they had2000 ban 2008 d declining bubudget. there is dysfunction in the marketplace. your workforce is still below the 2005 level. there was the dodd/frank

legislation. to what extent our staff levels ability to have clearl a high-tech trading? >> thank you. the richest of reaching our 2005

levels. we have been enormously fortunate to be able to attract a minutes -- immensely talented staff. there are people from hedge funds and trading desks to help as had the ability to do the job we have always been charged with. it is essential that we bring that kind of cells thaskill sete agency. rohm & hoss in order to make use of adaptive we would receive, even understanding the exchanges, we need people with

management, quantitative analysis and capability to see something on the order. it is to respect of our oversight marketplace. >> i do think our agency will be asked to take on the market. it is nearly 20 times the size and if our economy. we currently oversee them about $40 trillion.

we have more in this coming year. this is to deal with data.

we will need to be able to put a pipeline into that. there are alert on 300 different wines. >> perhaps this might be it. they are asking to agencies. -- to survey these markets.

>> it to move prices to his benefit after moving the price

movement, he did not cancel his original orders. that seems to be a variation of what they did using to market .urd might that type of a trading strategy be a manipulation? i am not asking you whether it is today he did not know. >> it is entirely possible that. >> it could be.

>> they need to be able to the acting improperly used. kenya chord in me the efforts to spot this type of cross market price manipulation? is this a possibility? >> we have two agencies. we will have to agree to require the exchanges on the different

agencies. i do not know of any reason why there is a will to do it. >> pilot say it is more on an ad hoc basis. we have had some good collaboration. . do you currently have an automatic surveillance to check

cross market manipulation? >> we have some tools and play set allow less -- we let it provide misinformation burd. we do not have routine capabilities to go to other driven markets. we do not have tools to efficiently utilize it. >> you hope it will obtain that? >> when do think that is possible?

>> it was proposed earlier this year. if they offerldid not know more traders.

we could take the resources and create generally consolidated audited skills. we except the exchanges. this gives us all they that know lenient. -- that we need. >> we are talking about trading

abuses they were not subject to this.

they made major contributions to the financial crisis. they require them to monitor them pitt. we uncovered this during our crisis. it will detect the type of market please preparsqueezes. . soon the price rose. no and was offering to offer any

protection. it induces holdings to sell them off. coleman plan to move then and purchase it for themselves. they participated in that activity.

the report was there. this is what they wrote. the market was trading very short. we begin to encourage this.

his account is consistent with others. the oversaw the trading effort. and it will include these e- mails. then he followed up a another e- mail.

he did not explain why he used the terms he did. it describes an effort to restore balance. this suggests the patented short squeeze negatively impacted this. they have bought this earlier. even after he abandoned the effort, this is my question --

with this type of attempted squeeze trouble year -- trouble you? >> are you sure you do not want chairman shapiro to go first? i am not familiar enough with the fact. this is the first time i have seen the documents. manipulation relates to intent to distort a prize. the dodd/frank bill broadens

that. in the current framework, the need to have an intent to distort the price that. >> let me ask you what did they have the capacity to monitor this type of activity? >> it is not there.

>> i apologize for the tag team actions. one point i want to raise, and it goes to the issue, is that the value of stocks is directly a function of the belly year. then there is a real economic value here.

with the proliferation of these trades, some did not take into account the fundamentals of the instrument. they are simply saying in a but these are still -- enough of these were sold. to the extent, we get further away from the values here. alexis the fundamental one. what is the role of investor is?

what do you looking for in the marketplace? whether the plane field is level soda long-term investors will be traders do.re, as if issues like speed and date. -- data. so goes the ability of others to participate. they are questions on th

emind of the public companies. they are expanding and growing. these are the quesiontions we ae trying to explore. what are the best metrics to measure that? w >>e can see if we can drive effective answers. i appreciate what you are doing. your efforts to find real

answers to this that are questions that are not only by the investors but large corporations go to the nature of a functioning market. they can be two different things. >> in the comment process in june, one comment or survey that had done of a number of investors across the range, even large investors, only about half thought it was working for

institutional investors inches. >> i think that markets have to have the confidence of the public and the markets. whether it is a farmer or aranchers or company, markets have included hedgers, investors, and speculators. we hvavae to make sure that everybody has an qual a -- equal access. they are transparent.

we police them against fraud and manipulation. >> i think i have asked this in different words -- so much of this is market activity. if you can check two markets, it is usually a profitable exchange. is there something to make sure that market equities -- what are

you doing? what are you both thinking you are doing? >> most of what we are doing is within the jurisdiction of a vil. we will work to make sure we have the data et and can do . valence -- and can do surveillance. we need to do more to institutionalize across the market. >> we have so many market desk. -- market. it would be an enormous step forward.

we can prevail. >> in your concept release, he said it is not the evolution. eyewitnessing you both agree with that. is there a window to catch up? is this something that will give beyond our capacity? the issues we have talked about in terms of resources and technology. this is not your father's market where immensit moves as a pace s

much slower now. this is a critical moment to get up to speed. if we miss this moment, regulation will be one not be effective. a comment on these points are included. >> what is the need for regulators with the purposes of policing the markets?

they are looking into about 12 different types this strategy. there is the monetary trail. yet to create a stronger regulatory purda will also have a minion of ideas. it requires brokered deals. this is something we saw.

they should the obligations on markets. looking again at the quality, it is in the proprietary way. wany to excess -- click it the fee structures. this would mimic the futures model. it will be incrementally important to try to clarify this market structure. >> i know is going to say the i

am an optimist leverage off of the exchanges. there is also the big market participant brits. we leverage by certain tools. we and did them on a regular basis. -- update them on a regular basis. i repeat the safeguards are absolutely critical. it had this in a voluntary way. now we require a, a thing we always have to leverage off the market.

i am a big believer that it helped economic activity. >> thank you very much purdah i am sure we will meet again. thank you. if the second panel can come forward.

>> there it is right now.

>> let me introduce the second panel. them i am awaiting the second to return. i can introduce the panel. our first witness, the social professor of finance at georgetown university. prof. angel focuses on markets. he serves on the board of directors. our next witness this thomas, a brokerage firm with 5000 equity capital.

it provides high-speed technology. third is the ceo of tradeworks. he held several positions at wall street firms. our fourth witness is kevin cronin. he is responsible for many firms.

he started invesco in 1997. he is currently the head of the equity market and buys series. does the largest with the united states public. now pursuant to rule 6, would the gentleman please add fan racial right hand? -- please raise your right hand?

>> they warranted the sec in writing. the markets are vulnerable. it can happen again. our market is a complex network. of all the broker-dealers, media entities, it is a complex ecosystem purda.

most of the time, it works pretty well. this better than it did 20 years ago. a market has the capacity. it can only handle so much before it chokes. our market is overwhelmed. if you live get the history, you will see that it is going over and over again?

we sell one in 1987. we need safeguards for the market network. the network was going crazy. some people grumble about market fragmentation. we have literally hundreds of different financial regulators. they do not always play nicely with each other. there is a lot of duplication. most of the regulators have a

pretty narrow mandate. they are hundreds of miles away. it makes it really hard. it makes it much harder to figure out what is going on. he saw how long it took the regulators to figure out what was calling on. they need better market intelligence. this is less than half of what

investors learn from burning madoff alone. what can we do about this? there are political forces that make it very hard. we can deal with this fragmentation by putting all the agencies in one. it will make it easier for them to find them what is going on. and still attract the kind of the market people will need. we need to think about how the markets are looking the need to

pay attention that the number of public u.s. companies has fallen by almost 50%. if we ran out of public companies, we've not had a job. it is listed on our exchanges. if each of them were responsible, that is 2 million jobs. this to make a big dent in our unemployment. there are a lot of reasons for that.

we are losing our capital market. >> thank you very much. they are making a part of the record. if you want to summarize, feel comfortable doing that. >> a broker is a market. customers have about $21 billion of assets. this is my worst nightmare propel. imagine high-frequency trading. these operations exist all over

the world. they using the members. as they close, more are our troopertriggers. it is down 30%. brokers are like dominoes. it makes a huge profit.

the market realizes that it is causing the prior year. on the other scenario, there is confidence in the market. this is not far-fetched.

it could be a terrorist act. what can be done? by have recommendations that i explained in detail. these markets are critical for the surveillance. in july of next year, they have access to this right away. seven months is much too long to continue. it is cutting down over a

million people every day. the ability to extend orders is there. it cannot be sending this to exchanges. the sec should improve this. it is associated with each trade t.

it is bizarre that they must create in exchange. it is traded. allows it to happen. it brings securities back to the exchange. the current brokers for only from 9:45 p.m. to 3:00 p.m..

also, they should begin the intervals. everyone can recalculate what is allowed and what is not allowed. there should also be a marked the cannot tell our transactions to be outside. it could result in insolvency but the.

