Thirty Minutes With... Sec. Earl Butz
Thirty Minutes With Secretary Earl L. Butz
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Thirty Minutes With Secretary Earl L. Butz
"Thirty Minutes With..." title superimposed over program host Elizabeth Drew seated across from U.S. Secretary of Agriculture Earl L. Butz. Male VO introduces show. "Mr. Secretary, when are food prices going to go down?" Secretary Butz: "Well, Elizabeth, I think food prices, some of them have been coming down. We've had a lot of static about beef prices in recent months. Maybe you've had some yourself. Have you?" Drew: "Had some beef?" Butz: "Have you beefed about beef prices?" Drew: "Well, I'm not terribly wild about them." Butz: "Well, if you're the typical consumer, you probably have. We've had a lot of complaints about beef, but nobody's complained about chicken prices, which have been so low chicken farmers are going broke. Nobody's complained about egg prices, which have been very, very low. Nobody's complained about cereal product prices. Nobody's complained about potato prices. I can tick off some of those things. But to get back to beef, the prices--" Drew interjects: "Excuse me just a second, Mr. Secretary. Food prices in general went up 1.7% in February. On an annual basis, that's 20%. That's a big rise, isn't it?" Butz: "That was a big rise for one month. If you put it on an annual basis, it gets pretty high but they won't rise that much on an annual basis. They never have. You see, food prices are seasonal. Food production is seasonal. In case of livestock, it's cyclical sometimes. Food prices fluctuate. If they go up, they come down. In that respect, they're completely different from, let us say, wage costs. If wages go up, they tend to stay up. When freight weights go up, they stay up. When utility costs go up, they stay up. When taxes go up, well they go up still more, don't they?" Drew: "When wages don't go up, they don't go up. Wages are frozen then." Butz: "Well, okay, but we've had considerable wage increases, too, even under the freezing of the wages. As you know, the wage board has approved some wage contracts substantially above the 5.5% guideline. Now, it may be that the overall wage increases have been held to 5.5% or less as they have, but individual ones have increased. You're talking about food prices. There's a good deal of evidence that the overall wages of, oh, let us say meat-cutters for example, have improved quite a good deal. If you back the last four or five years, for example, or the last ten years, and take the wages of meat-cutters, they've increased substantially... You know, everybody's looking for the scapegoat in food prices, aren't they?" Drew: "No, they're looking for lower prices."
Thirty Minutes With Secretary Earl L. Butz
U.S. Secretary of Agriculture Earl L. Butz speaking on higher meat/food prices: "They're looking, trying to find the culprit that's causing higher prices... Now, just yesterday, we had a meetings with the heads of the twelve largest food chains here. Secretary Connally, who heads the Cost of Living Council, called to me... Secretary Peterson of Commerce was there. Mrs. Knauer, who heads the Consumer Division in the White House, was there. Herb Stein, who heads the Council of Economic Advisers, was there. And we had top level management, the chairmen and presidents of these food companies were there, all looking for the person causing the high beef prices. Well, the food retailers said, 'We're not the middle men. We're the end men.' I stood there as the Secretary of Agriculture, and I said, 'Well, I represent farmers, who are the other end man.' What's in between? I pointed out that cattle prices aren't high in the long time trend, you know, a month ago, when beef prices were higher than they are right now. A friend of mine came to me one day and he said, 'I see where steers hit a twenty year high in Omaha. What do you have to say about that?' I kind of smiled and said, 'Yeah, I kind of saw what steers hit a twenty year high in Omaha yesterday.' I said, 'In the past twenty years, wage rates in this country have more than doubled. Farm costs have doubled. American purchasing power is up some sixty percent, and I think it's about time steers were getting back to where they were twenty years ago.' They just got back to where they were twenty years ago." Show host Elizabeth Drew: "You have described the meat prices as being just right." Secretary Butz: "Well, if you understand the pricing system, Elizabeth, for perishable products, I guess at any particular moment you've got to say the price is about right, for what is the function of price?" Drew: "You think food prices are right, now?" Butz: "Let's take perishable products, for example. Meat is a perishable product. You can't