The Meat Emergency
ABUNDANCE YET SCARCITY
By ROY F. HENDRICKSON, Administrator, Agricultural Marketing Administration
Delivered before the National Association of Retail Meat Dealers, Inc., Chicago, Ill., August 17, 1942
Vital Speeches of the Day, Vol. VIII, pp. 681-683.
IT has been only a little over eight months since the attack on Pearl Harbor. Yet in that relatively short time American warships have been in combat in the Pacific, in the Atlantic, in the Arctic, and in the Indian Oceans. It is a matter of public record that our troops are now stationed in Britain, the Near East, and the Far East—and in South America, Greenland, Iceland, Bermuda, and Trinidad. Our warplanes have been in actual combat over all the oceans and all the continents. The immense military job the United States has tackled has no parallel in history. We have no illusions about the fact that this is going to be a long job—and a tough one.
We can gain some idea of how tough that job is by taking stock of the present situation. Japan is still master of the Far East and has gained a foothold on the Aleutian Islands. Germany, disregarding fearful cost of life, has driven deep into the heart of the Russian Caucasus and has captured part of its vital oil fields. Closer to home, we are suffering tremendous losses of shipping through submarine warfare. Today we face a peril such as we have never faced before.
On the production front there is much that is encouraging. The smoke from factory chimneys, the red gleam of steel mills against night skies, the hum of industrial activity that pervades all the land, is indication that we are turning out the ships, tanks, planes, and guns needed to arm us against the enemy. But even on this front, we can't afford to be complacent. From time to time we hear disturbing news of shortages that are slowing down the war effort—shortages of steel, shortages of rubber, shortages of fabricating facilities. These hindrances to war production are becoming more frequent and more acute.
The situation in agriculture is very similar. This year farmers will produce more food than ever before. We have large stocks of many foods on hand. Yet we are faced with a squeeze on our food supply. Already farmers are finding it more and more difficult to get crops grown and harvested. The armed forces and industry are drawing increasingly large numbers of workers from farms; the farm labor shortage isvery real. Farm machinery is hard to get, and in the days ahead it will be even scarcer. Farm transportation, which depends so much on trucks, is gradually becoming a problem as rubber tires wear out. There are other shortages—fertilizers, insecticides, tin, and burlap—that threaten to complicate the production picture. Shortages breed shortages.
Only a year ago we heard people say, "Well, there's one thing we don't need to worry about and that's our food supply." I hope those people have abandoned their complacent attitude. From the standpoint of our total food supply no one will go hungry—but we are certain to run into more shortages of individual items than we have thus far. The current shortage of meat is only a forerunner of things to come—and the sooner that is realized the better.
This meat shortage has puzzled many people, because all the statistics on livestock production have been unusually favorable. The number of cattle on farms January 1 of this year totaled over 74 million head—a new high record. Sheep numbers totaled 56 million head—also a new high record. Hog numbers totaled over 60 million head—12 percent more than a year earlier. The 1942 spring and fall pig crops combined may total over 105 million head—by far the largest of record.
Secretary of Agriculture Wickard can be thanked for perceiving, as early as December, 1940, that meat supplies would be short unless farmers increased production. It took real courage for Secretary Wickard to ask farmers to build up livestock numbers at a time when prices were disastrously low—hogs were selling for $6.00 at that time. But he sounded the call and patriotic American farmers responded.
The bumper livestock crop of 1942, when translated into terms of meat, is expected to total 21.7 billion pounds. That figure compares with an average of 16.3 billion pounds for the 5 years from 1932 to 1936 inclusive, and with an average of 17.8 billion pounds for the 5 years from 1937 to 1941 inclusive. Production in 1941 reached the high total of 20.0 billion pounds.
But how can we reconcile this unusually favorable production record with the current meat shortage. That's a question that deserves a fairly complete answer, and we don't have to look very far for that answer. Briefly the overall reason for the meat shortage is the keen wartime demand for meat. This demand comes from three directions: From the armed forces, from our allies and from civilians here at home.