>> it consists of highly complex algorithms. including stocks and options. prevented this is an opportunity to share it.

is competent could get -- they can meaningfully to assess this preve. what impact does it have on liquidity? how did the market interactive the to other?

the public should not be forced do use these answers. it is needed to boost the market. the market has become too complicated for ordinary investors. consider this like chess.

 >> good morning, everyone. ceainly want to welcome everybody to the usda for the fifth and final in a series of

competition workshops held jointly by the usda and the department of justice to xplore the appropriate role for antitrust and regulatory enforcement and american agriculture. i want to welcome the panelists will introduce in just a few minutes, and my good friend, the attorney general, who will also introduce in just a second. in my travels across the country, i've heard from those coerned about the future of american agriculture's. in these workshops we have been looking at a wide range of issues regarding competition and agriculture. and today we look atthe namics and the interplay between age segment of the chain, margins in the livestock poultry and dairy industries and issues in the retail sector. the obama administration is committed to the most open transparent in history which is why we look forward to this dialogue with a diverse group of stakeholders regarding the agricultural marketplace. i want to welcome all of you to

this workshop and to this hearing. today we intend to focus on a number of issues. we will explore and better understand how livestock and other agricultural commodities moved through our system and the dynamics and challenges with each segment of the food marketing chain. we hope explore margins in the livestock, poultry and dairy industries. and lastly we will focus on the potential implications of consolidation in our retail sector. i want to see these workshops have been very beneficial to me and to the usda and helping us understand the issues that are of most concerned deserve close attention. i accomplish the issue of agricultural competition is exemely complex. the ever-changing nature of the sector suggts the need to ask questions and shed light on issues that frankly have not seen much light in many years. president obama has provided a cleadirection the government should be open and transparent,

which is what these workshops are designed to do and be. we want to and we have a public dialogue on these issues. we have held workshops across the country to explore the propriate role of antitrust and regulatory enforcement. in march we had a workshop on c concentration in hog market issues and ankeny. in may we gathered in a normal alabama to discuss issues and discussed very issues in medicine was concentrated in august we export competitioand livestock markets in fort collins colorado. in the workshops in my travels across the country, a number of things have emerged. producers want to have or maintain marketing options. they want transparency, they want access to markets, they have fewer by years with him to do buiness, and the struggle with the debt and face challenges accessing capital. and last, they just want to e treated fairly and with respect.

most importantly of all, they care about the future of a culture and want it to succeed, which is why we have seen such an overwhelming response and attendance at these workshops. i for one am optimistic about the future of agriculture and i think our best days are indeed yet at hand. for this to happen, we need to simply ask the right questions and not ignore warning signs. and if there are warning signs that we should consider to be america's meat sliced farms are barely profitable, and not always profitable enough to sustain a family. at the audio workshop, jim foster, a pork producer from misery, summarized his concerns as follows. he said my concern is not for me, but for my kids and grandkids. majeure they can pursue the american dream as my wife and i have. he compared what he saw driving through the ruins of fallujah and missouri in the 1960's to today. i saw home built called shelters and lots of rolling hillswith new leaders.

i saw barnes across audio with concrete pads out front 50 to 100 calves on feed. i saw veterinarians at work with their cash shoot. feeding trucks delivering feet, implement dealers delivering a new maneuver spreader or feed grinder. today he sees ery little human activity around what was once a thriving economic model. we all realize agriculture can't be exactly like it was 40 years ago, but the warning signs shouldn't be ignored either. in the past 40 years, the united states has lost 800,000 farmers and ranchers. and our remaining farmers are aging. from 2002 to 2007, the average age of a farmer increased from 55 to 57ears. and the number of farmers aged 75 years or oldr increased by 20% over the same period. while the number of operators under 25 years of age decreased by 30%. more than half of the rural counties are losing population based on the 2000 census.

at today's workshop, we will ask more questions. we will explore more into margins and why the retail will give producers are shifting awa/ from them and what that all)/)+- means.))i in 2009, a of a producer receed 24.5% of the retail value of a hall of and it was over double the percentage nearly 50% in 1980. last year, 13.6% went to the packer, and 61.9% went to the retailer. cattle producers gets 42.5% of the retail value of this year in 2009 which compares to 62% in 1980. last ar, 8.5% went to packer and 49% went to the retailer. today we will also explore what affects if any retail consolidation has had on the market place across all marketing sectors. and there are warning signs to pay attention to the house well.

the fourth largest retailers account for 47% of the u.s. grocery store sales in 2009 compared to 34% in 2004, 20% in 1999, and 17% in 1994 to read and we know that concentration can be much higher in certain regions. there can usually be an explanion of some aspects of these complex issues, but we must also ask if everything is fine, why don't we see young people getting into agriculture, why are people leaving the rural counties? atsda we take the warning signs very seriously and have taken a number of steps to assist producers and rural communities. the usda and the department of justice have established the agricultural competition joint task force to explore new opportunities for harnessing each other's expertise ad improving enforcement of the laws decided to protect producers and protect the beef producers. in particular usda and the department of justice establish

a process to handle complaints for unfair and deceptive practices in the poultry industry to more effeively and timely results cases, something that we feel will further facilitate addressing concerns we have heard of the alabama workshop. enforcement of the packers and stockyards act was mentioned many times the workshops. and in the past few years, the president has increased the budget to inude enforcement over unfair and deceptive practices in the marketplace. and the department is hiring attorneys to field investigators to how your complex investigations and other violations. usda's grain inspection come packers and stockyards administration, gipsa, published a proposed rule last sar for fairness and the marketing of livestock ad poultry. we know it is sparked coiderableillinger stand discussion and now we have the public comments some of which we heard the call the rebel workshop three we will begin in earnest and in good fith to process these comments and draft a rule that we believe will be workable, feasible and common

sense. in january, we put into effect a final rule to establish basic fairness for paltry contracts and in particular to ensure producers no longer have contracts arbitrer early canceled without notice. this resulted problem that had concerned poultry farmers for many years and was frequently mentioned during number alabama workshop. i'm looking forward to the findings and recommendations of e dairy industry of fisa committee that i appointed to review the issue of milk price volality and a dairy farmer profitability. the issues that were very important to participants at the workshop in wisconsin. the full committee report will be delivered early next year. in the meantime, we issued to a hundred $70 million in payments under the very economic loss assistance program, and $130 million under the milking, loss contract program, while we acquired 114 million pounds of cheese. the usda has worked hard in these tricky times to support agricultural producers of every size and tpe.

and we are helping american producers by promoting exports abroad. this year will have a record year in agricultural exports. and by supporting domestics and local regional food systems. we are working to help producers with access to the marke in rural communities with investment and will broadband access. we are promoting the use of the agricultural products and paste for use in production of renewable energy across the country. and we are helping farmers and landowners capitalize on opportunities from ecosystem markets that reward them for taking care of the environment. so you can see we have been busy in addressing the challenges thatxist in agriculture, and recognize that some woul like us to do more and some would like us to do less. we want to focus on doing what is right in these workshops will further inform our work that we do every day. it is our hope that the dialogue that we have started extends beyond the last workshop and continues around the kitchen table and coffee shops and academic institutions all across the country. government may not have all the

solutions to these problems, but togethe we can continue exploring ways to address the challenges that exist. again i want to think you for attending and i want to think the panelists for their willingness to participate in this workshop. all of the panelists and all who have attended these wokshops are owed a debt of gratude, and i went to thank the institutions from across the country that were kind enough t9 allow us to use the facilities to hold these workshops.! and now i would like to turn the podium over to attorney general eric holder for his comments. i want to welcome him to the u.s. part of a culture. mr. attorney general, you are welcome all the timehat the usda. i'm not sure, but you may be the first attorney general in the history of the usda to come to the usda to discuss issues of competition in this type of forum. and i want to acknowledge the impressive career the attorney general has. he served in public practice as a u.s. attorney for the district of columbia, as an associate

judge of the superior court of the district of columbia, and as deputy attorney general. he has worked to investigate and prosecute official corruption on the local, state and federal levels and is fully nvested in strong enforcement of the nation's antitrust law to advance the interest of justice on behalf of the american people. and i would want to say publicly to the attorney general i want to thank him and his staff not only for their commitment to these workshops but also for your willingness to work with us to try to was off to a decrease of claims against this department. so ladies and gentlemen please ring me in welcoming our attorney general, eric holder. [applause] >> thank you. thank you, mr. secretary. it's a pleasure to be here at the department of agriculture. and i think you all for joining . i know that many of you have travelled a great distance to be here today, probably you have left warmer climates to come to washington and i thank you for that.