store it back in the warehouse. You've got to move it. When the hog gets to weighing 210-225 pounds, you've got to sell him, process him, you've got to move it. We can store part of the carcass a little while. You keep hams back a little while because you cure the meat. You keep bacon back a little while because it's cured, but fresh pork has to move. Somebody said you sell it or you smell it... Which means you can't hold it back like you can an automobile. You can't hold it back like you can clothing, or furniture, or something like that. Who sets the price on meat in that case, with a perishable product? I think any economist will tell you that the price is really set at the retail counter. It's set by competition at the retail counter, and that's Mrs. Housewife bidding against Mrs. Housewife. Let's take the price of beef, for example. The price of beef in our supermarkets has been such that there's always some beef there for people who want it but the price was low enough that the beef moved out so that the store-keeper didn't have to hold it back and let it spoil. So, the price you see --- always had beef there for those who wanted it, and it was low enough that the beef didn't accumulate. In that sense, I guess, the price is right."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew challenges beef prices: "The price is right?" U.S. Secretary of Agriculture Earl L. Butz: "Now, some people who said, let's quit buying beef and the price will come down. And if housewives quit buying beef, I presume the price will come down because you've got to move it. And some people have said, let's stop buying beef and eat more chicken. And you've seen that, too, recently, haven't you, because the chicken has been pretty cheap..." Drew: "This raises another question. You haven't really answered the first one, but we'll come back to that. Why don't we just do away, as some people and economists suggest, with the import quotas on beef, and really lower those prices?" Secretary Butz: "That's an interesting question. We have import quotas on beef, which are voluntary arrangements agreed to by the Australians and New Zealanders, our primary source of imported beef, and some lamb, but it's mostly beef." Drew: "I never understood how a quota could be voluntary." Secretary Butz: "They agreed to that. If we don't impose a rigid quota, under the act passed by Congress six or seven years ago, the President of the United States is directed to impose import quotas on beef when imports pass a trigger point, which is defined in the law... The President imposed that quota, then rescinded it in lieu of a voluntary arrangement by the Australians and New Zealanders. Last year, that agreement was 1.16 billion pounds of beef. They didn't meet their full quota last year. They had a shortfall. The Australians had a short kill in beef, and they oversold early in the year to the Russians, and they had to meet that commitment, so that they didn't meet their full import quota in this country." Drew: "My question is why don't we do away with the quota to lower the prices?" Butz: "Next year we raised that quota by eighty million pounds to 1.24 billion pounds, and they can bring in eighty million more pounds next year. But let me give you a comparison. In January and February of this year..." Drew interjects: "What's the answer to my question?" Butz: "In January and February of this year, under federally inspected beef slaughter in this country, 161 million more pounds carcass weight than we did just a year ago. In two months that increase is twice the increase in total imports into this country. Now, imports are mostly manufacturing beefs..." Drew: "Well, it can be hamburger and processed foods, but those of us who eat, eat those, too. Why not lower the prices of that by getting rid of the import quotas?" Butz: "Why don't we get rid of the import quotas entirely? I think we'd be very ill-advised to get to the point of relying on a foreign source of beef, as for example, last year. The market in Russia is more attractive than this market here, and they fell short of what they could send to us. And if we ever get to the point when we depend on a foreign supply of beef for a substantial supply of our beef, we, again, are at the mercy of those who ship to us, and they might find another market more attractive."