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Testimony of Fred L. Dailey_ Dir

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					                                      Testimony of
                                Fred L. Dailey, Director
                            Ohio Department of Agriculture
                                    on behalf of the
                National Association of State Departments of Agriculture
                                        before the
                           House Agriculture Subcommittee
                            on Livestock, Dairy and Poultry
                             U.S. House of Representatives
                                      June 6, 1996

re: Repealing the Unfair Prohibition of the Interstate Shipment of State-Inspected Meat & Poultry
    Products


Thank you Mr. Chairman and members of the Subcommittee. I am Fred L. Dailey, Director of the Ohio
Department of Agriculture. I also serve as Chairman of the National Association of State Departments of
Agriculture (NASDA) Food Regulation and Nutrition Committee. NASDA is the nonprofit organization
representing the Commissioners, Secretaries, and Directors of Agriculture from the fifty states and four
territories.

THE ISSUE
The issue before the Subcommittee today is of extreme importance to the states and thousands of small
business operators — the removal of the unfair prohibition of the interstate shipment of state-inspected meat
and poultry products. The question before Congress is whether it is time to create a level economic playing
field for all meat and poultry processors — both large and small — or continue the legislated economic
advantage for large corporations and foreign competitors at the expense of U.S. small business owners and
operators. As stated on many occasions by NASDA, the issue of interstate shipment of state-inspected meat
and poultry products is not a food safety issue, rather an economic issue.

The issue is simple: we as state Commissioners, Secretaries and Directors of Agriculture are asking you to
provide the same opportunity for small business owners and operators that exists for large corporations and
foreign competitors. Opponents of the legislation are asking Congress to maintain a legislated economic
advantage enjoyed by large corporations and foreign competitors at the expense of small business owners
and operators. What we are asking you to do is level the playing field and pass legislation in this Congress
to repeal the unfair prohibition on the interstate shipment of state-inspected meat and poultry products —
the only such food prohibition which exists today. For instance milk, cheese, ice cream, alligator steaks, and
buffalo jerky are all inspected by state programs and can be shipped in interstate commerce.

We sincerely appreciate the fact that this subcommittee is considering this issue. It is our strong desire that
Congress move on this issue this year. We could all go back to the hearing record of September 28, 1994
and find nearly the same testimony by NASDA, the National Association of State Meat and Food Inspection
Directors (NASMFID), the United States Department of Agriculture (USDA), the American Meat Institute
(AMI), and the National Broiler Council that you will hear today. It is time to stop talking, and start acting.
In the last three years, approximately 400 small- and mid-size meat and poultry processors have gone out of
business, many because they are unfairly prohibited from interstate commerce. The loss of many of these
mostly rural businesses and the jobs and economic activity they created could have been prevented if
Congress would have allowed them the same access to interstate markets that is given to large packing
conglomerates and foreign competitors

While we were very pleased that the 1996 Farm Bill was signed into law, we are disappointed that it did not
repeal the unfair prohibition on the interstate-shipment of state-inspected meat and poultry products.
Elimination of the unfair restrictions on state-inspected meat and poultry processors would stimulate the
creation of thousands of jobs, mostly in small rural communities. Dr. Dan Otto, an Iowa State University
extension livestock economist, estimates a 1 percent increase in state-inspected meat and poultry processing
would create 29,000 jobs throughout the economy, including 8,000 in processing and livestock and poultry
production. Since the reverse is likely to provide the same outcome in a negative fashion, by not repealing
the prohibition, the 1996 Farm Bill not only failed to stimulate rural economic activity by allowing small
business owners a chance to compete nationwide, but also continued to place downward economic pressure
on rural America.

You will hear from USDA today. They are likely to tell you they have no problem with the concept of
interstate shipment of state-inspected meat and poultry products, but “the time is not right.” I would suggest
that the timing has never been better or more important, unless it was three years ago when there were still
nearly 400 more small- and mid-size business operators feeding their families and employing others.
Eliminating the unfair prohibition by the 104th Congress is crucial to rural America. Without passage of
legislation this year, many more small packers and processors are going to be forced out of business because
of the legislated economic disadvantage they are faced with. Further, unless this Congress repeals this unfair
prohibition, many of our state programs are in jeopardy of being eliminated. These plant owners and the state
programs cannot wait for the next Congress to act, or “when the time is right” as defined by some
Washington bureaucrat. They will be out of business because Congress failed to provide them with the same
opportunity given to large corporations and foreign competitors.




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You will also hear today from the major opponents to free and fair trade within the United States. AMI,
NBC, the National Turkey Federation (NTF) and their huge conglomerate members like will attempt to make
you believe they cannot compete with small, state-inspected, mom and pop operations if those state plants
are allowed access to the same markets enjoyed by the large federally-inspected plants and foreign countries.

SUPPORT FOR PASSING H.R. 3646 IN THE 103RD CONGRESS
Congress was been asked by many people in the 103rd Congress to pass H.R. 3646, a bill in that Congress
which would have repealed the unfair prohibition. Over 440 cattle producers from California, Colorado,
Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, North Dakota, South Dakota, Texas, and
Wyoming asked for Congress’ assistance in July, 1994. Later that same month, over 4,600 individuals from
Arizona, California, Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota,
New Jersey, Ohio, Texas, Washington, DC, and Wisconsin asked for Congress’ help in passing that
legislation.

In August, 1994 over 535 owners and operators of meat and poultry packing and processing facilities and
suppliers of those businesses from the 36 states of Alabama, Arizona, Arkansas, California, Colorado,
Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan,
Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia, Vermont, Washington
and Wisconsin sought Congress’ help. And in September, 1996, an additional 120 individuals from Illinois
and Wisconsin asked for your help.

