tional requirement of H.R. 14687 that the inspection of the grading of shell eggs be provided as well as of the processing of eggs into egg products.

H.R. 14687 would require the continuous inspection of the grading of eggs in all establishments having equipment with a rated capacity of grading 2,000 or more cases of eggs each week if operated 80 hours each week. In addition, plants of lesser capacity would be required to be registered with the Secretary of Agriculture before any eggs could be graded in such plant, and the Secretary would be required to refuse certification unless, on the basis of an inspection made, he determines that there is satisfactory assurance that the plant is equipped, staffed, and managed to comply with the requirements of the act and the regulations issued thereunder. The Secretary is also authorized to suspend the certificate of registration for failure to comply with the requirements of the act.

The provisions of H.R. 14687 which would require the inspection of the grading of shell eggs are not clear and the objective is obscure. From the language of H.R. 14687, it would appear that an official inspector would be required, under the Egg Products Inspection Act, to be present to inspect the grading of eggs. There appears to be no clear provision in the bill which would mandatorily require the grading of shell eggs. H.R. 16092 is a bill designed to provide inspection for wholesomeness, whereas egg grading is a quality determining function.

Section 28 (b) of H.R. 14687, however, would terminate voluntary egg grading carried out under the Agricultural Marketing Act of 1946 on the date "on which eggs *** are required to be inspected and graded" under H.R. 14687. The clear implication of this statement in the section of the bill establishing an effective date, is that the measure would somehow require the mandatory grading of shell eggs by an official inspector.

If the bill is interpreted to require the mandatory grading of shell eggs, the bill goes far beyond the matter of inspection for wholesomeness and injects an entirely new issue-namely, the mandatory grading for quality. It would go far beyond other inspection bills for wholesomeness, such as the Wholesome Meat Act or the Poultry Products Inspection Act.

The question of mandatory grading for quality is not involved in H.R. 16092. We do not believe that an issue such as mandatory grading should be considered because it is a matter which, in our opinion, would require extensive investigation and hearings on that particular question because of its far-reaching impact.

Mr. Chairman, we believe that the bill, H.R. 16092, is a sound and workable measure to provide for an effective program for the inspection and regulation of eggs and egg products and we support its enactment. We hope that the committee will act promptly to get this legislation before the House so that it may be enacted during this Congress.

Thank you, sir.

Mr. STUBBLEFIELD. Thank you, Mr. Ford.

Are there any questions?

Mr. WAMPLER. Mr. Ford, does this proposed legislation place any additional burden on the family-type farmer or producer of eggs?

Mr. FORD. To a degree; yes, it does. We have visited with a number of small, what we call on-farm producers of eggs on this very point. There is one classification of eggs included in the terminology of restricted that will have some financial effect on the industry. That is the checked eggs. It is estimated checked eggs will run 4 or 5 percent in our industry today. The producers recognize that this means that an egg that is now moving through retail outlets at the going market will now have to move to breaking plants for further processing, or the bill does provide for the on-farm producer to sell his eggs to a consumer who drives up to his farm and purchases for his own family needs, not for resale but for his own needs.

Most of our producers have accepted the fact that here is an outlet. They can continue to move this egg to a consumer who purchases at the farm, plus the fact they say we will have to do a little better job on our farms. You can hardly stay in business producing 4 and 5 percent rejects, anyway. We believe the bill will have an effect on the producer, and he will do a better job of handling his eggs. It is hard to measure the economic impact for this reason: We make our profit producing grade A eggs. We do not stay in business producing undergrade. For each undergrade egg we take out of the egg shelf on the retail store, we are making room for grade A.

Our producers have taken the position that this may be good for us in the long run. It will take an undergrade egg out of the market which is now competing with the "A" grade.

Mr. WAMPLER. Many of the States have enacted laws which would prevent the family-type farmer or the farm wife from taking a dozen or two dozen eggs to the general store and getting a due bill for them. Do the eggs not have to go through a processor or grader before they can be marketed?

Mr. FORD. Many States still permit selling a sack of eggs, if you please, to a local merchant. Most States have laws that prohibit this, but they have not been able to enforce them. They just do not have the manpower. The chairman represents a State that has a law on its books that is unenforceable. Legally we are not allowed to sell a sack of eggs to a retail store.

