The outstanding weakness in the present market for fishery products is the seasonal and 1-day-a-week character of consumer demand. Effective market development might make a New England fish an all-week, all-year-round food. Increased competition among wholesalers and retailers to handle fishery products would tend to reduce the high margins traditional in the industry. A steadier day-by-day market for fish landed at the New England ports would also reduce the current instability of prices paid to fishermen.

The New England fishing industry has already taken its first steps in market development. The Gloucester Fisheries Association, which represents most dealers at the port, contributed $40,000 in 1949 to the National Fisheries Institute, Inc., its national trade organization affiliate, for advertising New England fish. In addition, the Gloucester organization started a special oceanperch (redfish) advertising program of its own in January 1949. It published and distributed 100,000 copies of a cookbook which features Gloucester fish recipes. The organization paid for those ventures through a voluntary assessment of 5 cents for every 100 pounds of fish bought through the selling room by the member dealers.

The industry has received helpful publicity in recent years from three other sources. In 1947, the Massachusetts Fisheries Association distributed thousands of fish-recipe books to New England housewives through a Boston newspaper. During the summer of 1949, the Boston association and its Gloucester counterpart entertained food editors from national women's publications. The magazines published many favorable articles featuring the New England industry and its products. Finally, the Sea and Shore Fisheries Division of the State of Maine has issued cookbooks featuring Maine's fishery products, and it has distributed display materials for Maine's many seafood items. These activities point the way to improved consumer demand.

How to meet foreign competition

The New England fishing industry has become increasingly alarmed at the rise in imports of fish. Imports provided only 4 percent of United States consumption of fresh and frozen fish in 1931; they accounted for 23 percent in 1948. Canada, Iceland, and the other northern maritime countries plan to step up their exports to the United States still further. The Canadian Provincial governments also hope to expedite the northern movement of the fishing industry by granting liberal mortgage loans and fishing-vessel subsidies. Two of the larger New England concerns which already have interests in the Martime Provinces have initiated or plan substantial expansion of their Canadian operations.

New England interests have petitioned the Federal Government to impose a limit of 43 million pounds annually on imports of foreign fillets. They considered that request more desirable than an appeal for a higher tariff because import duties could not provide effective protection unless the present rates were raised 150 percent. An increase of that amount would merely restore the ad valorem effectiveness of the pre-World War II tariff, when fish prices were about 60 percent less than they are today.

After extensive congressional hearings last year, the United States Departments of State and Commerce and the United States Tariff Commission recommended that the fishing industry's plea be denied. They pointed out that quantitative restrictions on fish imports would run counter to the country's reciprocal trade policy of encouraging imports to alleviate the "dollar shortage." They noted that fish concessions were among the most important given to Canada, the nation which would be affected most severely by the imposition of fish quotas. Canada would be entitled to compensatory withdrawals if import quotas for fish were adopted. Since Canada is the most important export market for United States products in general, withdrawal of Canadian concessions might have a seriously adverse effect on our whole export trade.

Whether the New England fishing industry likes it or not, market development provides the principal defense against foreign competition. The task of lifting American fish consumption will be slow and difficult. Several factors in addition to those previously mentioned, however, make the outlook fairly hopeful.

The long-run trend of demand for fresh and frozen fillets is upward. Domestic consumption of those products nearly quadrupled between 1931 and 1948, despite the minimum of promotion and advertising. Many Americans who had never eaten fish were introduced to it during their wartime service activities. Others learned to like fish during the meat shortages. Children are acquiring a taste for fish as a consequence of the Federal school lunch program, which makes fresh and frozen fish available in schools at reduced prices.

Some foreign producers have offered to support American interests in their attempts to expand the United States frozen-fish market. In 1949, the Frozen Fish Trades Association of Newfoundland subscribed over $12,000 to the National Fishery Institute to advertise frozen fish. The contribution represented 5 cents for every 100 pounds of frozen fish exported to the United States. Other foreign interests might be induced to offer similar assistance.

Most of the competition from foreign suppliers so far has been concentrated in the American Midwest. The rest of the national market is open to New England interests. On the east coast alone, there is an underdeveloped market of more than 30 million persons with relatively high means. The New England industry has attempted to sell redfish in the East only during the last few years.

Finally, the New England industry can benefit from the present boom in frozen foods by increasing its emphasis on frozen-fish production and by developing attractive packaging. Total frozen-food sales increased 70 percent from 1948 to 1949. Furthermore, the Bureau of Labor Statistics reports that 75 percent of the food stores in the 56 large cities covered by its surveys now have facilities for displaying and selling frozen foods. Only half that number of outlets was available in 1945.

State and Federal Aid

The New England fishing industry must rely heavily on its own efforts to improve its competitive position, but both the States and the Federal Government can provide assistance. The intervention of the Governor of Massachusetts might stimulate greater cooperation among the divergent interests in the Massachusetts ports and produce some positive action. Spurred by the uncertain future of Massachusetts' fishing operations, the Governor appointed a committee in December 1949 to explore possibilities for helping the industry. The committee was headed by the director of marine fisheries. Its members represented fishermen, dealers, and owners in Boston, Gloucester, and New Bedford.