In addition to those thousands of people asking for your help, many people and organizations wrote letters
during the 103rd Congress. And, there were 53 agricultural organizations belonging to the Coalition for
Equitable and Fair Interstate Commerce (CEFIC). The purpose of the coalition was to seek passage of H.R.
3646 by the 103rd Congress. Members of CEFIC were:

Alabama Farmers Federation                                Meat and Poultry Association of Hawaii
American Association of Meat Processors                   Michigan Meat-Food Group
Arkansas Meat Plant & Locker Association                  Mid-States Wool Growers
California Association of Meat Packers                    Montana Board of Livestock
California Association of Meat Processors                 Montana Meat Processors Association
Farmers Livestock Cooperative (HI)                        Montana Wool Growers Association
Food Marketing Institute                                  National Association of State Departments of
The Herman Falter Packing Company                          Agriculture
Illinois Lamb and Wool Producers, Inc.                    National Association of State Meat & Food
Illinois Meat Processors Association                       Inspection Directors
Indiana Meat Packers and Processors                       National Country Ham Curers Association
Iowa Meat Processors Association                          National Farmers Union
Kansas Meat Processors Association                        National Grange
Kansas Ostrich Breeders Association, Inc.                 Nebraska Association of Meat Processors
Kansas State Grange                                       New England Meat & Food Processors
Livestock Marketing Association                            Association
Louisiana Meat Industry Association                       New Mexico Association of Meat Processors
Louisiana Pork Producers Association                       Association, Inc.
Louisiana Sheep Producers Association                     North Carolina Meat Processors Association
Maryland Association of Meat Processors                   Northwest Meat Processors Association

                                                     3
Ohio Agricultural Marketing Association                            Wisconsin Sheep Breeders Cooperative
Ohio Association of Meat Processors                                Wyoming Meat Processors Association
Ohio Farmers Union                                                 Wyoming Wool Growers Association
Ohio Power Equipment Dealers
Ohio Seed Dealers’ Association
Ohio Swiss Cheese Association
Oklahoma-Texas Meat Processor’s Association
Pennsylvania Association of Meat Processors
South Carolina Association of Meat Processors
South Dakota Association of Meat Processors
Texas Association of Meat Processors
Utah Meat Processors
Virginia Association of Meat Processors, Inc.
Wisconsin Association of Meat Processors

THE NEED FOR CONGRESSIONAL ACTION CONTINUES
Those who are left in business, still beg Congress to help. Let’s look at what small plant owners are saying:

       “Why do you insist on penalizing, crucifying and eliminating small business packers? We want
       a level playing field and parity such as federal packing plants enjoy.”
           -- Robert J. Eiel, Chairman of the Board; Walker Farm Fresh Meat; Cottonwood, Arizona

       “As a small operator who employs several people, I am at a disadvantage with the USDA because
       of my small size.... I do not believe that it was the intent of the framers of the constitution to
       discriminate against people like me, but it is happening! All I want to do is make my product and
       sell it in a fair marketplace.”
           -- Fritz Scherz; German Sausage Co.; Phoenix, Arizona

       “If the ban was lifted we could expand our business which would allow us to hire more people.
       In return this would generate more revenue and more jobs”
           -- H. Ray Quillen; Delaware Maid Scrapple; Felton, Delaware

       “Our business, which is located in Florida, is in jeopardy of losing our largest customer (10% of
       our total business) because we are unable to meet their requirements as they expand into
       Georgia.”
           -- Alan Krutchik, President; Kaye Bros., Inc.; North Miami Beach, Florida

       “We are a family owned meat business, just trying to keep our heads above water. You know
       how difficult it is for small businesses to be competitive with the much larger markets; we
       continue based only on the hope that each year will be the year to actually make a profit. But to
       have our own government sabotage us is a bit much.... You are actually tying the hands of
       American small business owners by not granting us the same courtesy that you grant others. We
       as a people talk about the American dream, is the American dream now only for other countries?
       We are asked to make jobs available for others, how would you suggest that we do this when it
       seems that we keep getting overlooked? We are not asking for a freeze on the other countries
       products, just a fair chance to compete.”
           -- Flora E. (Redditt) Wood, Accountant; Redditt Custom Meat; Orlando, Florida



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“This ban hurts small businesses like mine and threatens to force us out of business. The
discrimination allows the large meat packers and poultry processors to have a big marketing
advantage.”
   -- Charles P. Menendez, President; City Meat Company; Tampa, Florida

“Why are the state inspected houses treated as a step child?... We must take care of the businesses
that are in this country. These are the businesses that generate jobs in this country. Remember
jobs mean more taxes to this government. More jobs mean less welfare.”
   -- Isidore Rosa, President; Rosa Brothers, Inc.; Miami, Florida

“We are a family-owned business that prides itself on high standards of quality and customer
satisfaction. Many of our customers are large hotel chains that would like us to create signature
items specifically for use in their properties across the United States. The prohibition on
interstate shipment of state-inspected meat and poultry products severely limits our ability to
accommodate this demand and therefore greatly restricts our growth, profitability and ability to
create new jobs.... While foreign businesses may sell their inspected meat products throughout
the United States, PFI Foods, Inc. and other state-inspected facilities cannot. This is grossly
unfair as we are required to meet the same standard of sanitation and hygiene in our facility as our
competitors in Mexico, Canada and other foreign countries.”
   -- Michael S. Pollak, Vice President - Operations; PFI Foods, Inc.; Miami, Florida

“As long time owners and operators of a meat processing plant, we feel it imperative to stress the
impact and detrimental economic effects of the prohibition of the sale of product (from state
plants) in interstate commerce. This prohibition clearly provides an unfair marketing advantage
to large corporations and even the foreign competitors.... This unfair restriction has already
caused devastating results (plant closings) and is a serious and real threat to impair others to the
point of closing.”
   -- Vernon and Ruby Chambers; Chambers Slaughterhouse; Blairsville, Georgia