and the perspective that you are bringing from the mississippi delta and south dakota, from connecticut, californa and communities in between will be critical to today's discussion. i'd really like to figure out a way in which i can get one of those hats. [laughter] this is the last me i'm going to have a chance -- i see these guys all the time with those hats and those big t-shirts said athe end of my remarks if i could meet with you all to discuss a way i can -- i'm from new york. i don't have a hat like that, or a t-shirt like that. [laughter] but you will represent many different regions, areas of expertise and ositions and the agriculture supply chain. and you represent nearly every

we have held this year, will provide important learning opportunities for all the fuss. now before we get started, i want to thank psychiatry vilsack and his team for hosting us and for their partnership in conducting this workshop series. i also want to recognize the outstanding efforts of assistant attorney general christine varney and the justice department's antitrust division. each workshop i have been impressed with the diision's work in making the vision of these conversations a reality and now that we find oursees at the final workshop, it is clear that their contributions are paying off. we have learned a tremendous amount from farmers and producers -- and from industry executives and experts. and yet every expectation that the fruits of this workshop series will benefit the agriculture industry for years to come. over the last nine months, we have discussed everything as the secretary indicated from vertical integration and dairy

prices to the implications of the packers and stockyards act and leading poultry industry challenges. psychiatry vilsack and i have had the chance to hear directly from the hard-working farmers and producers, business professionals, economists, and elected officials. and the impact that those conversations had on our thinking. and on the enforcement strategies we are developing has been i think profound. of course, we know that interest in for some of actions will not solve every problem. we know that. but because of the insight that you have provided, and the circumstances warrant legal intervention, i believe that we will be better prepared to take the steps necessary to ensure a fair and competitive and ricultural marketplace. both for producers as well as consumers. now what has been clear throughout this workshop series and in the thousands of public

comments that we have received over the past year, and there have been thousands, is america's farmers and producers work extremely hard. the one to keep working hard and they are not asking for a handout. what they want is a level playing field, nothing mo and nothing less. that means they want market transparency, they want market access and the want market fairness. and my view and sick at three vilsack's view and president obama's view, that's exactly what they deserve. vigorous and appropriate enforcement is and he essential component of our commitment to ensure market fairness and robust competition. in addition to this workshop series, our commitment has resulted in a joint task force between the department of justice and agriculture that is focusing on agriculture markets and industry issues and it has resulted in a simple and

accessible online submission process for reporting concerns and complaints. that process is outlined on the department of justice website and i would urge all of you to utilize it to keep us informed of any complaints that you may have about unfair and deceptive practices. i also want to be clear about something. the critical channel of communications that we opened this past year and the secretary has indicated will remain open in the primitive justice and agriculture will continue working in close coordination to address your concerns and to ensure fairness and opportunity for america's farmers, producers and agricultural industry. all i am really proud that the the collaboration between the two agencies has never been stronger and that the level cooperation is driving meaningful, measurable progress, just last week ever joint efforts to resolve the long-running discrimination lawsuits reached a new level with the house passage of the

claims settlement act. this legislation represents i think a historic step in ensuring farmers who face discrimination by their government receive the justice that the desert. it also plans to seek further transformed relationship to the federal government and the many americans who rey on a fair and effective claims process. while i am proud of this and all that has, all of that has been achieved this year, i recognize we still have further to go after workshops on poultry, dairy and livestock issues, today we turn our attention to and after at cuts across all facets of the agricultural industry. pricing margins. i understand many ofears we have encountered is nuanced, that is not black or white. i realize farmers don't receive their share, it can pose a serious threat to industries and to ensure fair and competitive

sector cultural marketplace for farmers, producers and consumers alike. i know the pricing margins must be more fully interested. so i look forward to a candid and for this conversation today and to further disussions in the weeks and months ahead. these workshops have marked an important and i think unprecedented chapter in public private collaboration. and although this is the last workshop, it is not a final chapter. as our conversations carry forward, i expect our efforts will continue to be sharpened and continue to be strengthened and i'm confident the nation will remain a great place to do business. thank you all once again for your particition and for your commitment to the goal we share, justice, fairness and opportunity for all. thank you. [applause] >> general, thank you very much in the process we have followed

in the workshops is to open the workshops with remarks an fall with a panelist discussion and i want to take this opportunity to introduce some of the panelists. before i do want to acknowledge and sickened the comments of the attorney general concerning christine varney for the and trust division. she has been passionate but these issues and at a free workshop including engaging in a free workshop and has been working with our team to better that communication. the attorney general talk about. so christine, thank you for being here. just to give you a little of her background, she has called leadership positions in both the public and private sectors from 1998 to 2009. she was a partner at hoeven llp in washington, d.c. where she served in a dual capacity as a member of the antitrust practice group and head of the internet practice group. from 1994 to 1997 she served as a federal trade commissioner at the federal trade commission and

was leading official on a wide variety of internet and competition issues. prior to her service in the federal trade commission she served as assistant to the president and secretary to the cabinet during the clinton adminisation. thank you for being here. now the panelists, and again we want to thank each and every one of these individuals for taking the time to be involved. i'm going to do this in alphabetical order and start with you. doug burkett is a farmer in mississippi. his family has or 121 years. once was a cotton farm and gross 16 varieties of such couples and herbs for farmers' markets and local cooperatives. he's a director of the mississippi association of cooperatives and of the federation of southern cooperatives land assistance fund and also president of the national farm family coalition. sitting next to him as gary carpenter, the ceo of the national meat association assuming this position in 2007 following the 57 year career at

the usda. during his tenure he has actively represent the meat industry on an array of key issues ranging from food safety initiatives to immigration reform. he's been heavily involved in export issues especially working with the usda and ust are to support negotiations including a caribbean free trade agreement to open markets for the u.s. beef and pork. sitting next to barry is eric lieberman, a regular for counsel for the food marketing institute. prevusly he served as a majority of regulatory counsel for the house small business committee. from 2004 to 2007, he was a director of government affairs at the national grocers association. prior to that he served as the legislative assistant to u.s. senator bob graham. sitting next to me on my left is vaughn meyer beef producer from northwestern south dakota

managing a pure bred ingalls and red angus cattle differs abide by dry land farming is a seizure with his wife and son. the ranch was hosted in 1909 by his grandfather and purebred livestock was added in 1955 by his father. the commission does a second lieutenant in the army medical corps and has been involved state and local national organizations including the south dakota sto growers, our calculus and u.s. cattle association. next to him is than vincent for pacific coast producers, grocery own cooperative founded in 1971 which is made up of 165 family farmers in sacramento valley. he served as vice president of the private seals for te monte fo as was the credit for the bank of america he's affiliated with the national council cooperatives, the council of california is an important member for stereo

firms. sitting next to dan is chris waldrop colavita richter of the food policy institute federation of america and association of nearly 300 onprofit consumer organizations that seeks to advance consumer interest through research advocacy and education. chris overseas the reseah analysis and immediate of reach for all food policy activities at the institute s e have a broad cross-section of folks and the way this is going to operate, i'm going to open with a question and turn it to general holder and then we will sort of go back and forth. to get the audience just a sense of this, we know that consumers demand, and this is a question i am going t pose to all of the panels today we know the consumer demand is changed over the years and in some cases consumers are spending a significant amount of their food dollars away from home and restaurant, purchasing more

prepared meals at supermarkets, and the retail market appears to be concentrated to the processing retailing side and that may very well be a reflection of these changes. my question is tell us a little bit from your perspective how consumer demand in pact decisions on food marketing, and so those of you that work o represent at the distribution, can you walk us through how you ensure that that demand is being met appropriately? so let me start, ben, if you don't mind coming and we will >> thank you. in my area consumers want to

the consumer that local is the way to go. >> from the packing industry perspective, our customers obviously retailers and food service coanies our feedback on consumer demand comes through as they place their orders and they come to us for new products. the message we hear loud and clear is some things haven't changed. consumers want to have quality products and looking for product that has value. in addition to that, they're seems to be more and more of an awareness of making sure you get what you're looking for. and that is being dealt with

through progress. in a recent state come over two-thirds of the profit of the meat packages branded and the brands carry a message intended to develop trust for the consumer so the consumers are looking for credibility and that they are what they say they are so from a perspective our focus is to be able to fulfil those consistent, high-quality products.

