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Mr. COOLEY. Mr. McIntire pointed out a moment ago that any merchant who is handling a highly perishable commodity in a rather fluctuating market, naturally, will want a wider margin of profit than one who is operating in a market where he knows that he has a reasonable chance to make a profit on a smaller margin.

I think one thing that this committee might be able to acc mplish, that is, to bring about an improvement in our distribution system, is by bringing about an improvement in our terminal market facilities

Mr. DELOACH. It would be highly desirable.
Mr. COOLEY. That is all.
Mr. ANFUSO. Thank you, Mr. DeLoach and Mr. Ogren.

Mr. Fisher, would you come up? We would like to ask you a few questions, please.

Mr. Fisher, your full name?

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STATEMENT OF MAX FISHER, ASSOCIATED FOOD STORES,

NEW YORK, N. Y.

Mr. FISHER. Max Fisher.
Mr. ANFUSO. What is your business, Mr. Fisher?

Mr. FISHER. I am with the Associated Food Stores, produce department.

Mr. ANFUSO. You have been here this morning, and have heard the testimony of other witnesses and you were good enough to accompany the committee last evening to the produce market. Do you have any observations that

you

would care to make with reference to that produce market?

Mr. FISHER. Where do you start? I think I told you last night, Congressman, that there was such an additional cost put on stuff that came into the New York market unnecessarily; that it was almost close to $250,000 a day which I do not know whether we can save the whole $250,000, but we could save a good part of that by eliminating unnecessary expenses.

Mr. ANFUSO. Would you mind explaining that additional cost ?

Mr. FISHER. Well, the setup of the New York market is not comparable to other markets. In fact, we used to have quite a bit of business from outlying areas that came to this market, the New York market, which we have lost, because the New York market if they bought a car of lettuce, we will say, in California at $3 f. o. b., the same as another outlying market, we had additional charges on each and every package because of our physical setup, that we had to get more for each package than outlying areas.

Mr. ANFUSO. What was the result?
Mr. FISHER. The result, of course, was put onto the consumers.
Mr. ANFUSO. And, also, the loss of business to the market?

Mr. FISHER. That is right. Mr. Cooley said this morning-he was corrected, but he was not far wrong-he mentioned that New York enjoyed at least a 20-percent business of the perishable productsalmost 20 percent that was shipped from the West, from the South, but we are down below the 10 percent-like that gentleman saidI do not know his name—he said, he is probably right, it is probably high at 10.

Mr. ANFUSO. What is your recommendation, Mr. Fisher!

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Mr. FISHER. Well, my recommendation, I think New York should be or is entitled to a terminal that would be able to handle these commodities from the South and North and West without these additional costs tacked onto them.

Mr. COOLEY. You do handle a tremendous volume of fruits and vegetables even now in the Washington Street Market, do you not?

Mr. FISHER. Yes, sir.

Mr. COOLEY. With a modern marketing facility you could probably double the volume that you now handle?

Mr. FISHER. That is right.

Mr. COOLEY. You are familiar with that market, I am sure, the Washington Street Market; do you not agree that it is actually a disgrace to our American distribution system that we tolerate a market of that kind?

Mr. FISHER. It definitely is. Well, most of the space, the buildings that are there are not being utilized. A lot of old, antiquated buildings. They are dirty, and the merchandise is pulled through muddy streets, through the rain and slop, like you saw last night.

Mr. COOLEY. Trains and trucks cannot easily reach the market place?

Mr. FISHER. That is our problem. You see, I think if we had a train terminal where we would be able to have access to the unloading of cars with trucks direct, without the extra transportation charges, that would solve the biggest problem.

Mr. COOLEY. You are in the distribution business itself, and of course, as I said this morning, I think that without doubt we in America have the best distribution system in the world. It is too expensive, and far too expensive, right here in this particular area.

Mr. FISHER. That is right.

Mr. Cooley. You made the statement this morning, when we were examining other witnesses, that you were eager to be in a position to sell to the housewife at a reasonable price

you made that statement. That was what you and all of your associates would like to do?

Mr. FISHER. That is right.

Mr. Cooley. You are handicapped by having this antiquated marketing facility right here?

Mr. FISHER. That is true.
Mr. COOLEY. Thank you.

Mr. ANFUSO. Do you have any idea what it costs to unload or load a car of produce?