“We pride ourselves on providing our customers with a quality product delivered with small town
service. It seems unfair that our state standards must meet or exceed federal standards and yet
we are not allowed to practice interstate commerce. Even foreign countries are allowed to
distribute their products throughout the United States!... Please take action before we find
ourselves unable to remain in business.”
   -- Eldon J. Steidinger, Brian E. Steidinger, and Bradley J. Steidinger; Forrest Meat, Inc.; Forrest, Illinois

“We are located only 20 miles from the Indiana border and cannot sell our products; but if we
travel 300 miles to Carbondale, Illinois, we can. Our establishment has to abide by the same
requirements as USDA inspected plants, but we are not entitled to the same privileges for some
unknown reason. We feel [this] is very unjust. By removing this prohibition it would give small
meat packers a chance to compete in the interstate market that is now monopolized by the large
packers and help small businesses like ours stay afloat in this competitive market.”
   -- Richard S. Whittingham, President; Whittingham Meats; Alsip, Illinois

“We are in Chicago’s African-American neighborhoods, and 95% of our employees are
minorities. Without the limitations we could hire more employees. As it stands now, there’s the
possibility of our going out of business, costing many who are now employed their jobs.”
   -- Barry J. Levy; Moo & Oink, Inc.; Racine, Madison, and Stony Island, Illinois



                                                        5
“We are a family owned pizza business and we could boost employment and sales if we were
allowed to go to neighboring towns.”
    -- John A. Winiecki, Secretary; Bob & Jack’s Pizza, Inc.; Chicago, Illinois

“We are a very small locker plant and we cannot afford more expense. As more and more small
packers and processors go out of business because of the unfair interstate prohibition, the
concentration of the huge conglomerates will only increase.”
    -- Gladys Rhodes, Manager; Hancock Frozen Foods Corp.; Carthage, Illinois

“We employ 18 employees with 3 to 4 additional seasonal employees. Our business is important
to the economic viability of our community.... As we are faced with increasing costs of labor and
supplies, we must be able to seek out new marketing opportunities to stay in business. If the
number of small processors decrease, the large conglomerates will be able to take over the entire
meat supply. Obvious signs of packer concentration already exists and will only get worse if the
prohibition on interstate shipment is not repealed.”
    -- Dave and Sue McGiveron; Lena Maid Meats, Inc.; Lena, Illinois

“From my perspective, this is blatant marketplace discrimination, contrary to the very principles
of free enterprise which made this country great. There is absolutely nothing fair about this!...
Although we are not a large company, we do provide employment for 17 full and part-time
employees, pay our taxes, and support and serve our community on many different levels. This
has been our family’s livelihood for almost 50 years and we would like the opportunity to
continue on into the future, but right now our business is being stifled by this unfair burden placed
on it by big business and politics.”
    -- Steve Reason, Owner; Reason’s Locker Service/Prairie Pride Meats; Buffalo Prairie, Illinois

“As I am a small meat processor, this ban limits outlets for my products which therefore threatens
to force me out of business.”
    -- Dolores Weiss; H&B Ham; Brighton, Illinois

“Many small plants border neighboring states, and many are in smaller rural communities where
we provide jobs and rural development. In some instances, we can’t even send product across
town because we cross state boundaries, yet Congress provides marketing opportunities to
Mexico, Europe and other foreign countries by the passage of the North American Free Trade
Agreement (NAFTA) and the GATT agreements.... Big packers oppose increased competition
from smaller state inspected facilities, and most of them have portrayed allowing interstate
shipment of state inspected meats as confusing to consumers. What are the big packers really
afraid of? A little competition!... The small state inspected operators need this opportunity to
expand their markets and help to slow down increased competition in the meat packing industry
and the demise of the family farm.”
    -- James F. Hankes, Owner; Thrushwood Farms; Galesburg, Illinois

“As a small state inspected plant, manufacturing various meat filled pasta items, we suffer the
economic consequences of the prohibition which provides an unfair marketing advantage to large
corporations and foreign competitors.”
    -- Donald Julian; Belgo Food Products, Inc.; Cicero, Illinois

“As a small business owner in a very competitive industry, it is imperative that I have an equal
opportunity to compete with my products. I have many former customers who have moved out

                                                        6
of state because of retirement or relocation who call me asking to buy my products. I have to
refuse them sale of my product because of current laws. With the constant struggle for sales to
stay in business, it hurts me to tell a customer that I can’t sell them a product which they choose
to purchase.... America is based on free enterprise. We offer consumers a great variety of safe
products to consumers. Free enterprise encourages businesses to deliver a product to consumers
they demand. It never intended for government to tell consumers what they are allowed to buy.
If the government keeps such unfair trade restrictions on small businesses such as myself, we are
helping the large corporations which can afford to lobby Washington. We also destroy the
concept of capitalism from which this country has grown to be so great!”
   -- Donald Kepka; Crawford Sausage Co., Inc.; Chicago, Illinois

“It is increasingly difficult to maintain a decent profit in the average small plant. Part of the
reason for this difficulty is the competition from the large meat packers. This competition has
occurred, in part, because of the prohibition.... [Lifting the prohibition] could potentially triple
our current beef jerky business in a matter of weeks. There’s no telling how much increase could
be experienced in the first year. We currently have several large snack and nut distributors in
other states interested in our jerky products. Our company employs twenty people, with the
potential to employ many more in our community if our beef jerky product line increases.”
   -- Robert Jones, Owner; Jones Locker Service; Woodstock, Illinois

“How can a government which stands against the practice of discrimination, upholds the rights
of the individual, and strives to save endangered animals continue to allow laws to exist which
destroy the very fabric the economy of the United States was built on, that being, small business
and the people it employs?... There exists tremendous opportunities for our company, providing
the U.S. government would eliminate the unfair prohibition on interstate shipment of state
inspected meat. Many of our current distributors want to take our product into other states. We
have potential buyers who would handle our product, but since they are denied the right to sell
our products in other states they will not inventory our product to sell in our own state.”
   -- Miles D. Wright, President; Heinkel’s Packing Co. Inc.; Decatur, Illinois