>> -- can you hear me out there? as a producer and representing producers, we notice there's been 20% increase in the last decade here of certified programs, branded progra, and we realize that's what the consumer is looking for, but overall, i would have to say that the producer out there is really having trouble understanding what the consumer wants because if you look at our cattle cycle from last year, we've been going through cycles of 10-12 years, and these cattle cycles as consumer demand

decreas, then the cow number decreases and so on. those cycles are not there anymore. in 1980s we wngsed eight years of dispersions and lower numbers, and since 1996, we've been on a liquid phase of the cattle industry. i don't know that producers know what to do out there. there's several reasons, the age of the producers is getting up there and there's imports coming in and taking that over, but we do recognize there's 20% increase in the brand of product, but at the same time it's tough to follow out there if you study the cycles and add on our lick dation fees. >> thank you for welcoming us to be a part of this and the 165 family farms i represent. the thing that really changed in

the last 10 years and seeing in terms of marketing is, you know, how consumers determine the value has changed. it used to be just price, and now it's a combination of price quality and food safety recently. i think we've seen that a lot in the last two years, and i think it's delivering that value for our business. it's a little different than the meat cent store, commodity, or frts and vegetables. we do private label, and that's been a major marketing trend for center stores. i'd also echo what eric said that the process we go through with our customers is set out an annual plan or a seasonal packer so you do it once a year. we have his historical forecasts and put that together and work on a week-by-week basis.

we have things, bookings, they are just buying intentions, and we have to stay competitive throughout the year. >> i'm in a little disposition here becse i represent consumerrers producing food for them. i want to highlight one quick thing. consumers are becoming more an more interested in where their food is coming from, and it's echoed in the increase in the interest of the local and sustainable organic food, but consumers want more information period about their food, where it comes from is one issue. they also want to know that the food is nutritious and safe. they want more ifoation about what the ingredients are, what makes up the food, so consumers are looking for more information about their food, rtainly not less information these days. >> well, i think different parts of the agriculture industry

faces diverse challenges today which are likely to change moving into the future. with respect to competition, each segment of the agriculture industry may have different perspectives or how we can ensure there's a fair and competitive markplace. i question i have for everybody is how do you foresee major differences in the industry from your perspective in ten years, looking ten yea out, what do you think the major differences will be from where we are now, and following on that, what is needed from your perspective to ensure competitive and open agriculture economy in the future, so differences in the next ten years, and what do you think we need to do to ensure a competitive and open agriculture economy in at time period? we can start with n again. >> again, i think, the compensation of the marketplace is really placing an impact on

producers where you have maybe only four major chains controlling the majority of the market of fresh produce and vegetables. i think in the future in the next ten years that needs to change and open up and be transparent where cooperatives or signal farmers can be -- small farmers can be a major player in the market and receive a higher margin of the profit back to farmers. on the current structure we have now where the concentration in the dairy industry and growing vegetables with only four or five, and i think that should be -- i don't know how you can change it, but in the future it definitely needs to be restructured or opened up to different avenues of marketing instead of the distribution that

we've been going down to the st 15-20 years. it needs to be reorganized from top to bottom. >> can i ask a follow-up to that? >> is consumer demands going to drive part of that? >> most -- consumers are very aware of wanting to know where they food comes from. they want to quality of it, the safety of it, and i think family farmers in the middle of those are not necessarily the huge operatn, but those truly with the farmer's operation is they would seal that bond and farmers would know that a tomato -- >> when looking at consumer commands and what differences we see in the future, clearly it meets in the industry are going to have to go is to focus on those needs, and when you look

at where they are going, certainly i mentioned earlier the brand of the products is two-thirds of the market place, and that's likely to grow, and bringing in products we bring stainability and locally produced, specialty programs for natural and organic,hose are all going to continue and probably grow in the marketplace in looking at demand. what that does to the industry is that really dictates the need for relationships from the consumer back to the producer, and in order to fill those orders for natural organic or whatever it might be, you need to have a relationship from the production sector to the packers to the marketplace so that you can have a consistent supply of those products. consumers don't continue to demand that not only they have those options, but also that they can consistently get those,

now, as far as things that need to happen to get that done, you're really going to have to look to these long-term relationships to be able to create some value. the producers are creating value in life stock by going to the extra call, for example. they need to know they're going to have a mechanism as it moves through the marketing chain. to see success in the industry for all parties, and that's what has to happen for industry to continue, you're going to have to see more and more communications up and down the marketing chain and more cooperation to really target the need of the consumer because that's ultimately what the whole indury is all about. well, i think when you are looking to the future in the retailing side, you're going to see continued diversification of the market place. we've see that already now.

it's amazing how the market changed. 30 years ago, folks had to buy their groceries at the supermarket, but today it's diverse, so many retail channels where you can purchase groceries. you have the connectional supermarkets, superstores, chain drugstores, natural food stores, and dollar stores, so folks are going to more retail channels now and this resulted in very intention competition, so we're talking about markets pending llar, and in the future i think we'll continue to see cost diversification and require more competition and lower prices for consumers. you know, in the 1940s the american family spent 19% of their income on food eating at home. that's 5.5% today. this increased quality of life and increased competition is helping americans and i think it

will continue in the future. >> i agree with a lot of that of what was just said. what we see sting on the angus board, we seed a lot of demand for natural products. we don't see these going any one way. you have this group who wants that and that, so i believe that in the next 10 years we will probably see a lot of that. as far as communication at all levels coming back down from the consumer to the producer, we definitely need that, but the main thing of communication from that period from a standpoint of producers is that we have to be there just to struggle to be there in 10 years the producers will have quite a feat. at the rate we're losing 1,000 producer a month, that' alarming. you know, we're ready to work

and listen, but we have to be there first on the thg. we got to have fairness in the markets, and we'veot to have -- we've to be prepared for the product. that's the main problem we have. we have to be there. if you look at the consumer pricing last year up on all food product on 1.4%, and we out there as producers have a lot of fixed cost in that where our fuels, all fuels went up 5.4%, gasoline went up 9.9%, diesel fuel went up 14.5%. that's nine times over what we increased in food. our struggles as far as producer in the next ten years is just trying to behere to produce those foods for the consumers. >> well, i think what wee seen coming in the next ten years is looking back the last ten years the trend we saw with son sol dation. the --

consolidation. ten years ago the top ten accounts in reil were 50% of our revenue. today, it's 10%. we have two accounts now that make up 90% of our foo service business and they pretty much sell every account in america. i see that consolidation, at least the trends we see in the new customers we talk to, and i think eshic's right, it's kind of spreading out a little bit, the new players, limited assorted players, trader joes, those kind of people, i think that level of consolidation has peaked, and now it's going to fracture a bit which i think is good for everybody, and i do think looking into the future, i think a lot of these current issues that are important to consumers like food safety, sustain blght is a huge -- stainability is a huge deal. we do stainability in farm up to the supply chain, and ethical

practices are becoming a big issue now, audit, i think that's going to continue, so -- >> chris? >> on a couple things in terms of consumer demand in the next 10 years, i think there's going to be an increase in consers wanting to eat healthy, wanting healthy nutritious diets through increased fruits and vegetable purchases, but increase for demand of information on food and having nutritious and convenience will be a driver for consumers. a lot ofous households have -- a lot of our households have two incomes so we want something easy. we're not getting any less busy and as consumers we become more educated overtime and incomes increase. the's a variety of foot and having a true riety that's

available. i want to caution us in making broad statements about consumers. it may be true that consumers generally have more access to groceries in various retail outlets, but that's not the case of all consumers. low income consumers, especially folks in inner cities, they don't have the same access because of a lack of retain establishments, and usda is trying to change some of that, but there's been a long time period where we had consumers, low income consumers in urban areas have not had access to healthy fruits and vegetables and other healthy foods because they don't have access to retail outlets. >> chris, let me add to that, it's not just urban centers. >> okay. >> there's areas in rural communities where you are 20 miles away from the nearest full-scale grocery store. it is an issue, and it is one we are trying to address at usda.