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew on the subject of beef imports: "Domestic beef growers would stop growing?" U.S. Secretary of Agriculture Earl L. Butz: "It might not increase. They won't stop, but we're going to have to increase our beef production a great deal... Some people have asked me, 'Why don't our producers produce more beef because we want more beef? How come we're short of beef?'" Drew: "Yes, why don't they?" Secretary Butz: "You've heard of that, haven't you? Well, that's one of the biggest fallacies there is. We're not short of beef. This year, our producers are producing two and half times as much tonnage of beef as they did just twenty years ago. When you allow for the increase in population in those twenty years, we're eating over twice as much beef per person, this year, in 1972, as we did just twenty years ago. We're eating 116 pounds of beef per person this year. Twenty years ago, we ate only 56 pounds of beef per person, and it's much better beef this year too. A much higher proportion of it is fed beef, it's choice beef. Our economists project that by 1980, we're gonna be eating 130 pounds of beef per person." Drew: "Mr. Secretary, these are very interesting and complicated answers, but I'd like to get to my question: when are the food prices going to come down? That's what we all want to know." Butz: "This beef we want to eat, somebody's going to have to pay for it. It's that simple. That is, our farmers don't walk around in a muddy feedlot this time of year because they love the steers. They want to make a little money. And they're making a little money now. And it's the first time in some years. Now, to your question: When are beef prices going to come down? We've passed our peak in meat prices. For example, I've got a figure here. Let me refer to this figure here for example. Live steers at Omaha reached their peak in the week of February 12. During that week, they sold at about $36.76 a hundredweight. In the weekend of March 25, they sold for $34.62 a hundredweight, a decline of $2.08 in six weeks, or five percent decline. It's going to take a little time for that to show up in the retail counters, although it is showing up in retail counters because there's a week to a ten day lag between slaughter and retail moving through..." Drew: "So can we expect lower prices in April?" Butz: "You should expect lower prices in April." Drew: "If the prices do not go down to any substantial degree, would you be still opposed to price controls?" Butz: "The price ceiling on food products?" Drew: "On raw food products and beef." Butz: "I guess the important thing is the retail price, isn't it? That's the important thing." Drew: "There is no price control on raw agricultural products or beef until it is sold to this middleman." Butz: "The price ceilings would be imposed at the retail level. That's where you would have effective price ceilings. Would I be opposed to price ceilings? Perhaps not as much as you would be opposed to price ceilings."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew and U.S. Secretary of Agriculture Earl L. Butz engaged in conversation. Drew: "I have no position on price ceilings at the moment. You're the Secretary of Agriculture." Secretary Butz: "You're too young, Elizabeth, to think back, back to the food rationing in 1944-45. You know we had price ceilings in World War II. We had rationing. You didn't use a dollar bill to get your food. You used a little red fiber ticket the government issued you. You had ration tickets. So many tickets for a pound of steak. So many tickets for a pound of hamburger, for a pair shoes, and a pound of sugar." Drew: "I don't think that's what we think of as price controls now. The prices on shoes, or coats, or other things are controlled. Now, why not the prices on food?" Secretary Butz: "This is quite different because shoes and coats are not a perishable product. Now you can have price ceilings on shoes and the like on that because you can hold them back. You can change the supply. But how do you change the supply of beef coming into the market? You can't. This is a two or three year process to change the supply, or a four year process." Drew rebuts: "We're not talking about changing supply. We're talking about holding the prices down." Secretary Butz: "... Let's say that right now we reduce the price of beef at retail by 20 percent. Say we're gonna knock 50 cents off the price of sirloin steak. And everybody says, gee, that's wonderful. Fifty cents off the price of steak. I'll eat more sirloin... But there are only so many sirloin steaks in a carcass. We only have so many carcasses being slaughtered. And if we want to get the supply up, you gotta go back to the cow cap operation where they decide to hold a heifer or two back. And to breed her, it takes nine months to get a calf." Drew: "Why are they holding back? It's reported that you urged farmers to hold back on some crops or beef in order to get the price up. Is that true?" Secretary Butz: "No, sir. I shouldn't say no 'sir' to you, now. No, ma'am. There's no price support to our livestock people. There's no production control--" Drew: "But about price supports, the prices are up because quantity is lower."