The committe reported to the Governor on February 27, 1950. Its recommendations paralleled some of those contained in this article. It requested continued experimentation with freezing at sea, implementation of the international conservation treaty, and further scientific study of haddock and other species in danger of depletion. In addition, the committee requested financial aid from the Reconstruction Finance Corporation for improving and modernizing the industry's facilities and recommended that the Armed Forces increase their purchases of frozen fish. Finally, it suggested that the Massachusetts Development and Industrial Commission cooperate with the industry to publicize and promote the use of ground fish.

To be of maximum effectiveness, however, adoption of these proposals must be preceded by a reconciliation of differences within the industry itself. Governmental aid can help but cannot solve the problems of an industry torn by inner conflict.

Senator SALTONSTALL. Thank you, Senator. I appreciate very much the opportunity of having appeared here today. I think that is the longest statement I have made before any committee.

Senator DUFF. Do you have any questions, Senator Magnuson? Senator MAGNUSON. No, but I would like to put in the record a letter from the San Juan Fishing & Packing Co. of Seattle, Wash.; a letter from the Halibut Producers Cooperative of Seattle, Wash.; a letter from the Alaska Fishermen's Union of Seattle, Wash.; and a letter from the Pacific Coast Fish Producers Institute of Seattle, Wash.. which have a good analysis of the bill and a complete endorsement of this measure.

Senator DUFF. Without objection those four letters will be inserted. in the record at this point.

(Letters from San Juan Fishing & Packing Co., Halibut Producers Cooperative, Alaska Fishermen's Union, and Pacific Coast Fish Producers Institute are as follows:)

SAN JUAN FISHING & PACKING Co.,
Seattle, Wash., January 15, 1954.

Senator WARREN G. MAGNUSON,

United States Senate,

Senate Office Building,
Washington, D. C.

Dear Senator MAGNUSON: Thanks very much for sending us the publicity release on your bill designed to obt. in approximately $4 million to help in the research for the American fishing industry.

We are very much in favor of th s, and hope that it can be accomplished. There are two points, however, that we would like to stress. They are:

1. That some action be taken or wording put into the bill to make it mandatory that this money be spent in research only, and that it not be sidetracked in some department for other items.

2. That when the money is being spent for research, that it be done in cooperation with the already existing research programs which have been established for years by the fishing industry. We refer in particular to the Fisheries Research Institute, University of Washington, which the industry has sponsored for some time under the direction of Dr. W. F. Thompson.

We are writing to the other members of the Washington delegation to ask them to support your bill.

Very truly yours,

E. A. RUTHFORD,

Vice President.

Hon. WARREN G. MAGNUSON,

HALIBUT PRODUCERS CO-OPERATIVE,
Seattle 7, Wash., March 23, 1954.

Senate Office Building, Washington, D. C. Dear Mr. MAGNUSON: We were directed, at a recent meeting of the board of trustees of our organization, to write and request your support of the Saltonstall bill, S.-2802.

We feel any bill which will promote the study of our fishery problems, fishery resources and markets is worthy of support and especially so at this time, when we have so much competition from imports. We, therefore, urge you to press for the passage of this bill.

Our organization is made up of 2,696 fishing boat owners and fishermen of the Puget Sound area and Alaska.

Thank you in advance for your kind consideration of our request.
Yours truly,

Senator WARREN G. MAGNUSON,

W. B. JOHNSON, Manager.

ALASKA FISHERMEN'S UNION,
Seattle, Wash., January 26, 1954.

Senate Office Building, Washington, D. C.

Dear Senator MAGNUSON: Thank you very much for sending us a preview of the bill you intended to introduce in Congress to provide for research for the fisheries.

I believe that using money derived from duties on imported fishery products is fitting and proper. Probably by using this method to obtain the money which we so badly need, we can stay out of a budget fight-where we might come out second best. Also, you have insured considerably more support by including all of the fisheries.

Some questions arise relative how the money is to be allocated. We would not like to see pressure groups derive the biggest part of the benefits. We hope that some system of determining the importance of the fishery involved and the need of the research required will be the yardstick by which the money will be allotted. Andway, I suppose that will be up to the department which handles the fund.

We want you to know that we deeply appreciate your efforts on this issue and wish you continued success in your battles for the common people. Kindest personal regards to you and your staff.

Sincerely yours,

45699-543

GEORGE JOHANSEN, Sec.-Treas.

tion of the total American market. In addition, the distribution system for fish absorbs a very high percentage of the retail price. This allocation has held the industry's share of the retail sales dollar for fish to a minimum.