i wanted to touch on something that vaughn said to give people a touch of this. if we went back to 1980 and asked how many pork producers there were in the country, it would be 167,000 pork producers. today67,000. 90% are out of business. cattle producer was 1.6 million in 1980 and now there's 975,000. in the dairy area going back ten years asking how many producer there were there was 110,000 and today there's 65,000. to reenforce the concern about the fact there is a reduced number, and if you look at the people that produce the bulk of our food, 85% of our food, it's really about 200-300 farmers, and if you look at farmers

generally, it's 2% less, a roughly one tenth of 1% produce 85% of our food, and if you look at who is making money in farming, and who is just barely making it, what you're going to find is 1.9 million of the 2.2 million farmers in the country are losing best years we've had in awhile where farming is up 31%. those farmers in the middle make an average of $64,000 in the -- 6400 in the farming operation. that's not enough for a family. that's the challenge. the folks producing t most will do well financially this year, but the bulk of folks who farm may not which is why we need farm income and rural development. that raises the question. i want to post this to eric and barry, and dan, if you want to pipe in, please feel free to do

so. i'm curious. in terms of the relationship, you talked about relationships, are you seeing the more specific requirements being demanded from grocery stores, and specifically is there a difference between the large operations, the walmarts, the safeways, in maybe smaller independent operations in terms of what they are demanding. >> i'll go first. the demands are very specific in most cases. the relationship between the packer and the retailer, and the food service generally tend to be long term relationships, so what happens is the packer actually works with their customer to identify what their specific needs are, and even to r and d to develop products that

they want to sell so they can maximize the value of that produc so what we see happening is you see communications and relationships becoming stronger and stronger between the packer, processers, and food retailers. you can't satisfy those needs without those relationships back to the suppliers because many of the attributes that are being demanded by the retailers and food service originate with the life stock, so in order for the packers to have a consistent supply of those products that are unique to those retailers, they have to have arrangements with their suppliers so they know day in and day out they get a consistent supply of the product. as far as the size of the customer, there's not much variation there. they all have their niches and needs and whatype of products theyant to sell to the consumer, and they come to the

packers, and they target those. one of the complex things in the packing industry is diffent packers have different customers, obviously, and they tend to be long-term customers, so the type of life stock that one packer needs to fill their ders, may not match another. one packer is willing to pay a premium for may be a price for the packer because it doesn't fit their mold. this connection from the product of life stock to the ultimate consumer is very critical, and the attributes that they are wiing to pay for and up zest on have -- insist on have to flow through that process. it has to be a very transparent process so the message goes quickly from the consumer back to the life stock producers so they can sort the management and target the needs of the market marketplace. >> mr. secretary, i think it

varies. when you look at our members, some of our smaller guys like the branded meat programs and use it to meet the demands of their consumers. some of the bigger guys like the branded programs, others don't. it's not a priority for them, but a number of retailers do have specifications for the meat they sell. they may relate to breed, consistency, animal welfare, or something like trade size, and retailers pay premiums for these products, and this is increased the quality of the meat that you're seeing in the store, and also combined with a vigorous competition on price, it's help to stem the decades long decline to meet con sulings. meat consumption supplies from 1989 to 1998 declined 50%, and that's stopped. i think value added branded

programs have reinvigorated consumer interests in the meat case. our last meat survey says quality is the number one factor in retail, and i think some of the premium meat products are bringing more quality to the consumer, and that's generated demand. >> and how about on the vegetable side? >> the demand changes growing? yeah, definitely. those have definitely changed. they are asking for us to add a lot of value to the equation for the retailer or the food service distributer and ultimately the consumer. probably the biggest one, you know, in the past ten years has been managing supply chains. before it was all picked up for products west coast, and now it two days to market with 48 warehouses to manage and they expect us to manage the inventory and get them to market, and that's why the

relationships are important because you move inventory all the time to keep them stocked. we talked about sustain bilityd, ethical practice, those are really hot items. food safety is the bigst demand that's been asked for. like at our plants, there was 45 separate audits last year. these are customer audits. the big initiative that i think we'll all see in the next couple of years if we're already there is global standard sfety initiatives. we're at level 3, so i think you'll see everybody there. >> chris, question for you. you touched on this in the your remarks, consumer demands have changed, and some say they changed to operate under increasingly tight budgets. both parents work, you know, long hours, and families need food that's quick and easy to

prepare. i know that's how my household wos, and you have sometimes one person preparing the food, and that would not be me in my family. [laughter] has your organization done any studies or have any perspective on how these lifestyle changes impacted consumers and changed consumer demand and do the options that we see on store shelfs dictate consumer choice? do you feel consumers have more or less traits today than perhaps they did in the past? from that perspective, is that good or bad state of repairs? and about prices, do you think prices have stayed roughly the same over the years? have their increased? have they decreased? and if you think they have increased, what doou think is leading to the higher price? that's a whole series of

questions here, but have at it. [laughter] >> i'll try to hit them one-by-one. i think that the issue you bring up about consumer's busy lives and two-income households, that led to consumer demand for veensz, for -- convenience, for food that is already prepared or partially ready to eat that consumers can take home, heat up, and serve as quickly as possible, and we've seen not only food companies, but also retailers offering more packaged foods, ready to eat foods that you can go there, get a roasted chicken, and it's ready to go. those types of things. on the issue of choice, i think there is more choice than we had, you know, decades ago, but part of that, i think, is the allusion of choice in that one company is honing many different

brands so consumers may be thinking that there's a difference between a couple of different types of food, but it's all owned by the same company, it's just different brands under one company. consumersment more information about their -- consumers want more information about their food and they don't have that to make informed decisions or understanding of what's going on, and then on the press issue, i think prices have gone up over the past, you are g ditional money, and then -- or let me start again. if supply goes down and prices go up, prices go up pretty quickly for consumers, and consumers have to pay that price. when supply increases, prices don't go down as quickly as they go up. there's a number of different reasons for that, but that's something consumers deal with in having to pay for.

when those prices go up quickly, they have to pay for that often and go down as rapidly, and that affects them to a greater degree because they spend their disposal incomen food. >> you talked about -- >> i just wanted to address kris' statements about the crieses going up. that's not by the stalks when you look -- stocks. when y look at money sphenltd on foods in regime at home -- when you look at money spent on foods from home, it's plummeted. 50% of our family income on food, but now it's 5.5 pcts. i just wanted to make a comment on that. thank you. >> chris? >> if you were paying a small percentage of our income for food, does that mean that you

know, that the income that we have has increased in relation to the prices that are charged or is it that prices have gone up? what do you think the variables are? >> well, when you look at that statistic, that's the realost delivered to people. the real cost there's no question that it has gone down tremendous, and that's rtainly raised quality in our country. you know, even today and other industrialized nations, they spend 15% on food. look at russia and china, 30%, indonesia, 5. you can see how that raises the quality of life in our nation, and it's essential to consumers. it's beneficial. >> i want to make sure there's clarity on this point. there's a difference between what we spend for food at home and what we spend for food totally. >> right. >> we obviously spend a lot of

resources -- >> now we spend money at restaurants. >> right, so what is the percentage of what we spend on food in total? >> that has dropped. in the 1940s it was about 20% on food total, and now today it's around 9%. it's dropped tremendously too, but for food at home, purchasing at at supermarket, that's dropped at a faster pace. >> can i ask a question there? ishere a component to that due to flongsuation and consumers cut back. i remember growing up when milk got expensive, and we would cut back on milk. there must be a myth in the basket that also -- it seems to me prices have gone