“As a small businessman, my company is up against a lot of forces that are beyond my ability to
control. Many of these, such as taxes, insurances and raw product costs escalate yearly. I am
not asking for any hand-outs, just a fair opportunity to compete.”
   -- Rudolph Bamonti, President; Savoia Foods, Inc.; Chicago Heights, Illinois

“Our plant is located 15 miles from Quincy, Illinois and 15 miles from Hannibal, Missouri. We
can deliver our products to Quincy but we cannot cross the Mississippi River into Hannibal,
Missouri. Many requests have been made to us from restaurants and household customers in
Hannibal, but we cannot legally deliver to Missouri. The Iowa line is only about 30 miles from
us, but we cannot go there either. NAFTA and GATT allow our Mexican and Canadian
neighbors to expand their markets, but the small state-inspected, tax paying, voting American
meat plants are not allowed to expand their markets. If these small plants are not treated equally
under our laws, many will be forced to close and go out of business. The economic climate has
not been favorable for small meat plants for several years; continued discrimination will only close
more of us and create more unemployment.”
   -- Daren R. Kabrick; Ed Kabrick Beef, Inc.; Plainville, Illinois




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“Our Ohio restaurants, schools, nursing homes, clubs, etc. would really like to buy our products
because we are a very clean state inspected plant — offering good wholesome meat which has
been butchered and processed here — and purchased from our area farmers. But instead, they
have to purchase their boxed meats from the supermarkets, which may have come from Australia,
Mexico, Canada, but not four miles away in an adjoining state.”
    -- Alice Manley; Manley Meats; Decatur, Indiana

“This discrimination allows big meat packers and poultry processors to have an unfair marketing
advantage. The big packers are then able to control prices in certain areas thereby threatening
to force small packers such as ourselves out of business.”
    -- Michael L. Monson, Secretary/Treasurer; Mishler Packing Co., Inc.; LaGrange, Indiana

“I would like to make it known that we had to discontinue selling portion control sliced beef liver
to a distributor when he started selling interstate. He couldn’t keep our product segregated in
his freezer to be sold only in Indiana. Any distributor that we have tried to sell to is selling
interstate, therefore eliminating us immediately. I would estimate that our sales could increase
15 to 20 percent if we were able to sell interstate.... I would think that if this concept of interstate
shipment of state-inspected products were to become reality, that the local economies where
these plants are located would be boosted in increased jobs, more local and state taxes paid and
increased livestock purchases.”
    -- James F. Rihm; Rihm, Inc.; Cambridge City, Indiana

“As in other business, ours is changing and growing more dependent on new markets. Expanding
our service area has become very critical to our survival.... We are incapable of reaching up to
75 percent of our potential service area.”
    -- Timothy D. Reed, Vice President; The Butcher Block, Inc.; Lowell, Indiana

“If the interstate shipment of state-inspected meat bill passes, it could mean, at least, a 100
percent increase in my wholesale accounts. It would also enable me to move product for which
I now have little outlet. I estimate I would be able to employ an additional four employees.”
    -- John D. Fisher, Owner; Fisher Packing Company; Portland, Indiana

“In a time when small businesses have a hard enough time being successful and surviving, it
would be helpful to be at least on an equal playing field with the large packers.”
    -- Kerry Kerns; Edgewood Locker; Edgewood, Iowa

“I feel if this unfair, discriminatory act is not changed and changed soon, it will force me and
many small businesses like mine out of business forever. As rural farm areas become smaller, we
have to create other business ventures within our business to grow and survive in a competitive
world. Our plant developed a meat product, I felt, that would be acceptable in other states. It
could have and should have been a large part of our business expansion for this year. We would
have had to hire more help to accomplish this.”
    -- Dale Haupert; Atlantic Locker; Atlantic, Iowa

“Through the years we have won over 40 awards for our smoked meats. We erected a new
processing facility, spending a lot of money, time and sweat equity to meet USDA standards. But
still, as a state inspected plant, we can’t ship across state lines. This kills our future as a value-
added meat processor and could force us out of business. The monopoly big processors now
have over the state inspected plants in unjust, unfair, and a huge advantage. They are able to

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market their products while we are segregated to our own state borders.... With the interstate
shipment ban lifted, many state plants in small communities, like Malcolm, will prosper as new
markets for their products open, up adding new jobs along the way. Leaving this ban in place will
continue to make state inspected meat and poultry plants the only industry in America that is
subjected to an enforced limitation on their business rights.”
   -- Bill and Dave Dayton; Dayton Meat Products, Inc.; Malcolm, Iowa

“I have been in business for 36 years and to keep my small business going I need to sell my
product in other states.”
   -- Ralph D. Klobassa; Klobassa’s; Elma, Iowa

“Fifty years ago, I started a meat business in Kansas City, Kansas. Since I retired from day-to-
day operation of the business 15 years ago, my sons took over the original plant and have started
a second store, two miles away, in Kansas City, Missouri. Because of the prohibition on
interstate shipment, my sons cannot move their product between stores. This prohibition may
seriously impact our ability to stay in business.”
   -- John F. Bichelmeyer; John Bichelmeyer Meat Company, Inc; Shawnee, Kansas

“Our plant is located two miles from the Nebraska state line. This means that 50% of the HRI
business in our trade territory is unavailable to us. We can legally sell in Kansas but not in
Nebraska.... We have operated this small business (17 employees) in this small town (pop. 200)
for 35 years. It is unfortunate that meat from foreign countries can be sold in an area that is
denied to us even though we both meet the same inspection standards.”
   -- Nellie Beckwith; Bern Meat Plant, Inc.; Bern, Kansas