Mr. FISHER. To unload and reload ?
Mr. ANFUSO. Yes.
Mr. FISHER. Well, I would say that it would be over the $200 mark.

Mr. ANFUSO. That figure that you gave, multiplied over and over
again, would amount to about $250,000 ?
Mr. FISHER. That is right.
Mr. COOLEY. Just the handling charge?
Mr. ANFUSO. That is wasteful.

Mr. FISHER. Wasteful. The cost of labor has increased. It is going to be higher, not lower, from all indications. I cannot see where the cost will go down—the cost of handling.

. Mr. ANFUSO. Let me ask you this. I know that the mayor of this city has sent a statement to the committee approving the marketing

bill introduced by Mr. Cooley and a similar bill introduced by myself. Who is stopping this obvious progress?

Mr. Fisher. I could not honestly say. I think the mayor would know that. The mayor knows the conditions of the market, because he was campaigning

Mr. Anfuso. We are told by the mayor and, also, by his commissioner, that some of the people in the market refuse to cooperate.

Mr. Fisher. That is right. It has been my understanding of the matter that the people who receive the fruit, not the vegetables, do not want to move from this market because we have the auction rooms down at the pier here, and they are well satisfied because their handling of the fruit is not the same as the perishables. When I say "perishables" I mean vegetables. Because, there, if a man is a carrot receiver, he will load it on the pier and it is sold through the auction and your truck and my truck and everybody's truck comes and picks up without that extra handling charge. That is the difference.

Mr. Anfuso. Would they benefit or lose by a better marketing facility?

Mr. FISHER. They could not lose.
Mr. AxFuso. They would, perhaps, benefit?
Mr. FISHER. Definitely.
Mr. ANFUSO. All right.
Mr. FISHER. They could never be any worse than what they are.

Mr. COOLEY. I would like to ask one more question, Mr. Chairman. Isn't it a fact that the prices on the New York, Philadelphia, Baltimore, and Boston markets actually influence prices of perishable commodities in far distant places, actually, over the entire country?

Mr. FISHER. Yes; that is true. But, of course, that has been changed in the last few years by the chain buying on the other end. That has become greater every year. The immediate locale, New York, Philadelphia, and Boston, you know, did have a great bearing on the setting of the free-on-board prices.

Mr. COOLEY. Commodities come to this market from, I believe, more than 40 States in the Union; isn't that right, Mr. Crow?

Mr. Crow. Yes, sir.

Mr. FISHER. That is correct. New York is a great distribution center. We can sell more cars, even on a slow market, than any ordinary city. The ordinary city will handle 1 or 2 cars. New York has the outlet to move more carloads than any city in the United States.

Mr. Anfuso. We thank you for your very valuable contribution.

We have present today a group of gentlemen who are going to discuss milk. They have written to the committee in Washington, and have asked for this opportunity. I might say, in calling these people, that whatever will be said by no means closes that situation.

I said at the meeting in Syracuse that the committee would continue these studies in Washington, and full opportunity will be given to everyone connected with the milk industry who testified, so that today you might be receiving just one side. I want you to reserve any conclusions; I am sure that the members will, because there are many other sides and this a very complicated subject, this question of milk.

We have Mr. Sol Chalek, who is president of the Associated Food Stores, and we will be pleased to have him make his statement to the committee. Proceed, Mr. Chalek.

STATEMENT OF SOL CHALEK, ASSOCIATED FOOD STORES,

JAMAICA, LONG ISLAND, N. Y. Mr. CHALEK. My position on milk, of course, is from the point of view of the retail distributor, and our problem goes back many years due to the control of distribution of milk in New York. Particularly of course, the criticism we make is that competition has been definitely ruled out in the milk industry in New York with the idea of preventing destructive competition. Under those circumstances, for the past 19 years, despite the tremendous growth of population in this area, not a single license has been issued to have an additional milk distributor in the city of New York. Those are the records that are in Albany.

Mr. ANFUSO. You mean there is a lack of competition?

Mr. CHALEK. With the tremendous growth of the supermarkets, of apartments, houses, population, that we have in the city of New York, it is still concentrated in the same number of dealers that we had 19 years ago.

Mr. ANFUSO. You mean no new dealer has been licensed in 19 years?