up and down at the retail level. >> yes, prices flux chat, but they are including the staples. consumers will buy milk, meat, produce. we need that to sustain ourselves. they have changed, but because the competition is so intense in our industry and the margins depend on the dollar, the prices consumers are paying have declined consistently over the past many, many, many decades. >> if i may, when prices go up, they go up quicker an they go down. >> that's also a phenomenon found in all industries too. that's because the decisions you have to make to lower prices take a longer time than they do to raise prices because you have to get labor, expand

production. you take a bigger risk. that's the bottom line, and the justice department did a paper on this recently explaning that phenomena. >> i'm curious, the word relationship is used here frequently in the short time that we've been visiting here. for the producer, i'm interested in your perception of that relationship, and for the folks who are representing packers on the retail side, are these relationships because they are long term, is it more difficult than for someone who wants to develop a relationship to be able to do that? in other words, if you are having a relationship, a packer to a retailer, how does another retailer engage in an opportunity if the relationship is so strong and so long term? we'll go right down the line.

>> speaking from the producer side, it takes a year to build a relationship to become a vender or a whole foods or a safewayto get into that door. it takes several years and producers on my side, it takes a long time to develop that relationship. i tend to disagree that the variety of food in the supermarket is more. i think it's even less. it just been repackaged. it just been different branded, and if you go to the supermarket now, you were buying a pound of leaflet toc, but if you look at the bag, it's 12 ounces or 8 ounces now. i think if we are to continue 20 years down, we want more farmers, more of that retail dolls have to be returned to

farmers. i know the gentleman stated that the supermarkets buyer told me they operate, i find that hard to believe. if we're going to profit, we have to increase the number of farmers we have or hold on to the ones we have so the margin is areat return to the farmer, and that's the ly way we're going to increase the number of farmers or maintain the ones we have because what we are receiving as farmers is just too low to continue to operate. >> well, when we talk about relationships, i think they take lots of shapes and forms in the industry, but clearly as you're trying to satisfy the need of a customer, you feel this trust is built up, and the product

development associated with it is built up, and it makes it very difficult for others to fit into that mix especially between a packer and a retailer, but certainly the overriding factor is competition and ultimately price and the desire to keep the prices as manageable as possible. on the othe end of the equation, the relationship with the producers is somewhat different in the sense that producers depending on the complexity of the product, i use an example. if you're producing cattle transport to europe, that's a lifetime commitment that they have. you're looking at probably 20-24 months commit on that animal before you can market it. it's very unlikely that producers will get into that marketplace unless they know they have a commitment to buy that product so it can be marketed in a marketplace that will catch full value. those kind of relationships become fairly firm where they really have to target very

specific atritts. -- attributes. in the case of lesser demand, maybe something like on the angus program, the relationship is not as firm, but there needs to be a relationship there because you're going to supply product, and if i'm supplying this product, i want a premium for it knowing ultimately the consumersaid for the premium. they want to pass need funds back through, and everybody that added the value can cash in some of that value in the process. i think that the relationship is critical. it's certainly there are opportunities given the cattle size right now, and especially the demand for life stock is certainly much exceeds the supply side. most of the packer members are not near full capacity, so there's certainly demand there.

the export markets are there, anded demand is there, so if a producer has a product that fits the need of the ultimate consumer, and there's a packer that services that consumer, they are all welcome and invited to be a part of the marketplace because the demand is certainly exceeding the supply in these unique programs. >> thank you. >> it's all about meeting the consumer. it's working with suppliers large and small. we're interested in any product that consumers want, and with the smaller guys, many of the retailers work with them to help innovate products that meet consumer demand. we have a lot of resources that can help suppliers in terms of consumer behavior, so we work closely with them, and even on safety standard, we'll help smaller, some of our members work with the smaller producers and suppliers to help them meet the rigorous safety standards we

have and make sure all the foods we're selling are safe, so we -- yeah, there's lots of opportunities. >> if i understood your question correctly r you kind of related how to retailer get in with the wholesaler, the opportuties once they're going with the clients. the only connection i have wh that is through the angus association and certified angus beef. they have to meet certain specifications and jump through hoops, and we monitor them wn they are on and make sure they advertise our product. we have no problem. there's usually quite a waiting list for people to get on with that, but we work with them and make changes where possible, but as a producer, there are

producers out there, neighbors and friend who market their cattle through various programs like all natural and a third product, and, you know, they have been careful with the shots and documenting all of that. most do it for a year or two and switch to go somewhere else because the premiums are not there is the main reason. i guess they start out with great hopes in that and find the extra cost of the workload in that and it doesn't worthat way, and you usually see them switch. in order to join those verified programs and a lot end up feeding tem through custom lots and sign contracts, some of those are open of ended -- open-ended contracts on price, d those prices will be on the base price the day cattle are harvested, and base prices are usually on a diminishing scale.

it's usually going down. i myself have said that cattle for three consecutive years where some of those cattle went through a brand of program with the association and some of the cattle went along of the same time and same genetic makeups were of a different breed, and they went through the cash price for that day, and the cash price or the base price difference between the ones that went through there was anywhere from a dollar to $2.75 lower. as a producer, they usually get discouraged because there's no firm price at the end of the rainbow for us. >> a question on the relationships. you know, you know, the one thing we bring as a supplier is we have a cost. the farmers have a relationship with the retailer or the food service contributors. that's something we bring. with that said, i think it's, i

think ben mentioned it, i think it would be very difficult to be a buyer mainly because it's varied. they have been consolidated too. there used to be 10 buyers, and now there's one buying 10 categories. they are busy and one of the relationships they value. if you take care of equality and supply chain and keep those in line, that's what they value and get business year to year. you still have to be competitive with that said. both of our major food suppliers put us out with a bid this year and lost businesses we've had for years to a chinese importer. you still have to be competitive, but i think those things you add, the things that they value in the relationip are important, or i kn they are, and then we have to keep it every day. >> that particular relationship is sort of outside of where we

are on consumers, but i will say there's a small, but growing segment of consumers who are settling their own relationships with farmers and places that provide food in farmer's markets and things that are going directly to the source and getting their food that way. >> the issue of margins is often the topic of discussion that comes from the producer level and a retail level. some have said a retail or a packer profit margin is very thin. now, without getting any kind of proprietary information generally speaking, what are the margins that a retailer contends with or what does it take to generate a profit? what are the fixes variable costs that retailers operate under an packers pass those costs on down the marketing chain? >> i'm happy to addrs that, mr. attorney general.

profit margins in the industry are very thin. we're talking a penny on the dollar, and i think there's a misconception to that meat is a profit center in the stores. i know when i joined the industry, i thought it was, but that's not the case. meat is frequently a loss leader and the margins are meat are considerably lower than the margin on the average product in the storement now, like other -- store. now, like other products competition is really fierce on meat. there's been discusses about the farm-to-retail spread determined by erf, d how the long term trend shows that spread widening, but i think it's far too simplistic to look at the spread between the farm price and retail price and assuming the retailer is making profit on the meat. it was cautioned about using the data in that way and state the retail value figure they figured

overstates retail values and it's not a good measure of what consumers are paying in the store. one of the reasons is because it's not volume weighted. you want prices that generate demand, and a huge portion of the meat products sold are on sale or on special. there's also an assumption in the erf data that supermarkets sell beef from a wholesale car cues from the day they purchased it from the farmer which we know that's not true because of the time it takes. the cost we face, of course, are transportation, warehousing, labor, refrigeration, rent, overhead korsts, and those are not reflected in the spread data, and these costs are high, and they are growing. it's also important to consider that we can't really pass those costs on downstream. it's very difficult because of the intense competition on

price, so it's also important to contemplate that supermarkets just want meat too and restaurants and exports have become more important. usda say the retail price has less of an affect on retail prices than they have in the past. >> where do you look for profits? i mean, where do profits come from if meat is as u say, sometimes a loss leader or the mar margins are very small? >> yeah, profits are higher on packaged goods. >> okay. >> and they are a little higher in produce too, so those are some of the areas where the profit margins are better, but they are really, really narrow. >> how about dairy? >> i don't have the dairy data in front of me, but i can go through the files and get that.