Meat, one of the best sources of protein, has always been the foundation of the soldier's diet. Alexander the Great invaded India while subsisting on livestock taken from the Medes and Persians. Julius Caesar told of arrangements with local tribes to provide his men with meat and grain. One of the earliest rations of the United States Army provided for about a pound of meat per day per man. Soldiers still get about a pound a day and to meet their current and reserve needs during the year beginning July 1, the armed forces are expected to buy a tremendous quantity of meat—most of it beef. We want them to keep on buying meat—all they need.
Our Russian and English allies will require even more meat than our armed forces. And who can begrudge it to them? They are fighting our fight—they are fighting for their existence just as we are. It is important to remember, when considering meat shipments to our allies, that soldiers as well as civilians receive the products of our farms and randies. The meat that is going to Russia—where the fighting is most active now—is the most important meat on earth. The meat that is going to Britain will fall into the same category when the second front opens. During the year that began July 1, 1942, we shall ship these two fighting allies of ours about 3.2 billion pounds of meat—most of it pork.
Since March 15, 1942, when the Agricultural Marketing Administration started its expanded buying program, through June 30, 1942, the following meat products were purchased, primarily for Britain and Russia: Lard, 715 million pounds; canned pork, 709 million pounds; cured pork, 531 million pounds; frozen pork loins, 58 million; and other pork products, 6 million pounds. Beef purchases totaled only about 15 million pounds. The combined total of all meat and meat products to July 1, 1942, comes to about 2.0 billion pounds.
For evaluating the reasons behind the meat shortage, however, it is better to stick to prospective figures. And they are rather startling. The combined total of requirements for the armed forces and for our allies during the year that began July 1, 1942, is equivalent to about 35 percent of our federally inspected meat production or about 25 percent of total meat production.
I think I have made it clear that the armed forces and our allies come first in our calculations—they must come first— but we ought to examine the way in which these enormous drains on our meat supplies affect our civilian requirements. After taking into account purchases for the armed forces and for our allies, the quantity of federally inspected meat remaining for civilian consumption during the year that began July 1, 1942, will be about 11 billion pounds. This is about equal to the average domestic consumption of federally inspected meat during the 1931-40 period. But there will be a shortage of 3 billion pounds of meat in relation to the quantity of meat civilian consumers would buy at ceiling prices.
That is the third basic reason for the meat shortage, then—domestic consumer demand. National income this year is expected to total about 115 billion dollars, compared with around 90 billion dollars in 1929, the year we have always looked back on as a good one. The big income in prospect this year is a sure indication that most people are working and drawing good wages. They are spending part of theirmoney for meat—and they would spend much more if the meat—at ceiling prices—were available.
Any analysis of the meat shortage must make it clear that there are inequities in the price ceilings as between areas. Thus packers have the natural inclination to market their meat in the areas where they can get the highest return, and some areas, such as New England, which has relatively low price ceilings, have tended to be passed up in favor of the areas where higher price ceilings prevail. The Office of Price Administration is taking steps to correct these inequities.
A seasonal angle also is involved in the current situation. Slaughter of cattle and hogs is always light during July and August and the early part of September. In ordinary years we don't notice this falling off in supplies; but this year, with the armed forces and shipments to our allies taking a large part of our total output, the drop is more apparent, despite the fact that our slaughter at this season is the highest on record for the season. A large increase in meat supplies will be forthcoming by late October, however, and this will provide temporary relief.
Until livestock marketings pick up in the fall, the Department of Agriculture has put into effect two programs aimed at relieving the current pinch. First, purchases for our allies have been reduced temporarily to make more meat available for domestic consumption. Second, prices paid for the meats still being purchased for shipment abroad are below the OPA ceilings specified for AMA purchases.
While these measures will ease the situation to some extent, we must not lose sight of the fact that we have a shortage of 3 billion pounds of meat—that consumers would like to buy 14 billion pounds of meat at ceiling prices instead of approximately 11 billion pounds that will be available. Well, what would happen if the ceilings were taken off? Prices would immediately seek their own level—they would rise to the point where many consumers would not be able to purchase meat—a very undesirable situation. Undesirable because, in a manner of speaking, millions of consumers would be "rationed" out of the picture. And it would be the low-income groups—the workers who need meat most of all—who would be left out.