“I process beef and buffalo jerky only in my facility. Currently under current state inspection I
can only ship the beef products to points in the State of Kansas. Under this system I am allowed
to ship the buffalo products all over the United States. This is because buffalo is considered a
game animal. Several of the stores out of Kansas want to carry the beef as well as the buffalo
jerky. As it now stands I am losing business because I cannot sell them the product they want.
I have even lost an account completely because they wanted beef only. It is difficult to explain
to them that the two products are made under identical conditions, but only the buffalo is good
enough to ship out of state.”
   -- Lori Robbins; Home on the Range & Co.; Scott City, Kansas

“We produce quality products in our small plants. People across America should be able to
purchase and enjoy the many special products made such as jerky, snack food items, sausages,
and the many ethnic products that the large packer does not or cannot afford to produce in the
small amounts that are desired by many nationals here in the U.S.”
   -- Thomas R. Pyle, Executive Director; Kansas Meat Processors Association; Eudora, Kansas

“The unfair prohibition has forced this company to turn down business from interested buyers
located outside the state of Louisiana, which has resulted in negative economic consequences.
If the prohibition is eliminated, it would allow us to grow and expand into new markets and
enable is to compete with large packers.”
   -- Frank De Grado III, President; Patton’s Sausage Company, Inc.; New Orleans, Louisiana




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“The current laws severely limit our ability to expand our distribution.... This repeal will enable
small business owners to continue to grow, prosper and provide economic benefit to their local
community.”
    -- Brett LeBlanc, Owner; Pap’s Louisiana Cuisine, Inc.; Prairieville, Louisiana

“If we could sell out of state we could hire more people. We would use more Louisiana products
such as vinegar, salt and hot sauce.”
    -- Dennis DiSalvo; DiSalvo Packers; Belle Chasse, Louisiana

“Unless Congress repeals the unfair prohibition on the interstate shipment of state-inspected meat
and poultry, we will be out of business. This ban hurts us and is discriminatory.”
    -- Pete Miller, President; Gerlach Meat Processors, Inc.; Shreveport, Louisiana

“This ban hurts our business.... By helping us [and lifting the prohibition], we will be able to hire
more workers.”
    -- John W. Guidry, Owner; Country Cousins Farms; Cankton, Louisiana

“Without the opportunity for small packers to expand their markets, the concentration in the
industry will continue to grow, so that even livestock producers, who are already suffering from
depressed prices, will be affected more as fewer packers will be competing for purchase of their
animals.”
    -- Janice C. Hyde, President; Hyde Meat Packing; Robert, Louisiana

“We have had to turn down business time and time again because of this unfair prohibition.”
    -- Joseph Lonnie Richard, Owner; Richard’s Cajun Country Food Processors; Church Point, Louisiana

“Since 1972, I have been operating a state-inspected meat plant. As you know, small business
has been the heart of our nation’s industry. However, small business is often not granted the
same privileges as large corporations or foreign producers, while still being held to the same basic
standards and federal requirements.... I have been told by chain store warehouses, ‘We are sorry,
but we can’t take any product from your state-inspected plant, because it will cause problems if
it is inadvertently shipped to one of our stores out of state.’ Can you see the injustice and the lost
business opportunities we suffer only because we are a ‘state-inspected’ plant? This not only
prevents growth in small business, it will eventually cause the demise of many small plants.”
    -- Joe P. Pellichino; Tangi Meat Packers; Ponchatoula, Louisiana

“Although the rules for state inspected plants are equally as strict as the USDA, we are unfairly
discriminated against.”
    -- Fabiola C. Schmitt, President; Creole Country; New Orleans, Louisiana

“This ban and the big meat packers who have such a big market advantage threatens all small
meat and poultry businesses.... This is the time to make a change since the wheat supply in the
United States is causing cattle and other livestock to be slaughtered. This is driving meat prices
down.”
    -- Richard D. Guidry, President; Cajun Maid Meats LTD.; Breaux Bridge, Louisiana

“Mr. Bellue has worked very hard to produce quality products meeting the same standards as
foreign products. Yet we are limited as to sales and distribution of these fine products ‘Made in
America.’ Therefore, our production is limited, employment is limited, sales and profits are

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limited. Does this also mean our ability to remain in business is limited? Where are our ‘equal
rights?’ I have worked my way up in this company to know we have quality products which
should be available to everyone. Through the years, out-of-state businesses have requested our
products for resale. We have had to deny them the opportunity for profits; in turn, denying our
own profits due to the prohibition of interstate shipment of state-inspected products.”
   -- Renae Smith, Plant Production Manager; Bellue’s Fine Cajun Cuisine; Baton Rouge, Louisiana

“As small business owners of a growing meat product business, it is very limiting to us not [to]
be able to ship our products interstate. The economic hardships we are forced to endure because
of these limitations prohibit us from expanding our business.”
   -- Carl & Betty Carpenter; Western Meat Block; Butte, Montana

“Economically it would be very beneficial if the products produced in my state-inspected plant
could be sold in markets outside Montana. I have had many businesses, outside of Montana,
request to sell my product. But because of the present prohibition I am unable to meet these
requests. With these other markets it would help me to continue to make a profit and stay in
business, and keep my staff working full time.”
   -- Merlon R. Tolman, President; Tolman’s Meat Inc.; Hamilton, Montana

“With A Bar S Processing being located so close to the North Dakota border, we are limited in
our distribution area. With interstate shipment, we would be able to increase our business
considerably. This in turn would affect the local livestock producers that we currently use for
supplying us.”
   -- Robert M. Sain; A Bar S Processing; Scobey, Montana

