today under marketing orders for all kinds of processing, you can see immediately, I think, the problem that would arise. The Department of Agriculture and, of course, this committee, has to be primarily concerned with the stabilization of pricing of agricultural commodities from the standpoint of income to the grower. That is the reason I raise the question. You heard my question to the Department witness a moment ago as to whether or not there might not be another way, somewhat more limited, to meet this particular problem? Do you have any suggestions in that area?

Mr. RUNZLER. I could not come up with anything right at the

moment.

Mr. SISK. The concern is what seems to me to be a rather blanket statement, "other processing." We are covering the field, because you discuss here about this prepeeled potato. You heard the comment also by Mr. Hedlund with reference to whether or not peeled potatoes become processed potatoes. Would they be processed, in your opinion?

Mr. RUNZLER. No, sir. I think-there are witnesses following me, but I think the definition after processor is one who materially changes the stability of product. Now, there are other people that are technically better versed in this than I am, but I think it would include or be a fairly accurate statement.

Mr. SISK. Could you give the committee briefly the range in costs or differentials in costs between a grade A, No. 1 grade, and that of a B size? What was your relative differential in cost in Klamath Basin?

Mr. RUNZLER. Because we did not attempt to purchase U.S. No. 1A size in the Klamath Basin area, I am really not familiar with their price structure up there. We simply-we will provide you with what the cost would be at a later date after we have had time to do some research.

Mr. SISK. It would seem to me that this would be of some interest to the committee. Let us assume for the moment that we went in the other direction in line with our discussion a little while ago with Mr. Hedlund and removed all exemptions from the law governing all products under Federal marketing orders. Would they all be in an equal competitive position?

Mr. RUNZLER. If you removed all exemptions, I think you would have chaos that would end up with a can of potatoes like this that normally sells for 10 cents a can on the shelf, if you remove all the exemptions it would end up even at today's inflated prices it could theoretically cost a dollar. If you control or removed all the controls and there were no exemptions granted and growers would get together, which is certainly part of the business in today's present competitive world, if that would happen the price of potatoes, in my opinion, would skyrocket. I think we would only be the first of many, many people parading to Washington, because I think it would be harmful. Mr. SISK. I take some exception to that remark, Mr. Runzler, because the law itself would set up the operation, and regulations under the Marketing Order Act. The Department of Agriculture and the Secretary certainly have responsibility not only to the grower, but also to the consumer. I would seriously doubt the validity of that argument. It might increase the price of that can to 15 cents or it might even increase it to 20 cents. This whole philosophy today with reference to the problems of agriculture and the admitted situation where

nationally agriculture today is getting a far smaller percentage of the dollar than other industries, raises the whole question of whether or not the growers should not be given some protection. He should have the right to make some determination as to what he is going to sell his product for and whether or not the price he receives meets the cost of production plus a decent living wage. This is the responsibility of the Department of Agriculture so far as agriculture is concerned. Do you agree?

Mr. RUNZLER. Yes; I agree.

Mr. SISK. That is all.

Mr. FOLEY. Thank you.

Mrs. May?

Mrs. MAY. Mr. Runzler, I, too, want to thank you for a well stated case. I think perhaps you already are aware of the problem we are running into, the practical problem in this subcommittee, of very widespread concern among potato producers throughout this country about the extent to which this proposed legislation goes. I gather from my own communications, and I am sure the other members of the committee have the same experience, that these producers feel as Mr. Hedlund said in his statement, and I quote: "The bill would significantly reduce the effectiveness of marketing orders as a means of strengthening returns to producers in view of the increasing quantity of potatoes going into the processing uses."

Now, admittedly there is always room for a difference of opinion as to how big a factor a marketing order is in setting the price of potatoes in any one area of the country. And you have made some statements about what happened on prices of potatoes in certain years, and I do not have the expertise or the facts to take issue with you, and I would not intend to. I will accept the study as made by Professor Wood and others.

What I would like to ask-did you, when you had the administrative regulations changed very suddenly on you, then did you look for other sources of potatoes for your firm in other parts of the country that might not be operating under a marketing order?