Thirty Minutes With Secretary Earl L. Butz
U.S. Secretary of Agriculture Earl L. Butz rebutting idea that quantity of beef is lower and affecting prices: "The quantity isn't lower. I just told you a while ago that in these months of January and February, we've slaughtered 161 million more pounds of beef carcass weight than we did just a year ago in those same two months. If only February had one more day in it this year because of leap year, but take the one day out and our slaughter was still substantially up from over a year ago... We've got twice as much beef, per person, as 20 years ago. This year, we had 161 million more pounds available than we did the same two months a year ago. So the supply is there, it's the demand that's up. And the plain truth is that when we have more money, we like to eat better, and when we eat better, we like having animal put in our diet. It's a measure of high level of eating. Somebody said you eat higher on a hog. You know, you move up to the expensive cuts. And when we eat more meat, we eat beef. We are a beef-eating nation. We eat twice as much beef as we eat pork. The demand for beef is great. This reflects a high level of purchasing power in our country, and I'm delighted to see that. And I think one of the reason, now, that we complain about meat prices is that we're all aware of any change in meat prices because we go in the supermarket three times a week, and we see that 3 times a week. We're unaware of changes we see in furniture prices, medical costs, and transpor---" Program host Elizabeth Drew: "Do you think that people are imagining then, that food prices are going up faster than other things?" Butz: "In the month of January, food prices did go up faster than other things, in that particular month. But let me give you a little comparison, for example-- " Drew interrupts: "I'd like an answer to some of the questions because people are really interested in these questions." Butz: "No, they don't imagine that. But let's get it in perspective, Elizabeth." Drew: "Are you opposed to controls on prices of food? You said I would be-- " Butz: "I certainly am." Drew: "You are. Chairman-- "Secretary Butz: "I'm on the record on that, and the reason I'm opposed to price controls on food products is they won't work with a perishable product." Drew: "What about the unperishable product?" Butz: "If you got a stable product, you can have price ceilings on that. It'll work." Drew: "Mr. Grayson, who's head of the price commission, said he's going to look into raw agricultural products, then is he looking into an impossible matter to control?" Secretary Butz: "It's certainly a very difficult one. We did have price ceilings on, not raw agricultural products in World War II, but we had price ceilings on food products at retail level. Now, obviously, that reflects back. We had rationing. We had black markets. We had favoritism. We had empty meat counters because, as I started to say a moment ago, let's say we reduce the price of meat by twenty-five percent, and everybody says, 'Gee, I'm going to eat more.' But there isn't more in a shortage, and that means we simply run out. Suddenly, the demand goes up, you see, and it's not there to satisfy the demand. By 10 o'clock in the morning, you got empty meat counters, as we had in World War II. And if you want to see irate housewives, just look at somebody who came down and sees an empty meat counter, and she says, 'What in the world is wrong here, now? The price is down, but I can't get any.'"
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew: "You're quoted as saying that the current high prices guarantee the quality cut beef that you prefer. What do you mean? How does that work?" U.S. Secretary of Agriculture Earl L. Butz: "It's just like anything else. It's like Chairman Grayson said the other day when he made that statement about the Secretary of Agriculture..." Drew: "He was talking about you." Secretary Butz, looking down at his notes: "...there's just one Secretary of Agriculture at the moment. Well, at any moment there's only one Secretary of Agriculture. And I sympathize with Chairman Grayson. He's got a difficult job, as I have a difficult job." Drew, looking at her notes: "Now, what he said was that you had been praising the rise of food prices. He said, 'What the Secretary is really advocating is a larger share of the national income for farmers as a special group.' I have wanted to ask you what your response is to that." Secretary Butz: "I haven't been advocating higher food prices. I've been advocated higher prices to farmers. That may partly reflect in higher food prices, but let's get this straight, Elizabeth-- Our farmers only got 38 cents out of the the consumer's food dollar. 62 cents went somewhere else." Drew: "Who is this middle man? The culprit? I'm a middle man? You're a middle man? Who is this?" Secretary Butz stammers a little: "It's a big chain. The steer in an Iowa feedlot has no value until he's an attractive roast in a Philadelphia meat counter. Somebody's got to put some services in there-- transportation, labor, processing, merchandising-- to get him to the Philadelphia meat counter. The hog on an Indiana farm has no value until he's an attractive pork chop in a Washington supermarket. And it takes somebody to do that. You don't do that for free, you see. Not only do we make him a pork chop, we process him. We make him into luncheon meats, which becomes rather expensive, you see. And we don't even stop there. We make him into a TV dinner, where got to put more service into it. And you've taken the work out of the kitchen, now, that your mother and mine used to do in the kitchen. We just pull that TV dinner out and slip it in for thirty minutes, or whatever it is, and heat it up, pull it out, and serve it. And that costs money. It's just like Chairman Grayson said the other day, when he was talking about the Secretary of Agriculture pushing for higher farm prices, and I do, I don't make any bones about it. I think our farmers are entitled to a decent level of living, and they haven't been getting it. And even in 1972, our farmers, the per capita income of people on farms in America in 1972 will be only 66 percent of the per capita income of people not on farms." Drew: "Have farmers' incomes gone up since you took office?" Secretary Butz: "Indeed they have."