Mr. WAMPLER. I appreciate your testimony. I was interested in the economic impact of the legislation. I appreciate your response. I think it important that we have this in the record.

Mr. FORD. We cannot really measure the effect. We hope that by providing a better quality egg at the retail level, at all levels, we will be able to net more return for our effort.

Mr. O'NEAL. Mr. Ford, what is a checked egg?

Mr. FORD. An egg has a shell, and then inside the shell is a membrane that holds the contents of the egg intact. If an egg has a broken shell, normally the membrane is also broken and the egg contents may ooze out of the shell. A checked egg means an egg with a shell which may have a slight, hairline check; yet the inside membrane is still intact and holds the contents together.

Mr. O'NEAL. So it is not leaking.

Mr. FORD. It is not leaking.

Mr. O'NEAL. This egg is still wholesome, without any danger of salmonella.

Mr. FORD. We are not aware of any evidence available to our industry that a checked egg is a health hazard. Cornell University has done a great deal of research which indicates it is not a health hazard. The checked egg is now included in the restricted classification primarily because if it is a checked egg at the farm level, there is a possibility in the movement of the product in the channels of trade, shipping to market, it could become a leaker.

Mr. O'NEAL. As I understood your answer to Mr. Wampler, the biggest effect this bill would have on the small family-type farm is that the checked eggs would now have to go into the liquid trade.

Mr. FORD. If a producer has a high percentage of checked eggs, he will anticipate moving eggs to the breaker in order to salvage some revenue. However, sir, he can continue to sell that egg to the consumers, his neighbors who drive up to the farm to purchase.

Mr. O'NEAL. Besides that, it would not be a total loss to him. It would not be a full loss. He could still get something.

Mr. FORD. That is correct.

Mr. O'NEAL. Is there anything else in this bill that will hurt the family-type producer? This is the biggest thing you see, but are there others?

Mr. FORD. If Mr. Purcell's bill were to pass, it would be a great impact on the small farm producer, because this bill goes one step further and would require mandatory grading. This would put a hardship on a small producer who would have to apply for and have a volume great enough to justify an inspection program.

If H.R. 16092 is approved, it would not require the family farmer to have grading, because we are removing from the channels of trade the classification of eggs that are suspect as a health hazard.

Mr. O'NEAL. Somebody this morning-I cannot put my finger on it made a distinction between producers who exceed 2,000 cases a week.

Mr. FORD. Yes. Mr. Purcell's bill would exempt the producer who has less than 2,000 cases.

Mr. O'NEAL. Does that mean Mr. Purcell's bill would exempt the small family farm?

Mr. FORD. I think that would probably be the interpretation. As an industry organization, I think our position would be that 2,000 cases a week is a pretty good volume when you multiply that by the number of producers. If a problem exists, it will not solve the problem to give exemption to the 2,000-case producer. That is a sizable production.

Mr. O'NEAL. You give considerable emphasis to the purposes of the bill, to provide wholesomeness and not necessarily taste. Yet, as I understand it, all Hawaii is asking for is an exemption that would affect taste rather than wholesomeness. Will you tell us again what the Senate committee said concerning this exemption?

Mr. FORD. Their comments were basically that the source of eggs, where the egg is produced, is not a determining factor of egg quality. That is not a factor in deciding if an egg is wholesome or not. They go on to point out:

If a State is concerned about the quality of eggs from another State, this can be determined adequately by egg law officials conducting a check grade on the eggs. If a State wishes to promote its own eggs or inform consumers as to the source of supply of eggs, it can adopt, either on a mandatory or voluntary basis, a regulation providing that eggs produced and sold within that State may be labeled as such.

Mr. O'NEAL. As I understand, the bill, H.R. 16092, on page 32 specifically says it cannot.

Mr. FORD. It would not permit a State to have a law on eggs coming into the State. It does provide for a State to have a voluntary promotional type program.

Mr. O'NEAL, I see.

Mr. FORD. Hawaii could change its law.

Mr. O'NEAL. So that they then labeled their own eggs rather than the ones coming in, and have the same effect.