“We cannot expand or diversify beyond our state because of this ban. This is a serious threat to
the small packers in this area. Foreign meats are allowed to be shipped anywhere in the United
States but our products cannot be shipped across the state line. We are required to meet the same
inspection standards (our plant is located 10 miles from the state line of Texas) yet we cannot ship
our inspected meat across the state line.”
   -- Ernest Paro; Ernie’s Custom Processing; Clovis, New Mexico

“It is difficult for a small business person such as I to compete with large corporations without
the added competition of foreign investment. Failure to correct this inequity could mean the end
of the family owned packing business. I believe that the United States government is practicing
discrimination when they allow foreign competition greater advantage than their own citizens.”
   -- Fernando (Buddy) Baca, Owner; Luna County Meat Processors; Deming, New Mexico

“The recent passage of the NAFTA and GATT trade agreements allows foreign inspected meat
to be shipped into the United States as long as the foreign inspection is equal to U.S. federal
standards. In effect, these trade agreements increase competition. Competition is good,
however, undue hardship is placed on my small business when the government allows foreign
business access to interstate commerce at the same time it is limiting mine to a specific area.”
   -- Eloisa L. Guerrero, President; Mac’s Meats; Las Cruces, New Mexico

“This scenario, in my opinion, clearly places New Mexico businesses, licensed by the NMLB, at
a competitive disadvantage with similar businesses in neighboring countries.... If I were to make
one request it would be the following: ‘Dear Government: Let us survive, prosper, grow and
continue to be a vital part of our economy by letting everyone do business by the same rules.”

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   -- F.A. Arellano; Sunset Foods, Inc.; Los Lunas, New Mexico

“It seems only fair that if Congress will allow Canadian and Mexican inspected meat to be shipped
into the United States under the North American Free Trade Agreement (NAFTA), that it will
allow the same opportunity to our states. This is the United States of America and I think the
small business owners in this country should have the same economic opportunity provided to
Canada and Mexico, especially within our national borders.”
   -- Richard M. Hadad, President; New Mexico Association of Meat Processors

“The unfair advantage granted to foreign competitors by allowing them to distribute interstate,
while we cannot, forces us to sell to a limited customer base. This forces us to reduce margins
and increases the chance of our failure.”
   -- Oliver Meads, President; Robersonville Meats, Inc.; Robersonville, North Carolina

“This could very well make the difference between small companies staying in business or having
to close. We here at D&M Packing Company in Albemarle, North Carolina, have lost several
accounts because these vendors work in and out of two or more states and it is unlawful for our
product to cross the state line.”
   -- David Marbry, Owner; D&M Packing Company; Albemarle, North Carolina

“As owner of Sessoms Packing Co., a small state inspected plant, only by elimination of the unfair
prohibition on interstate shipment of state-inspected meat and poultry products will I be able to
remain in business.”
   -- James Thurston Sessoms, Owner; Sessoms Packing Co.; Ahoskie, North Carolina

“If we would go federal-inspected we could sell to federal plants and sell across state lines but
we would not be able to buy meat from state-inspected plants (many who are customers of ours).
Another example of how absurd this is in Union City. The city is divided down one street by
Ohio’s and Indiana’s border. Down this street we can and do sell a grocer our meat but on the
other side of the street (in Indiana) it is illegal for us to sell our product.”
   -- Bob Falter; Herman Falter Packing Co.; Columbus, Ohio

“Why on earth would our governments, state and federal, support foreign business above U.S.
business? I can understand large corporations that are USDA inspected protesting that state
inspected facilities should not be allowed to ship interstate, but that’s just so they can continue
to monopolize the market.”
   -- Helene Roush; Coslafin Meats, Inc.; New Vienna, Ohio

“As a small company, who has gained recognition for our bratwurst, made in Bucyrus, Ohio, ‘the
Bratwurst Capital of America,’ we are being hindered in our progress by the prohibition.”
   -- Dean E. Fagan, Owner; The BratWorks; Bucyrus, Ohio

“Although we have done well in marketing our product in this area, we are only 30 miles from
the Arkansas line. We have to concentrate on westward expansion to enlarge our territory, while
a closer territory remains untouched. I’m sure you can see how this can be a costly burden on
our sales force in terms of mileage, etc.... The only reason we did not try for USDA approval was
that the USDA guidebook required a 70-square foot office for the inspector. With our limited
construction budget, I chose to spend our money on better processing equipment — items that
would affect the safety of our product — not waste it on an office that would rarely be occupied.

                                                    12
I’m paying a price for that decision, but it’s one that I can live with. The bottom line is, can the
federal government live with a decision that imposes unfair prohibition to small businesses such
as mine?”
   -- Charlotte “Charlee” Haley, Owner/Partner; Charlee’s Gourmet Beef Jerky; Bokoshe, Oklahoma

“If in 1959 we had built our plant in Mexico or Canada instead of Oklahoma, we would now be
able to ship our products anywhere in the United States, with the passage of the NAFTA and
GATT trade agreements.... Let’s get modern and make free trade legal in the United States, not
just across North America.”
   -- Gary R. Crane, Owner; Ralph’s Packing Company; Perkins, Oklahoma

“For the most part our plants are small businesses which are owner-operated. Many of our
products carry our family name. We are proud of these products and their quality, and should
be permitted to share them with our neighboring states. We are suffering the economic
consequences of an unfair policy.”
   -- Michael J. Cunningham, President; Fountain Inn Frozen Food Plant; Inc.; President of the South Carolina
   Association of Meat Processors

“This discrimination allows big meat packers and poultry processors to have a big marketing
advantage which hurts our business and threatens to force us out of business, thereby putting 34
people in the unemployment line.”
   -- W.H. Lee, Jr., President; Lee’s Sausage Company, Inc.; Orangeburg, South Carolina

