tenneco. I was in touch with the authorities of that company when it was an independent company. In fact I thought at one time I would like to write a history of it because its records I suspect are fairly complete.

The company officials replied that they would do everything they could to aid me. But other things came up and I have not pressed the

matter.

No; I really don't know of comparable instances of that sort. It seems to me this is a little unusual because it was primarily, although its profits were much larger from oil, a farming company. Another

is the Tejon Land Co. which is just south of the Kern County Land Co., in Kern Co. and partly in Los Angeles County.

I see their reports regularly. That is still a relatively small company. It does not seem to be tied in with any large company such as the Tenneco Co. and the Kern County holdings.

The Southern Pacific has a huge owning, part of which I understand is farmed. But the Southern Pacific has never been inclined to open its records. It may be one of the few railroads that has not. Most railroads today are anxious to have their histories written, indeed many of them have hired historians to write them, letting them have their records.

Senator STEVENSON. The law does not intend farms of more than 160 acres to benefit from Federal irrigation and land reclamation projects. Why has not that law worked?

Mr. GATES. A married man under the law and under the interpretation of the law may have water for 320 acres, as I understand it. Senator STEVENSON. Is that the principal reason?

Mr. GATES. That is the only exception.

Senator STEVENSON. That is the only exception. Is that the reason? Mr. GATES. There are various reasons why the Government has allowed the public water provided by the expenditure of billions of dollars to benefit large owners, contrary to the intent of Congress and the fundamental purposes of reclamation legislation. I judge that the major reason is that the public officials have been reluctant to enforce the excess lands provision of the law by compelling the large owners to dispose of their surplus lands to small holders.

Senator STEVENSON. The law has not worked very effectively I gather.

Mr. GATES. No; it has been quite ineffective.

Senator STEVENSON. I thank you again, Professor Gates, for being very helpful to us this morning, traveling a long distance to be here. Mr. GATES. Thank you, Mr. Chairman.

Senator STEVENSON. Our next witness is Mr. Charles Frazier representing the National Farmers Organization.

The NFO as we all know has been concerned about the problem of family farmers in the country. Its membership is daily coming up against these problems which we have been discussing this morning. I thank you for your willingness to come here and help us with the benefit of your views, experience, and observations.

STATEMENT OF CHARLES FRAZIER, DIRECTOR, WASHINGTON STAFF, NATIONAL FARMERS ORGANIZATION

Mr. FRAZIER. Thank you, sir. By way of introduction may I say that President Staley would have liked to be with you here today and at one time had planned to do so but some rather unavoidable conflicts made it rather difficult; he couldn't make it. Further by way of introduction may I say that I spent a little better than 30 years in the Department of Agriculture. I have only recently become associated with the National Farmers Organization and welcome this opportunity to appear before you.

By reason of my previous experience and background perhaps I can be of some help to you on questions other than those that may be covered by our prepared statement.

69-133 O 72 pt. 27

Mr. Chairman and members of the committee, I appreciate the opportunity to appear before you today in behalf of the National Farmers Organization because of the direct relationship between the major goals of our organization and your interest in the migratory labor group that is so important in the whole pattern of agricultural production.

The National Farmers Organization was first formed in October of 1955, essentially as a protest group concerned about the prices of major agricultural commodities prevailing at that time. In recent years, the organization's major effort has been devoted to collective bargaining for better prices and terms of sale for its members under authority of the Capper-Volstead Act of 1922 and related legislation. We are actively engaged in the marketing of most major agricultural commodities in various areas throughout the 48 contiguous States.

As these bargaining activities have expanded and we have gained experience, our officers and membership of the organization have become keenly aware of the recent rapid rate of expansion into the field. of farm production by many large corporations and conglomerates. In our opinion, this trend of recent years threatens the very existence of the family owned and operated farm unit that has played such an important part in our American economy throughout the history of this country. We believe a large proportion of these family farms are efficient and they are still important in the whole chain of food production for our people.

In some instances, large corporations or conglomerates appear to have entered agricultural production only as an act of business judgment, seeking diversification for the deployment of their resources.

In other instances, large corporations whose principal business is in the food processing, distribution, and retail field evidently have entered into agricultural production in the belief that they are gaining certain economic advantages over their competitors.

For example, Del Monte Corp. claims to be the largest producer of canned fruits and vegetables in the world. It also has become a very large farmer through the ownership and operation of thousands of acres of land in California and elsewhere. The company operates processing plants here and abroad. They own restaurants, can manufacturing facilities, trucking concerns, an ocean terminal, a label printing outfit, and many other operations that may relate directly or not at all to food processing and sales.

Our organization recently published some of the corporate connections of the Ralston-Purina Co., the largest of the poultry and hog integrators. This step was taken simply to inform our membership of the tremendous competitive advantage enjoyed by a large corporate structure when it chooses to compete at the producer level-and to illustrate the necessity of farmer cooperation in a barganing effort they themselves control and operate. Directors of the Ralston-Purina Co. hold positions with Kidder, Peabody & Co., the New York investment house; General Motors, which needs no introduction here; the Royal Bank of Canada; NBC; RCA; Texas Gulf-Sulphur; R. H. Macy & Co.; certain electric utilities and railroads here and in Canada-in short, a Who's Who of the American financial establishment.