Fish have been called "the bottom rung of the economic ladder of meat." In June 1947, average weekly family expenditures in the United States for meat and poultry were $2.36; for fish they were only 20 cents. Annual per capita consumption of meat products in 1947 was 155 pounds in contrast to 6.2 pounds per person for fresh and frozen fish. American fish consumption has been confined largely to Fridays and to the Lenten season. The seasonality in cold storage holdings of fish, shown in an accompanying chart, tends to indicate that the industry has been dependent on the Lenten season to move stocks of frozen fish. The principal marketing problem of the fish industry is to increase and stabilize the demand for fresh and frozen fish by smoothing out its weekly and annual sales curve. It must make fresh and frozen fish a matter of everyday consumption in every month.

To increase per capita consumption, the industry must encourge the sale of fish at prices low in relation to those for meat. Per capita fish consumption declined from 1930 to 1933, for example, despite lower fish prices. A study of available data for the period 1930 to 1937 indicates that per capita consumption of fresh and frozen fish was highest when fish was cheapest in relation to meat prices.

The fishing industry must also convince the public of the desirability of eating fish and publicize the varied ways in which it may be served. Tests have shown that fish is equal to meat in nutrition, although housewives have traditionally classified fish as an inferior food to be served only when they could not purchase meat. Many homemakers have never become acquainted with most of the interesting and palatable methods of preparing fish. A study made in 1946 revealed that more than 70 percent of the women interviewed served only fried fish: 85 percent asked for instructions on how to thaw frozen fish. The industry might obtain large returns if it could meet the challenge to educate the housewife.

Fishery products move through a variety of market channels from the New England fishing centers to the final consumer. Dealers and chain stores are the principal purchasers of fish at the ports. They may process the fish into fillets or sell them whole. The larger dealers distribute fish through their own brokers in key cities to jobbers who supply the retail trade. Others sell through independent brokers to wholesalers and retailers. Some dealers ship directly to institutional buyers and retail stores, occasionally on a cash and carry basis. They also supply secondary wholesalers and processors who move the fish to the retail dealer. Some chain stores handle the fish from the pier to their own retail outlets.

The available evidence indicates that "charge what the traffic will bear" is the only price policy adopted by the fish dealers. Companies in the major ports typically aim at a gross profit of 1 to 2 cents a pound on whole fish and a 10 to 20 percent markup on fillets. These margins are only "rules of thumb" and are frequently not realized. In actual practice, dealers sell at the highest markup obtainable under existing market conditions in the hope that the average margin over time will approximate the "ideal" level.

Tradi

Much larger markups have occurred later in the distribution process. tionally, the large wholesalers have received markups of 30 to 40 percent, and retail stores have operated on margins of 50 to 100 percent. A price of fish to the consumer double that received by the major-port dealer has not been unusual. Wholesalers have defended their markups by citing the cost of handling and financing the product: retailers have blamed the danger of loss due to perishability and one-day-a-week markets. Nevertheless, trade markup practices have held down the flow of income to the New England fishing centers.

Although wholesale and retail markups seem to have shrunk in some areas during the last year, there is little evidence of uniform reductions. Only a few of the chain stores, which have fully integrated facilities from the port to the retail level, can maintain control over wholesale and retail markups. Independent wholesalers and retailers have the greatest bargaining power in the chain of markets from the ports to the consumer. Wholesalers, who receive detailed information daily on prices paid for fish by the dealers, can take advantage of the high degree of price competition among dealers. Retailers have enstomarily received substantial margins as an inducement to handle fresh and frozen fish. Many are still unaccustomed to handling it.

Fresh and Frozen Fish Questionnaire, Parents' magazine, March and April 1946.

The power of the New England fishing industry to eflect reductions in distributive margins is severely restricted by the lack of effective controls over the latter stages of the marketing process. Nevertheless, steps taken to encourage greater competition among wholesalers and retailers who handle fishery products might pay substantial dividends to the industry.

Foreign competition

Foreign competition is not a new problem for the New England fisheries. New England lost its salt-fish trade to Canada and other northern countries before the first World War. New England interests have continuously had a tariffconscious attitude. Wartime and postwar developments, however, have made the challenge from foreign fisheries more acute.

Tariff regulations have protected fillets ever since they became a major fishing product. Under the Tariff Act of 1922 the import duty on all fillets was 2.5 cents a pound. The Tariff Act of 1930 continued that rate until the second trade agree ment with Canada, effective January 1939, reduced the duty on groundfish fillets to 1.875 cents a pound. The reduced rates applied to annual imports of 15 million pounds or 15 percent of the average annual United States consumption of fillets in the 3 preceding years, whichever was the greater. Imports of groundfish fillets in excess of the quota and imports of all other fillets remained subject to duty at 2.5 cents a pound.

An indication of the potential threat to New England interests from foreign fillet producers came in 1939. Imports rose 64 percent above the 1938 level. The largest New England filleting concern made an unsuccessful attempt to establish a new plant in Newfoundland and ship fillets into the United States duty free. It failed only because Congress redefined "American Fishery" to make the products of such a venture subject to the American tariff. These events not only emphasized the importance of the tariff for the maintenance of New England's position under existing cost and market conditions, they also made clear the potentialities in the development of fresh- and frozen fish facilities in the countries to the north.