“As the leader of the free world, America must be committed to decency and fairness around the
globe. But America must also be committed to America. We, the state-inspected meat plants of
the U.S.A., are only asking for a level playing field. Give us a chance to grow and compete as
Congress did for Mexico and Canada with NAFTA.”
   -- JoAnna Clayton, Vice President; G&W Incorporated; Hickory Grove, South Carolina

“We have eleven different smoked products which we cannot ship outside Texas because of the
regulations. That is half of our inventory. Just think of the results it would have on our profit
margin and the boost in our clientele if we were able to provide consumers with our smoked
products anywhere in the United States.”
   -- Kimberly Moore; Earthwide Enterprises Inc.; El Campo, Texas

“I have had to pass on several marketing opportunities because I could not sell my products out-
of-state. Every day that goes by it gets harder for me to stay in business. If I were able to
explore these out-of-state opportunities, it could be the difference in my company’s survival or
death.... I recently contacted a supervisor for the USDA meat inspection service. I asked the
supervisor about the possibility of becoming a USDA-approved processing plant. When the
supervisor learned where I was located and what I was doing, he told me that the USDA would
not be interested in my plant, and that state inspection would be the best for me. I asked the
supervisor why the USDA had no interest in these small, out-of-the-way plants, and his reply was:
funding.”
   -- Jerome Pieniazek; Star Creek Beef Jerky; Adkins, Texas

“Because of changes in state inspection laws over the past few years, I have had to upgrade to
federal code without enjoying any of the benefits of being able to sell my product across state
lines.”

                                                    13
   -- Daniel Poffenberger; Bellville Meat Market; Bellville, Texas

“By scrimping and saving, this ‘mon & pop’ operation was built to federal standards two years
ago. Nevertheless, large companies and foreign competitors enjoy the privilege of shipping their
meat products interstate even though our facility and products are equal or superior to theirs.
This injustice limits our profitability while providing an unfair marketing advantage to foreign
companies and large domestic operations. Unless Congress repeals the unfair prohibition we
could be forced out of business. Conversely, if Wind River grows, then our suppliers, including
the local, federal meat inspected packers, would also grow.”
   -- David H. Yadron, Partner; Wind River Co.; Orem, Utah

“There is a potential for expansion of our operations since we are close to the borders of southern
Idaho and southeastern Wyoming. We are the only packing company within a 100-mile radius
of many of the small towns in both states and I am positive there is a potential market for our
products.... I estimate I could increase my business by at least 20 percent, translating into
additional income of approximately $750,000 annually, which is a very conservative estimate in
my opinion. If interstate shipment were available, I would have to hire an additional five people
to service the possible new accounts.”
   -- R. Larry Lower, Owner; Lower Packing Co.; Smithfield, Utah

“I believe that my gross sales would increase 30 to 40 percent, which is close to a $500,000 a
year increase. Employment would be increased also. I would need two to three more butchers,
and probably five to six more part-time workers.... It has always been a thorn in our side that we
couldn’t service the customers that want our products. It would be more economical for them
to come to us if it weren’t for the federal inspection restrictions.”
   -- Monte Lucherini, President; Horlacher’s Fine meats, Inc.; Logan, Utah

“We have been in business at Majestic Meats in Salt Lake City for over 25 years. During this
period of time our rate of growth has been slowed due to the fact that we have been limited by
selling only in-state. This has had an effect on our sales and marketing strategies.... We feel that
in the long run we can contribute to the state by generating more revenue and by employing more
people if we were allowed to ship out of state.... Finally, being a small business makes competing
against large corporations extremely difficult. Having the opportunity to cross state lines will
enhance our ability to create more market share.”
   -- J. Sheldon Burt, President; Majestic Meats; Salt Lake City, Utah

“I am located in Vernal, Utah, 25 miles from Colorado and 35 miles from Wyoming. [If the
interstate prohibition were repealed], my business would be strengthened and my market area
would be enlarged considerably, especially where we are in a rural area with no federally-
inspected plants within a 200 mile radius.”
   -- Don S. Anderson, Owner/Manager; Vernal, Utah

“We now provide services to large supermarket chains, such as Martins, Safeways, Krogers and
IGAs in our state, and would like to provide the out-of-state stores as well. We have had interest
in our products out-of-state but because of this prohibition we have had to turn down business.
In the competitive business of meat and poultry, this is very hard on the small business owners....
We live in the U.S. and abide by all the inspection standards, yet the foreign meat is given
privileges that we are forbidden. As a small business owner struggling to stay competitive and


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as a citizen of this country this seems extremely unfair.... Our business works very hard to support
our families and our employees. But there is always the fear of large packers monopolizing the
market. By removing the unfair prohibition, we could stimulate competition between large and
small packers and prevent more and more small processors from losing their hard-earned
businesses. Not only will this help Americans trying to live the American dream, but it will
prevent large conglomerates from destroying the livestock producers’ businesses as well.”
    -- Jeffrey Gore, President; Gore’s Processing, Inc.; Stephens City, Virginia

“We wholesale throughout the state of Wisconsin, but we are finding it extremely difficult to find
new accounts due to the restrictions applied to state-inspected plants of being unable to ship their
product across state lines. This prohibition on our state-inspected plant is going to make it
impossible for further sales expansion, thus making it impossible for our plant to do any more
expanding. Since maintenance costs and production costs continue to rise, this could put a
financial burden on our plant that could in the long run be devastating. We want to grow and
expand and we want to supply more jobs but without interstate selling this will be impossible....
This day and age it is hard enough for small business to make a go of it. I’m sure you have heard
many times how big business keeps getting bigger and bigger while the small business suffers.
Unless something is done to help small plants expand and compete against the large plants, this
will only continue to become more and more of a problem.”
    -- Leonard Bayer, Owner; Country Fresh Meats; Hatley, Wisconsin