>> i can add to what you just said there about the costs are not passed down. you're stuck with them. i agree. a large margin of them are not big in that, but indirectly, a costs when the consumer quits buying comes back down to the producer. they come back down to e wholesaler, and the whole wholesaler has one or two things. he can drop prices to you or cut production. he has costs to meat and production lines he has to keep busy, so usually the alternative, and nearly 100% of the time is to lower his procurement costs. indirectly all costs do come back to the producer. >> we've also talked in addition to relationships about the word drains paraphernalia sigh and --

transparency and i'm interested on all the panelists commenting on this about the market chain and what you know about your piece of it or whatever it might be or whatever your organization whatever piece your organization might be involved in. do you believe there's adequate transparency in communication in the chain tay? if you d fine. if you don't, what changes would you suggest weonsider? let me start chris, if i could start with you. >> sure. i would just point, again, to the information needs of consumers, and how those are not always met. an example of that is country origin labeling which was thought for a long time sic information where commodity products come from. we do not have that information. that's not on all products. it's not on packaged goods or

dairy and some other areas, but that's an area, again, where consumers could have more information to be better informed when in the marketplace. >> yeah, i would say you're right, chris. i didn't think of the dairy in the transparency, but there is transparency of what our customers ask us about retailers. they need to know where the products are grown for recall as well. we have farm business every year, and then on the information side, they need transparency to know where the products are at all time all the way from distribution and pickup. >> about pricing? is there adequate transparency in pricing? is there adequate information for a producer to know that they are getting a fair price? >> oh, for our producers, it's pretty simple because we're all -- they have commercial price

negotiations, so all of our products are represented by associations like the california tomato growers association or the peach association, so there is a mechanism to cool all of at, and then find it. it works well. if our producers are not getting the price ty need, we see the supply go down, and we don't negotiate, but our target internally is to meet commercial price, or we wouldn't have a co-op if we didn't do that either. >> as far as transparency as the label offering, there's producers out here that are willing and many of them are working with that now today to identify their product and pass along that information on to the wholesalers. whether it gets on to the retailer and customer, that's a big if. i suspect a lot of that gets lost along the way. i have neighbors documenting

where the calfs are born and the treatments they've had and when they are born, but you never see that at the retail counter. it may help sell the product to the retailer, but i don't know if the consumer is getting that. transparency on price, there is no transparency. we're at the mercy of whatever they want to give us out there. 66% of the markets are now through contracts, and many of them are open-end or alternative marketing agreements, and those really are working against us because they have a group of cattle under that contract that they know they are coming on such a date, and if there's enough cattle in there, they don't put kids on any of the cattle like through the auction markets. they tell the buyers not to bid because they have enough for a week or two, or if there's an

import product coming in, that works against us too. they may even use that nonbidding process and they own a lot of cattle themselveses, 10% of the cattle that go through a packer owned cattle, and they can bring them in and not have bids for aeek or two, and those are cattle on feed to wait longer on feed and that increases our price too. basicall there's no transparency, has not been any, and the best reference to this is the fact that in the farm to retail spread, we've lost 20% of our reil value between 1970 and 2002, and if you check that out, the wholesale end has picked up 20%. >> there's no question that prices are more transparent for consumers at the retail level. i just got a smart phone not

that long ago, and it has a bar code application in it, and i can scan the product in the store and get a price online for them and see what other retailers are charging, so that's quite remarkable, and it's driving competition and making the consumer even more aware of the prices, so i think the trend is with increased technology and more of these apps, we're going to be seeing even more competition and more transparency. >> erik will show you that app at the conclusion -- [laughter] >> transparency in the market place is very effective in the life stock industry. that is very well driver by usda demand for price reporting. the packers report all their transaction on the life stock as well as their sale of products, so that information on the value of the product is very available. it's online.

it's a very timely information multiple times a day. i think when you think about pricing in the life stock area, it's all out there for the industry to look at. when you start talking about things like price from farm gate to retail, all the sudden they are losing sight of what they are trying to be transparent on. this -- when you look at -- when you look at price trends and compare it year to year, you're really apples and oranges at best. just looking at the meat industry, a few key things i would mention that have changed the spread from farm gate to retail or to food service, when you start thinking about regulatory changes, food safety changes, food safety alone in the last ten years, the number of additional interventions included in the packing industry, the cost of regulatory

impact of that, the cost of recalls, the cost of testing, the additional costs that have been incurred by the industry just to get products through the process totally differ from the way they were 20 years ago, and as you said, looking at key ings, product changes. all of you can remember a retail market and the traditional trim was a half inch of fat up to an inch of fat. that's not there anymore. that product has changed. the process has changed. it's really erroneous to start looking at a trend compare year to year. it's requiring different information to see that spread. if there's a lack of information or transparency is really misguiding. >> from a producer's stand point, i don't see any

transparency. from the time a farmer plants a seed or births an animal, you are looking at the long term commitment there. dairy farmers, these cows have to be milked every day. en you have a sale for this milk, whether you get 1600 or $21 per week, you still have to milk the cow, and in the case of where that money goes, a plant of watermelon seeds in 90 days is ready to be harvested. i have a parishble product. consumers can use that because they know what we are growing has a life span. we have to move the product. we need that suppo of the safety net from usda, from the justice, and from the industries. we are secured by a prayer in

the marketplace so we can survive. transparency i don't personally believe it's there in that sense from the producer side. >> a last question to a follow-up of what ben was saying. it's obvious that producers need packers just as packers need retailers and the marketing outlook. everybodhere works in agriculture in one form or another. as a wrapup, i'll make you kings of the industry. you have absolute power. what do we need to do to make sure all segments are profitable and there's fairness in the market. what would you do, total power to ensure profit abilities and fair -- profitability and fairness? n, you. >> if i were the king, i would do with the all th major corporations [laughter]

>> that'll take care of it then. >> yeah. [laughter] >> while i'm king, i'll do it a little differently. [laughter] i think, of obviously, food is essential, and the more cost effective that process can be, the better, so i think the more we can strengthen the communications and relationships between the producers of life stock to the ultimate consumer, the more efficiencies you build in the system, the more, the better quality, the meeting of needs. with that said, everybody in the sector has to be in a profitable situation. that doesn't exist. packers incur certain costs that need to be dealt with, but in order for the industry to survive, you have to maximize the total marketplace, and that's looking at things. if i were king of the day, we'd do away with the market access

issues we're having. it's limbing the ability to cash in on the physical -- full value of life stock. we need to take out restrictions and the burden that's in there to make it more streamlined and more efficient for everybody in the whole marketing chain to be successful. >> well, -- and that's just left with the best food in the agriculture system in the world. we enjoy the safest, best quality, freshest, and best food in the world. everybody here deals with that system. they have expanded access to quality and american goods to the american people and both usda deserves a tremendous amount of credit for tt miracle which is our food system. it's a question of improved qualitof life, and ts is essential to the american way of life. competition is why our food

system is so phenomenal. our retail profit margins are thin, and surveys show that shopper satisfaction continues to rise and 6 out of 10 people recommend their store to a friend. the purpose of the antitrust laws is to protect competition, not competitors. competition is more inten that it has ever been in the grocery industry, and consumers are benefits greatly from it, so this competition must be maintained. >> i agree with what was said on communications to keep communications in this industry, and if we do enjoy the faith of food in the world at this present time, the producers out there, a lot of them are a very

patriotic bunch. they realize what they have in this country, and most of them want to continue to see that this is a great country, and there's great concern out there by the amount of food that's not coming from our country anymore, and that some of our better food that is being ground and added to that product to make it better, but there's still a safety factor in there. i would say a lot of producers are concerned about that. as far as competition, we -- the best thing as producers can e out there is a lot of people, and i've heard it here since got here, are talking we don't need more government telling us what to do and all that, but we had the packers act since 1971, and it's done nothing to us. we need some rule if packers are going to remain in this game, otherwise we'll see producers in

mexico, canada, other places. you won't know of an american producer pretty soon unless it's a giant firm that's running tens of thousands of cattle out there with a contract with the packer. the family element is in real danger as far as production in agriculture is concerned, so i guess the best thing we need to do something now and quick, and the best way to enforce the rules has been proposed in the last year, and i guess i would like to see these rules enforced. there's things that may have to be addressed in them in e final rule and changed to make them more workable and everything on that, but these rules are designed to prevent the injustices from happening, and part of these rules also say that if those injustices continue, they will give me or any other producer out there the same options to go into court just like any other american or any other american industry or entity, so we need to have the rules and we need them

immediatel [applause] .. we are asked to do a lot of thin, especially in california with environmental air. we have 4000 jobs we provide good working wages. we do a lot of good things i

think are important and i think ultimately good for our country. but it's very difficult when i have to compete against in import wre none of those things are required except the price. and somehow that value is implied when you find in america. i don't know what that come from, but it has to be recognized. >> i'm aconsumer advocate, but to hit on couple for the purposes of this discussion, one would be information that is 54. that's where consumers to be able to have enough informatio to make decisions when they're in the marketplace. i would improve access to food, but specifically healthy nutritious food that is affordable, particularly for low income. and because i do most of my work i do have the safest food supply of the world.