Mr. RUNZLER. We looked to other sources but the distances that potatoes would have to have been shipped to San Jose, for instance, from North Dakota, would just put us right out of business with regard to the price that it would cost us for the potatoes, for the raw material. Mrs. MAY. What, then, was the impact on those potato producers in the Klamath area from whom you had been purchasing your basic supply for the Pik-Nik Co.? I understand you could no longer purchase from them. What was their attitude on it?

Mr. RUNZLER. Would you-I really do not understand that question.

Mrs. May. Well, you were buying potatoes in the Klamath area. Mr. RUNZLER. Yes.

Mrs. MAY. Up until the time these changes in administrative orders were made. I assume that your inability to purchase potatoes in that area must have had some effect on the producers in that area from whom you had been making your purchases, right?

Mr. RUNZLER. Yes. They were not able to sell them because the order so stated that they could not ship they could not be shipped from that area.

Mrs. MAY. What I am trying to get from you, have they protested on your behalf the new change in the administration of this marketing order?

Mr. RUNZLER. No. We are not that large a user.
Mrs. MAY. I see.

Mr. RUNZLER. We are not a big fish, so to speak.

Mrs. MAY. The impact on them, then, was negligible as compared to the terrific economic impact on you.

Mr. RUNZLER. Yes.

Mrs. MAY. I would like to just follow very briefly one more question following up Mr. Sisk's line of questioning, and again I think I am not sure I understand your answer to this question, but I will ask it again, then.

If we did not extend exemptions beyond canning or freezing, which will be difficult to do, but if we do come up with a new definition of canning to include the particular process employed by you at Pik-Nik, that would be of help, would it not?

Mr. RUNZLER. Yes.

Mrs. MAY. And you have not explored with your attorneys or advisers this particular approach.

Mr. RUNZLER. We have met three times in Washington with the officials of the Department of Agriculture and they have been unrelenting in their position with regard to this particular definition or definitions that they gave to us.

Mrs. MAY. While Mr. Hedlund is in the room, Floyd, would you mind commenting on that while we are here? Is it possible for this committee, in your viewpoint, to possibly come up not with the farreaching legislation we have before us but a change in the canning definition that might give relief in this area, and what would be the implications?

Mr. HEDLUND. Mrs. May, certainly the committee and the Congress could change the definition of canning to include the process that Mr. Runzler has described or any other process. Certainly, that could be done and presumably give relief to those who were then exempted. Mrs. MAY. Thank you.

That is all, Mr. Chairman.
Mr. FOLEY. Mr. Jones?
Mr. JONES. No questions.

Mr. FOLEY. Mr. Goodling?

Mr. GOODLING. Thank you, Mr. Chairman.

Mr. Runzler, Mrs. May touched on this question that I was going to ask. You indicate that you operate in 13 States other than California. Mr. RUNZLER. Yes, sir.

Mr. GOODLING. Are you affected by marketing orders in any other area?

Mr. RUNZLER. No. We are not affected by the summer supply of potatoes. California does not have a marketing order where we get our summer potatoes. Does that answer your question?

Mr. GOODLING. Do you have plants in these other States or have potatoes shipped from those States into California?

Mr. RUNZLER. Into California. We have no other plants, just this

one.

Mr. GOODLING. From what I have read and heard of this regulation

from the Department, it objects primarily to the fact that you process your potatoes and then can them. Is that correct?

Mr. RUNZLER. Maybe Mr. Hedlund could tell me. Would you repeat that, please, sir?

Mr. GOODLING. I have been told, or at least I read somewhere, probably got this from the Department, that the objection that it has to your method of doing this processing is that you process your potatoes and then can them.

Mr. RUNZLER. Yes, sir. That is primarily correct.

Mr. GOODLING. Well, that brings me to another very important question. What is the status of the chippers in your area or do you not have chippers?

Mr. RUNZLER. We do, and I am sure there are other people here that are qualified to speak on that, sir.

Mr. GOODLING. I would think the Department, to be consistent, should apply the same rules and regulations to chippers because we all know that chippers are processed and then packed. They cannot be packed and then processed.

RUNZLER. Yes. I would agree. They should be consistent.

Mr. GOODLING. I think it is very important to give that thought some consideration because if the Department is going to be consistent, it must apply the same rules to both the chippers and the way you do your processing.