Furthermore, price ceilings have definitely slowed down the upward spiral of inflation—an inflation that would greatly increase the cost of the war and that eventually would harm every citizen in the country—and farmers most of all. I am quite sure that consumers, if given a choice, would choose shortages of certain items to the inflation that might follow removal of the price ceilings.
It is well known to all who have studied the subject that there is an inevitable association of price ceilings and rationing. To most students of the present situation it appears that rationing of meat might be one of the logical steps to solve the meat problems growing out of the war. It also appears entirely logical pending the time rationing might be instituted, that meatless days each week might be requested of the public by an appropriate governmental authority.
In Britain, consumers get two ounces of ham or bacon a week. They can also buy a shilling two-pence worth of fresh meat—equivalent to about 25 cents' worth in this country. Canned meat is handled under the "point" system— a system whereby most foods are weighted in accordance with their importance in the diet and with their relation to the total food supply.
However, there are some important differences in the situations in Britain and the United States. In Britain, the government controls the meat supply and regulates distribution at each step of the marketing process; our government doesn't. Also, more of Britain's meat supply is imported thanhere; farm slaughter is smaller; and the population is less. These factors make meat rationing somewhat easier to handle in Britain than it would be in this country.
Neither meatless days nor rationing nor any other steps of that nature are likely to eliminate the "squeeze" that packers and distributors have been complaining of lately. Many packers tell us that they are losing money on their hog operations and to some extent on their cattle operations; the prices they pay for live animals, they say, have been exceeding the amount of money they have been able to obtain from the processed meat. Retailers also are being squeezed; the prices they are receiving from consumers for meat under the maximum prices established by OPA allows them, they state, only a very small margin over what they pay wholesalers.
Since prices of live animals are the only unregulated part of the meat price system, some packers and distributors are inclined to lay the blame for the price squeeze on the lack of ceilings on prices of live animals. With hog prices advancing more than $2 since the pork ceilings became effective last March, it is obvious that either profits then were very large or that they are very small now for the average concern.
We must realize that ceiling prices on live animals would be extremely difficult to administer. In the case of cattle, we have a farm product that shows an extremely wide variation in quality. No two animals are alike. As cattle are sold in the market today, the buyer evaluates each animal on the basis of such characteristics as age, weight, size, shape, breeding, and flesh condition. Since there are innumerable variations of these characteristics, it would be difficult to devise price ceilings that would take all of the variations into account. Hogs are more nearly alike than cattle, but there are other difficulties. If ceiling prices were established for live hogs—with hogs in light supply relative to demand as they are now—a system of allocation inevitably would haveto be established. Under such a scheme, packers might pay much below the price ceilings and still get hogs, with the result that packers' margins would be widened considerably. Thus, if ceiling prices are established for hogs, there must also be some provision for hog price support at a level that will prevent packers' margins from widening unduly.
I am pointing out these difficulties—and they are only a few of the difficulties—not to show that price ceilings should not be applied to live animals, but to show in part why there has been no rush to do it.
In the meantime, the Department of Agriculture is formulating plans whereby packers facing the necessity of suspending operations may continue to operate by entering into a processing contract on foods purchased for our allies. This plan is necessary as a stop-gap measure if several small packers are to continue in business until the large volume of hogs begins to be marketed this fall, when our processing capacity will begin to be heavily taxed.
As I see it, the entire meat situation at the present time might be summarized under three headings:
1. We need to keep livestock production at high levels to provide meat for our armed forces, our allies, and our civilian consumers.
2. We need price ceilings on wholesale and retail meat prices to avoid inflation.
3. We need some system—perhaps rationing, meatless days, a combination of the two, or something else to assure equitable distribution of what will be a short supply of meat.
The meat situation is unusually complex, and to cope with it, all of us—producers, processors, distributors, and consumers—are going to be called upon to make sacrifices. But if it means helping our armed forces and our allies—helping us all to win the war—then we will all be glad to make these and many more sacrifices. Compared with the danger we all face they are trivial.