Mr. FORD. That is right.

Mr. STUBBLEFIELD. Any other questions?

(No response.)

Mr. STUBBLEFIELD. Thank you very much, Mr. Ford.

The next witness is James K. Presnal, attorney at law, from Austin, Tex., representing the Texas Egg Producers. Mr. Presnal, we are glad to have you with us.

STATEMENT OF JAMES K. PRESNAL, ATTORNEY AT LAW, AUSTIN,

TEX., REPRESENTING TEXAS POULTRY FEDERATION; ACCOMPANIED BY JACK M. DUBOSE, PRESIDENT, TEXAS EGG COUNCIL, GONZALES, TEX.

Mr. PRESNAL. Mr. Chairman and members of the subcommittee, if I might, I would like to have the president of the Texas Egg Council present at the table. I would like to introduce Mr. Jack Dubose, president of the Texas Egg Producers Association, from Gonzales, Tex.

Mr. Chairman and members of the subcommittee, I have prepared a statement which has been filed, and suggested amendments are attached to the statement. The statement and the amendments are directed to the bill S. 2116, on the presumption by myself that that would probably be the vehicle which the committee would choose to use to move whatever legislation you finally decide upon through the committee and to the House floor. But these remarks relate to all the bills which you have under consideration.

The bills which you have under consideration have been closely examined by the affected egg producers, which are members of the Texas Poultry Federation, and both questions and suggestions have resulted therefrom.

The Texas Egg Producers, with the same object in mind as these bills have, insofar as shell eggs are concerned, went to the Texas Legislature in 1969 and obtained the passage of an amendment to the then existing Texas egg law. This was done to help insure that the Texas consumer got what they paid for. By insuring that the

consumer got good eggs, we felt that the consumption of eggs would increase.

The old Texas egg law already provided that standards of the U.S. Department of Agriculture as to quality and size would apply, but the old law permitted the sale of ungraded eggs. The amendment adopted in 1969 did not completely eliminate the sale of ungraded eggs, but did reduce the amount considerably.

At this point I would like to deviate momentarily to comment on the question Mr. Wampler asked about the effect on small producers in a man-wife farm operation. In the passage of our bill in 1969, we originally had written the bill to eliminate completely the sale of ungraded eggs at the retail level. However, we found there were still a good many mother and dad type operations that traded their eggs at the local grocery store in Texas, and we encountered a great deal of opposition. As a result, we had to exempt limited quantities of this type of transaction from our bill in order to get it passed.

Secondly, the amendment to the Texas egg law provides for an inspection fee of 3 cents per 30 dozen case to be paid by the person first establishing the grade of the eggs sold in Texas. This 3-cent inspection fee is to provide the Texas Commissioner of Agriculture with funds to carry out an effective enforcement program of the Texas egg law. In this connection, it should be noted that the Texas enforcement program as to grade and size of eggs is carried out at the consumer level rather than at the grading level.

Commissioner White, in the 12 months since the new Texas egg law went into effect, has hired, trained, and put into the field 16 inspectors who check the eggs sold in Texas in the retail store. Eggs which fail to meet the grade and size claimed upon spot checks immediately are placed under a "stop sale order," along with all eggs of that same lot, and removed from the grocer's shelf. This program has already resulted in a noticeable improvement in the quality of eggs sold in Texas, for not only does the quality have to be there when graded, but eggs must be sold or removed from the shelf regularly as the natural deterioration will result in their falling below the grade claimed, thereby subjecting them to the ever-present possibility of a "stop sale order.'

There has been some question as to whether the 3-cent inspection fee referred to above would be affected by the passage of S. 2116, and replies to our inquiries directed to the U.S. Department of Agriculture personnel have been in the negative.

In order to maintain all regulation of the egg industry in one agency, we would like to see an "equal to" provision included in the bill. Attached hereto as exhibit 1 is a provision which would bring this egg bill into line with the Meat and Poultry Inspection Acts adopted by the Congress several years ago.

Our producers questioned the desirability of including "checked eggs" in the definition of "restricted eggs"; as checked egg sales produce a certain amount of needed income, and small isolated producers and packers must have a market for these eggs. There are no breaking