Mr. RUNZLER. That is what we are asking for, sir.
Mr. GOODLING. That is all.

Mr. FOLEY. Mr. Myers?

Mr. MYERS. Thank you, Mr. Chairman.

Mr. Runzler, I, too, think it is a very fine statement. I also serve on the Government Operations Committee and the research subcommittee of that committee last week held hearings for 4 days on the canning industry. One of the criticisms was, and I think the Department of Agriculture also testified to this, that canners were adding too much liquid, that they were not getting enough content in the cans, that they needed to reduce the amount of liquid. Now-I think I recall the Department of Agriculture saying this now they are critical because you do not put any liquid in. I wonder if the right hand knows what the left hand is doing. I am a little bit alarmed by what is happening here.

Mr. RUNZLER. So are we, sir.

Mr. MYERS. I can certainly understand. Are there any other companies besides you that are affected?

Mr. RUNZLER. By this marketing order?

Mr. MYERS. Yes.

Mr. RUNZLER. Not that I know of, sir.

Mr. MYERS. Any other processing companies?

Mr. RUNZLER. They can have a competitive advantage but to the best of my knowledge, there are no other companies affected by this marketing order.

Mr. MYERS. What is a U.S. No. 1 B? In size is it bigger than a walnut or

Mr. RUNZLER. May I ask Mr. Giacomini to generally describe the regulations.

Mr. GIACOMINI. U.S. No. 1 B was known in the trade as an egg,

about an egg sized potato, which is not adequate in size, although it might be adequate in condition or quality to the fresh market. It used to be destroyed or used for cattle feed rather than for the processing that Pik-Nik employs.

Mr. MYERS. And in Mr. Runzler's statement he said there was no other market for this particular potato. Now that you are not buying or cannot, what is happening to those potatoes now, by the producer? Mr. RUNZLER. Two things are happening to those particular size potatoes. In large measure they are being used as a cull type potato by a local starch plant in the area which is buying them for about 25 cents to the farmer and the farmer hauls them to the starch plant. Under the regulations for the 1968 crop pertaining to marketing order 947, some have been able to buy them. For example, the regulations for the 1968 crop permitted them to be purchased by freezers and canners of which we were considered not to be either, and some of those are being sold in that market. But generally speaking, they are just being dumped or sold for very little consideration at all.

Mr. MYERS. Well, now, you speculated a moment ago about the price and I think you took some figures off the top of your head. No doubt your company has gone into some projection. If you should have to go into marketing orders what would be the increase in the price?

Mr. RUNZLER. Well, we would rather provide those at a later time because I think that is a critical question you are asking and I would rather not give you an off-the-top-of-the-head answer to that question. Mr. MYERS. Off the top of the head, you mean you have not done any figuring on it?

Mr. RUNZLER. We have some figures on it but I have not got those with me and I would rather

Mr. MYERS. It is no accident that you did not bring this, was it?
Mr. RUNZLER. It was an accident, yes.

Mr. MYERS. I think I have heard enough. Thank you.

Mr. FOLEY. Thank you very much, Mr. Runzler.

The Chair would like to note the presence in the hearing room of the distinguished chairman of the full committee, Mr. Poage.

At this point, I think we may have to consider the possibility that we are not going to approach the end of the witness list by noon. The hearing will reconvene at 2 o'clock this afternoon under the chairmanship of Mr. Sisk of California. I regret that I am scheduled to be in New York this afternoon and will not be able to continue myself, and Mr. Sisk will continue. Is there anyone who would find it impossible to be here this afternoon? If not, we will proceed with some variance in the witness list. I am going to call on Mr. Ralph Harding, director of the Dehydrated Foods Industry Council. Mr. Harding is a former Member of the Congress and a distinguished former member of this committee. We are very happy to see you.

STATEMENT OF RALPH HARDING, DIRECTOR, DEHYDRATED FOODS INDUSTRY COUNCIL, EMERYVILLE, CALIF.

Mr. HARDING. Thank you, Mr. Chairman. Mr. Chairman and members of the committee, I wish to thank you for the opportunity I have of appearing before this committee in support of H.R. 11243, which

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