Such widespread influences existing within the management of a single large corporate structure provides almost unlimited resources

and a special form of buying power for machinery, chemicals, fertilizers, and other requirements of production. It certainly enhances the competitive advantage over individual farm owner-operators in a manner that almost defies description.

The National Farmers Organization has advocated the passage of legislation that would require corporations of the type just described to divest themselves of all interest in the ownership and operation of agricultural land and production facilities. We will not belabor the point at this time, nor will we initiate a discussion as to why the Department of Justice and the Federal Trade Commission have not taken an active interest in the antitrust or antimonopoly aspects of the large corporate farming operations. It is intended to show that there are several aspects of the development relating directly to the status of migrant workers who constitute the bottom of the personnel ladder in our whole food production and marketing setup.

A major point to be made is the possible loss of a whole class of capable farm management personnel in this country-and I refer again to the experience of Ralston-Purina. It is well recognized that independent integrators and a number of large corporations converted the production of practically all broilers in this country from the independent farm producer type of agriculture to the centralized factory type of production in a period of less than 15 years.

In the October edition of Broiler Industry, an extensive account of interviews with the management of Ralston-Purina describes the history of the company's experience in broiler production. This review was sparked by the company's announcement on September 16 that it was seriously considering divestiture of all broiler production facilities. It reportedly would sell $40 to $50 million worth of broiler inventory, plants, and equipment.

As late as the mid-1950's Purina still sold all chicken feed through their local dealers. The dealers were drawn into heavier commitments in financing production by the depressions in 1957 and 1959. It moved first into a stage of joint venture operation with the dealers who, in turn, were contracting with growers. In 1961 the company proceeded to a full integration of feed production, hatcheries, egg and turkey production, broiler processing, and distribution.

New sales of Ralston-Purina Co. increased from $647 million in 1961 to $1.57 billion in 1970-these sales are expected to reach the $2 billion level this year. The company is now involved, in addition to being the largest single livestock feed producer in the United States, in soybean processing, pet foods, restaurants, and a broadened line of consumer food products. The decision to dispose of the broiler business apparently was reached in a logical businesslike manner-they have concluded that broiler prices are cyclical and the return on investment does not measure up in comparison with other phases of the business.

In other words, the Ralston-Purina executives have discovered something that thousands of small producers also learned the hard way before they were forced out of production. A decision also was made to dispose of the egg production facilities. The company will retain its turkey production setup and certain facilities to market broilers and Cornish hens. There are no reports that the company effort to produce hogs will be dropped.

If this announced intention to dispose of some of its production and processing facilities represents a probable trend during the next few

years in the management decisions of some corporate structures who have entered agricultural production, one may draw certain conclusions. In practical terms, this corporation participated effectively in displacing a large proportion of the owner-operators who were producing a needed food product. It would be nearly impossible to reinstate owner-operators in this field once they have been broken or forced to move to other types of income.

Management know-how has been lost at the farm level. Now it is endangered at another level as production hereafter will be concentrated in even fewer hands. It would appear that competition between the giants will be lessened when some of them drop out of the gameand it is readily apparent that only very large, well-financed buyers can consider purchases of the magnitude contemplated by RalstonPurina. Several questions immediately come to mind: Is the longtouted efficiency of bigness really all that it is cracked up to be? Can the corporate structure provide the knowledgeable management necessary to cope with the many varied hazards involved in agricultural production?

If they undertake it, wipe out the family farm structure and then fail to produce at reasonable prices, will the consumer then be provided with food produced by only a few corporate giants at prices such as we have in prescription drugs today? In some instances consumers are already offered foods that are tasteless and uninteresting because they have been developed largely to satisfy the requirement of mechanical picking and packaging. Must we look forward to more of this?

As an organization, we are convinced that the spectacle of large corporations monopolizing the food production field is a very strong possibility-we are not just crying "wolf." Ralston-Purina is already engaged in swine production. Cattle feeding has moved into very large lot operations in recent years. It is quite conceivable that a few of the conglomerate giants could move into cattle feeding and hog production, and thus place control of our whole poultry and meat supply in the hands of a very few people.

We urge that you consider the implications of corporate farming in agriculture, in its broadest sense. We do not mean to lessen or detract from your well-justified interest in the problems of the migratory worker. Actually, it is quite possible that many who have considered themselves small, independent farmers in the past are about to join the ranks of the migrant farmworker, at least from an economic point of view.

This is well illustrated by reference to the article by Washington Post staff writer Nick Kotz on October 5, 1971. In commenting on the problems of the low-income farmer who may undertake to compete with the large agribusiness corporations through the use of cooperatives, Mr. Kotz tells of the specific problems of the Cooperative Compesina. A small group of these ex-migrant workers are undertaking to produce and market strawberries using money loaned through an OEO program and the Wells Fargo Bank in California. Despite the assistance and the oft-repeated statements of interest in cooperatives and the problems of small farmers, it would appear that the Department of Agriculture would offer little, if any, assistance. In fact, when these small producers do undertake to reestablish themselves at a subsistence level, they may find the Department personnel in direct opposition.