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew: "Is there any way of [raising farmers' income] without raising food prices?" U.S. Secretary of Agriculture Earl L. Butz: "It'll have a modest impact on prices, but let's come back again to the point here that farmers get 38 cents to the consumer's food dollar. Who is the middle man? I had the head of one of the major grocery chains indicate to me the other evening that since the wage price freeze went in on August 13, 1971, the cost of labor in his retail stores..." Drew interrupts: "So the middle man is the worker?" Secretary Butz: "...went up one percent of his total sales, which means labor itself, the total increase, added one percent to his sales price. He said, based on the wage rate level back there, it went up 6 percent." Drew: "So it's the worker. It's the laborer." Secretary Butz: "Most of this is labor. That's absolutely right." Drew: "George Meany says..." Secretary Butz interrupts: "And now you get these restrictions in, Elizabeth..." Drew: "If I could finish my..." Secretary Butz continues over her: "This same chap told me, he said: 'For example, in Chicago, we can't sell meat after six o'clock in our supermarkets.' They're open weekends, sell meat. I said why, and he said: 'Well, it's part of our contract. That raises our cost.'" Drew: "When George Meany left the pay board, he said the workers' wages are frozen and yet he's getting gouged at the supermarket. Do you mean that the blame is really on this worker?" Secretary Butz: "In the last 20 years, the prices the farmers receive for food products at the farm have gone up a whopping 6 percent in the last 20 years." Drew: "What about the last six months?" Butz: "The wholesale price of food has gone up about 21 percent, the retail price about 43 percent. That's mostly labor." Drew: "Is Mr. Grayson wrong when he says your advocating a special increase for the farmers while everybody else is having freezes on their income?" Butz: "No, he's not wrong. As I said a while ago, when Mr. Nixon asked me to take this job, it was to raise the incomes of rural people. And in the short run, I guess the way you raise the incomes of rural people is to pay them for what they're doing. And they're just getting back to the point where they got a little black ink in their operation. They've been in the red so long that I'm delighted to see them in the black."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew on narrative of farmers' incomes in relation to food prices: "Isn't there a way of doing that, of having [farmers] have more income, either through direct payments or something, without raising food prices to everybody else?" U.S. Secretary of Agriculture Earl L. Butz: "Elizabeth, you keep insisting that farmers are responsible for the food prices here." Drew: "I have never said that. I asked you if there's a way of raising farm income, which you have done, and it was your job to do, without raising the cost of food." Secretary Butz: "Let's take a six month look here for a moment now without raising the cost of food. I said a while ago that food prices are perishable. They go up and they go down. They don't stay up. They come down, and that's characteristic of them. What's happened since last August 13, when the wage price freeze was imposed? Price of slaughter steers in Omaha has gone up three percent since last August 13... They went down, then they came up again, and they've gone down again. So if you take the six month perspective here, they're just about where they were. The price of beef carcasses in Iowa, and Iowa's our leading fed beef-producing state... on March 28th, were actually 1percent below the price from last August 13... The price of eggs, for example, has come down six percent." Drew: "The point, Mr. Secretary, really is, people think prices are up, whether you think they are or not. I'm not quite clear on whether you agree that they are or not." Butz: "I'm citing the figures here, Elizabeth." Drew: "You're a political man, and one of your roles is political. Your major assignment, I guess, was to make the farmers happy." Secretary Butz: "That's economic. You can call it political if you want to." Drew: "But it is an election year as we both know. What do you think is going to be the impact on the elections if this continues? In other words, your success at getting farm income up does have an impact on the price of food. All people who shop and all of us who eat think that food is more expensive than it used to be. How do you think that's going to work out?" Secretary Butz: "It'll be a double-edged effect. In the first place, in the whole farm belt... where farmers may not be the major predominant factor in the population, but the rural economy is... If you take Des Moines out of Iowa, all the towns in Iowa are essentially rural towns. Their prosperity is dependent on farm prosperity, and I guess you can say that of Des Moines, too, as far as that's concerned. The index has turned upward. They're making a little more money than they've made. They're seeing some black. Now, some prices are still too low. Corn prices are too low. Wheat prices are too low."