it's not as good as it needs to be and can be in a 5000 people to get sick every year -- die every year from foodborne illness and that is something that i would approve. >> well, thank you all very0000 much. we are going to give the attorney general an opportunity0 to close, but before i do, i0 want to thank the panelists for their informative and interesting conversation and on0 that points out the complexity of these issues that we're0000 dealing with and the difficulty in determining at what pnt to and then the second panel will be focused on margins

in the dairy industry. mark tobey was a special account for agricultural antitrust division of the department of justice will moderate a panel discussion. and that'll be followed by public testimony, an opportunity for people to put their comments into the public record that are assembled from these meetings. they will be a break for lunch and then we'll have a third ammo focus on issues in food retailing, going into more of the issues that we talked about briefly in greater depth. again, sure as those in who is the chief of staff of the food division will moderate the decision. i will be followed by a beak and then the final panel which will begin the livestock and poultry industry. jay's journal was from the usda will be moderating a conversation. what havoc in additional conversations for public testimony if we hadn't included all of the remarks earlier and then we will close hopefully

sometime around 5:30 this afternoon. i want to thank everyone. general. he made a pledge to be fully participating in these hearings and i appreciate the fact that he has traveled and not christian varney has traveled to his to the folks who are farming the land and you are responsible for the food supply we take sometimes for granted, a food supply that is abundant. if that's what i does provide us greater flexibility their paychecks and most of the folks around the world have any food supply that comes from folks who really do believe that the basic fundamentals of this country and you simply want a fair shake in return. so mr. attorney general, for his stories. >> loafersi think i saw the other panel that i participated in conversations that we've had

this one for me but has been extremely enlightening. i think were talking about, you know, a segment -- a fact or of our economy that's really more than that. it is defined, i think, what the country has been over the years, who we are as a people, who we are as a nation. and i think it's an important ing for us to focus on because they think we will find who we will become in the 21st century and even beyond. our concern that the justice department as well as agriculture is to ensure that we have fairness in a good and important part of our economy, that it is as profitable as it possibly can be and that we put as much transparency into the system as we possibly can. so that ultimately all components, all parts of the sector do well and that the american people ultimately are the beneficiaries of our action.

we are under bernie's leadership determined to stay tied with agriculture in ensuring those three things. as isaid fairness, profitability and transparency. unestablished between justice and between agriculture that did not exist before, that existed before. our pledge and the obama administration is to stay involved, continue to listen. we have thoughts, we have ideas, but we know that we don't have all the answers. but as i think one ofhe real values in these workshops that we have had. we will use the information that we claim from these workshops and then from the tousands of comments as i said that we have received as we are developing enforcement policies, practices so that we do all that we c to ensure the continued viability

of this very important part of our economy. so it's been a real pleasure for me to be on this panel with all of you any real pleasure to have this new relationship with my colleague at the department of agriculture. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] up next, the house debate on the two dozen of loven spending

bill. live coverage of the house of the reimbursement rates. the senate banking committee holds a hearing today on the credit union industry purdah -- per industry. live coverage begins at 7:00 a.m. eastern. >> as you work on your documentary, here are a few tips from our objectives. >> i'll look for use the stadium. i want to see you and your personality. then held serve video stand out. >> i see a real investment in care in the topic. the share to be interested in

what you are telling us. >> 1 tie-breaker for me was the requirement on using c-span video. i want them to look at the continent and say what elements make the most sense for telling the compelling story. >> for all of the rules, go to studentcam.org. >> you are what seem c-span. every morning it is "washington ," connecting q with interviews. of the weekend, you can see our interview program.

you can also what our program any time at c-span.org. it is washington your way. >> yesterday, the house passed a spending bill to fund the federal government their next year. it is less than the president's request. here is the debate pitta it is over an hour. mr. obey: i call up the bill h.r. 3082 with senate amendments thereto and have a motion at the desk. the speaker pro tempore: the clerk will report the title of the bill, designate the senate the clerk: h.r. 3082, an act

making appropriations for military construction, the department of veterans' affairs and related agencies for the fiscal year ending september 30, 2010, and for other purposes. senate amendment. mr. obey of wisconsin moves that the house concur in the senate amendment to h.r. 3082 with an amendment. the speaker pro tempore: pursuant to house resolution 1755, the motion shall be debatable for one hour work 40 minutes equally divided and controlled by the chair and ranking minority member of the committee on appropriations and 20 minutes equally quided and -- divided controlled by the ranking minority member of the committee on commerce. mr. obey and mr. lewis will each control 20 minute, mr. cacksman and mr. barton each will control 10 minutes. the house will be in order.

the chair recognizes the gentleman from wisconsin. mr. obey: i ask unanimous consent that all members have five legislative days to revise and extend their remarks on the pending legislation. the speaker pro tempore: without objection. the house will be in order. members please take their conversations off the floor.

80% has gone to the luckiest 10%. families are hurting. what has been the response? it is to spend $80 billion to give super says tax cuts to millionaires. and of the 24 billion to give families a pass to paying taxes. washington politicians are singing pious songs about the need for deficit reduction provoke. i hope congress is not to offended to recognize that we must deal with long-term budget deficit but we also need to

confront our investment deficit in jobs comment education, and infrastructure. that is the context that the bill is being considered. spending $46 billion less than the president asks for this id funds the current shortfall in grants for students. maked adequate adjustments to meet military pay and health kansases. it provides the department of defense $513 billion, which is $4.9 billion more than last year with corresponding cuts on the

domestic side of the ledger, i'm sorry to say. i'm sure we'll hear a lot of talk about a number of changes in the bill. the number of hard choices we had to make in this package to try to keep uncle sam from being uncle scrooge this holiday season. john wesley admonished to us to do all the good you can, by all the means you can, in all the ways you can in all the places you can at all the times you can, to all the people you can, as long as ever you can. this product falls embarrassingly short of that goal. but i make no i apolings for the fact that the committee has done its dead level best within the constraints under which we're operating to make some modest adjustments to salvage some investments which over the long haul just might create more jobs than tax breaks for millionaires and adjustments that might ease

the financial desperation faced by so many families today who cannot afford to send their kids to college to find decent child care or to provide adequate medical attention to their needs. so we have had the unmitigated gal to shift gsh gall to shift additional funds@social security administration to ensure that people get their benefits without undue delay. in an outrageously socialistic attempt to provide some additional health safety protections for minors who have all too often been the victims of the mind -- protections for miners who have all too often within the victims of the mind set of owners who put more focus on the bottom line than mine safety, we have shifted money into that account. i hope the congress is not so penny wise and pound foolish that they will object to our efforts to further our efforts to ferret are out waste, fraud,

and abuse in social security and medicare. on a day when temperatures are dropping to five above zero in my hometown and we're a balmy 23 degree here's in washington last night, i hope this congress isn't too offended that we are recommended $1940 million above last year for homeless assistance grants to combat the growing number of families who are living on the streets thanks to the brilliance of political leaders in washington in managing this economy. those are a few of the modest changes we've made in what would otherwise be an automatic pilot course of action in a straight course of action in a straight continuing resolution.