“[Landjaeger] is our most popular item, and I get asked on a regular basis by business owners
from other states (we’re about 25 miles from the Illinois border) if we can ship our Landjaegers
to them for resale in their establishments. It really hurts me and my business when I have to tell
them ‘no’ because we aren’t federally inspected. This kind of unfair prohibition will only continue
to drive small businesses to fold, and allow large conglomerates to monopolize the industry.”
    -- Bill Ruef; Ruef’s Meat Market; New Glarus, Wisconsin

“This prohibition hurts us, and provides an unfair marketing advantage to larger firms and
international competitors.... This past May, we were honored to receive two international gold
medals for our sausage in Frankfurt, Germany. We are not allowed to market these products
anywhere but Wisconsin. These kind of restrictions make it difficult to maintain a profitable
business.... Large plants directly benefit from this interstate prohibition. With these
conglomerates, the competition decreases. A decrease in competition in the meat industry results
in a slide in quality, increased opportunity for price fixing, and further depressed prices for market
animals.”
    -- Louis Muench; Louie’s Finer Meats, Inc.; Cumberland, Wisconsin

“Our volume is increasing quite rapidly and we are interested in contracting with a multi-state
distributor, however we are unable to do this because we do not have USDA inspection. We feel
that our business will suffer significantly and job creation will end if we are not permitted to
expand due to this unnecessary prohibition.... I am not convinced that we can survive with the
present prohibition on distribution. Were this prohibition to be lifted, our company could move
ahead with plant expansion and create new jobs to support our distribution.”
    -- Daniel H. Kubly, Partner; K&K Lazybones LLC; Brookfield, Wisconsin




                                                       15
       “In the last eleven years we have taken 18 state and national and international awards for our
       ham, jerky, beer sticks and variety sausage; but because we are in Wisconsin, we are discriminated
       against by the federal government.... We are 20 miles from the Minnesota border, but cannot sell
       our product there. If we cannot compete, then we will slowly fade away and a few big packing
       companies will control the food from the farm to the consumer.”
           -- James R. Weber, Owner; Gunderson Food Service; Mondovi, Wisconsin


 INTERSTATE SHIPMENT               OF    STATE-INSPECTED MEAT IS ONLY FAIR                       TO   SMALL
BUSINESS
The mission of state meat and poultry inspection programs is to provide the consumer with a wholesome,
unadulterated product that is properly labeled and safe. The issue of interstate shipment of state-inspected
product is a simple fairness issue. Mr. Burkhardt has done a fine job this morning discussing the “at least
equal to” status of state meat and poultry inspection programs. It is quite clear that any question about food
safety” or “equal to” is simply a diversionary tactic used by the opponents of repealing the unfair prohibition.
It is essential that Congress looks beyond the smoke screen, and acts to repeal the unfair prohibition based
on the economic merits of the situation.

While the federal acts require all state meat and poultry inspection programs to be “at least equal to” federal
standards, they prohibit the sale of the product in interstate commerce. For the most part, these state-
inspected plants are owned and operated by small business owners who are suffering the economic
consequences of the prohibition which provides an unfair marketing advantage to large corporations and
foreign competitors.

The benefits of repealing the prohibition extend well beyond the processing plants. In many cases, the
products inspected in a state-inspected facility are specialty products. The specialty items prepared by small
operators are not economically viable for a large operation. Today, consumers do not have access to these
delicious, innovative products created by small companies like the internationally-acclaimed sausage produced
by Louie’s Finer Meats, Inc. in Cumberland, Wisconsin or the bratwurst, made by Dean Fagan in Bucyrus,
Ohio, “the Bratwurst Capital of America.” Repealing the unfair prohibition would provide consumers a wider
selection at the meat counter of safe, often locally-produced food.

Livestock producers would also get better prices by having more markets for their animals. Large packing
conglomerates now account for more than 82 percent of all meat processing in the United States. Lifting the
unfair market restrictions imposed on state-inspected meat and poultry processors could slow the
concentration in meat packing by enabling small- and mid-size processors to expand their operations and hire
more employees. In fact the members of the USDA-created packer concentration panel — scheduled to
release its report tomorrow — found that the interstate shipment prohibition contributed to packer
concentration. The panel voted 15 to 1 to recommend lifting the prohibition to assist in slowing the
concentration trends in the industry.

President Bill Clinton and Vice President Al Gore agreed with this conclusion in their January 1996 report
entitled, Reinventing Food Regulations. In the overview of that report, they said, “Federal food regulations
must be revised continually for a number of reasons ... so that food companies have the flexibility to innovate
and incentives to engage in vigorous competition for consumers’ dollars.” It is obvious that when more
small-town processors are able to sell their products across state lines, they are able to buy more local
livestock. When local producers have more competitive markets for their animals, they recieve higher prices
for their livestock.

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Lastly, we cannot overlook the fact that under GATT and NAFTA, foreign processors have greater market
access than our own state-inspected meat and poultry processors. This in not only unfair, it is simply wrong,
and if this Congress is as concerned about small business as it has indicated, it will repeal this unfair
prohibition. Passage of these trade agreements allows foreign-inspected meat to be shipped into the United
States and moved interstate as long as the foreign inspection program is equivalent to U.S. federal standards
— in practice, the same standard which state-inspected programs must meet. It seems only fair that Congress
now provide small business owners in the United States the same opportunity Congress provided to Mexico,
Honduras, Australia and other foreign countries.

SUMMARY
The intrastate and interstate flow of commerce is a basic protection provided by a number of laws and
regulations. The prohibition of interstate shipment of state-inspected meat — the only such prohibition of
any food product — disrupts that free flow of trade and restricts the ability of American small business
entrepreneurs to economically compete against foreign producers and large domestic corporations. It is time
for this anti-competitive, anti-small business prohibition to be eliminated.

Thank you Mr. Chairman for the opportunity to present the views of the state Commissioners, Secretaries
and Directors of Agriculture on this very important issue.




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