Mr. CHALEK. Correct.

Mr. McINTIRE. Could we get a definition of what we are talking about?

Mr. CHALEK. A dealer is a milk distributor or milk-company processor, that is located in the city of New York and delivers milk to stores to be sold at retail to the consumers. Does that answer your question?

Mr. McINTIRE. How many are there now?
Mr. CHALEK. Offhand, I think, it is in the area of about 150.
Mr. McINTIRE. How many more do you need?

Mr. CHALEK. It is not how many more we need. The idea is that we have the concentration of power in this limited group, and they can only change by virtue of the fact that some person may buy an existing company—and the fact is that it extends much further than that, because for all of these years—I should like to modify that and not say "all of these years,” but in recent years—I would say for 10 years anyway-even the control of distribution to the retail outlet has been so concentrated that the stop or the customer would not be pilfered by one company or another. It would stay put by, perhaps, a gentleman's agreement or by association or other influences that exist among the milk distributors.

In the New York City area, where they do not have the competition in existence, when a new store opens up, at that time, they would approach the owners and offer them a gratuity for the stop, and they outbid each other, and the most recent price is as high as $400 a case or equivalent to $20 a quart for daily purchase.

In other words, if a store distributes 200 quarts a day, or 10 cases, he can get a gratuity as high as $4,000 if he bargains and pits one milk dealer against another.

In many instances it has gone even further, to the point where they have reached the $400 price, and they do not want to pay any more; he would offer them a loan without interest of a few thousand dollars or many thousands of dollars, if it is a large stop, for a period of time, 5 years, or thereabouts.

Mr. ANFUSO. Mr. Chalek, isn't it the law that in order to get a new license you must show that the milk dealers in operation cannot meet the need and that there is an increase in population, for example, which would have to warrant the issuance of a new license?

Do you mean to say that in spite of that, in spite of the fact that there has been an increase in population, in spite of the fact that certain dealers cannot meet the present market, nevertheless there has been no new license issued ?

Mr. CHALEK. There have been new licenses issued and the burden of proof, of course, as the law today is, is on the shoulders of the Department of Agriculture, but I cannot see it--they do not even try to prove it, because I have experience whereby these things happen. We cannot justify it by the fact that they can supply the requirements, yet you won't prevent additional stores from opening up.

Mr. COOLEY. Who is throttling and controlling these things and limiting the number of distributors who operate in New York?

Mr. CHALEK. Well, the full power is concentrated in one individual, that is, the commissioner of agriculture in the State of New York.

Further than that, as long as I am on the subcommittee, I made some notes here. In the Marketing Administration Bulletin---this is for July—we have the average price paid to the farmer for milk, is $4.09 in July. The price of class 1-A milk in September, this is a supplementary sheet—but it is in the same neighborhood, $5.83 was paid for fluid milk, that is for class 1. And class 3 is $3.17 for 47 quarts or 100 pounds.

Here we have a differential of almost 31/2 cents a quart for milk.
The farmer gets $4.09.
Mr. McINTIRE. That is the blend price?

Mr. CHALEK. That is the blend price. He gets $1.09. Class 3 is used for evaporated, powder, for condensed, for butter and for cheese.

Originally, you know, it probably served the purpose when we had large surpluses of milk and for the purpose of absorbing that, we have created a low price so that it would be manufactured into commodities that can be stored. However, the situation is such that where the Government has stored millions and millions of dollars worth of these surpluses, we pay for it. The housewife can save 31/2 cents.

The retailer, so far as he is concerned won't have an increased profit but not a decreased profit, and the Government will not be compelled to store the surpluses or give them away. Whereby the milk can be sold for 31/2 cents at retail increasing the consumption of fluid milk and discouraging the tremendous manufacturing to create these surpluses by having the blend price regardless of what class of milk. It is the same milk.

Mr. COOLEY. Did I understand you to say a moment ago that because of the number of distributors in the city of New York, because of the limited numbers, that the distributors were competing with each other in taking on new customers ?

Mr. CHALEK. Yes. Mr. COOLEY. They were, in fact, in effect buying new customers? Mr. CHALEK. Correct, correct. Mr. Cooley. You have many unhappy farmers in the State of New York. All the unhappy farmers are not living down in North Carolina. There are a lot of unhappy farmers right here in the State of

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