Thirty Minutes With Secretary Earl L. Butz
Program host Elizabeth Drew asking about food grains: "Are you going to try to raise them before the end of the year?" U.S. Secretary of Agriculture Earl L. Butz: "Our farm program has taken some 38 million acres out of productions and feed grains, which we hope will have a buoyant effect on feed grain prices next fall." Drew: "So lower production, and won't that raise our food prices?" Secretary Butz: "It shouldn't raise the food prices because we're going to have a very adequate supply of feed grains. We had a surplus of feed grains last year. Five and half billion bushels of corn produced last year. That was in contrast to the year before when we had a very short year because of the corn leaf blight that hit us and cut our production way down. Last year was too big. This year, we're going to adjust that production back to a reasonable level. There will still be an adequate supply for a full supply of meat and milk and eggs for the American consumer." Drew: "I want to ask you about poor people. As you know, we have a rather major issue about people being hungry in this country because they didn't have enough money, and there was an expansion of the food stamp program. People can get $108 dollars a month for a family of four to buy food. The benefits equaling that. Under the law, that amount was supposed to go up as food prices go up. When are you going to raise the amount that people can get under food stamps?" Secretary Butz: "We had a proposed revision for eligibility for food stamp assistance that would have gone into effect February 1 this year. This revision was done at the insistence of Congress a year ago..." Drew interjects: "But you didn't do it." Secretary Butz: "...and we didn't do it. The revision made it a little more difficult to get aid at the upper end of the income bracket, much easier at the lower end. But we ended up making it easier for everybody, those at the lower end, and not changing the upper end back." Drew: "When are you going to raise the amount that poor people can eat?" Secretary Butz: "It's at the point now where the upper end now, you don't get entirely free food stamps. You have to pay for food stamps, and you pay a modest amount for them at the end. The lower end, you get the entire thing for free. We're putting about 4 billion dollars a year right now into our total food program. Over two billion dollars, that goes into the food stamp program, over a billion dollars of it, into the school lunch program, and the rest of it goes into the direct distribution and that type of thing." Drew: "The law says the benefits are to go up as the prices of food go up, so when are you going to raise the benefits?" Butz: "This is under constant review, and I cannot say right now, but..." Drew speaks over him: "You have no present plan for raising benefits?" Butz: "...President Nixon has said he doesn't want any American to go to bed hungry for reasons beyond his control, and I feel exactly the same way. We think the program is working reasonable well, but you've got to recognize, too, when you start giving anything away, food or anything else, you're never liberal enough. You understand that." Drew: "But the law says you're supposed to raise the benefits. I mean, this isn't a question of whether we're liberal enough. It's a question of the law." Secretary Butz: "When we reach the trigger point, that will be examined and changed." Drew: "But you have reached the trigger point." Secretary Butz: "No, no, we haven't yet." Drew: "Thank you, Mr. Secretary." Secretary Butz: "It's been very pleasant being here."
Thirty Minutes With Secretary Earl L. Butz
Elizabeth Drew sitting across from U.S. Secretary of Agriculture Earl L. Butz, speaking off-air as end credits roll. NPACT logo.