MANDATORY LIVESTOCK PRICE REPORTING

NCBA Staff Contact: 
Colin Woodall, Executive Director of Legislative Affairs
202-347-0228
cwoodall@beef.org

Summary:  Following final approval by the U.S. House of Representatives in September 2005, and the U.S. Senate in September 2006, President Bush signed into law H.R. 3408, which extends the Livestock Mandatory Price Reporting Act through September 30, 2010.

Although the President signed the bill into law on October 5, 2006, the U.S. Department of Agriculture is working now to develop a new regulation for the program. At current, it appears the rulemaking is taking an unreasonably long time, and there is no time frame as to when we can expect to see the final rule being announced and implemented.

The USDA said October 31, "This new regulation must be issued prior to the resumption of the program on a mandatory basis. The statutory authority of the Livestock Mandatory Reporting Act of 1999 ended in September 2005. At that time, USDA’s Agricultural Marketing Service (AMS) requested each packer that was required to report under the act to voluntarily submit market information. Due to the high percentage of voluntary participation by the packers, USDA has continued to publish most reports, except for imported boxed lamb cuts and slaughter cow reports."

Mandatory Price Reporting requires meat packers to report to the USDA Agricultural Marketing Service (AMS) daily price and volume information on negotiated and non-negotiated purchases of cattle and boxed beef sales. In addition, companies are also required to report beef exports and imports. The reports are available online at the AMS website, found at www.ams.usda.gov/LSMNpubs/index.htm

Background:

The Livestock Mandatory Price Reporting Act (LMPR) was signed into law by President Clinton as part of the FY2000 Agricultural Appropriations Bill. 

The USDA Market News program was established to augment producers’ knowledge base when making marketing decisions by providing them with pricing and sales information from transactions around the country.

Prior to 2001 USDA Market News reporters collected this pricing information by observing public auction markets and via voluntary submission by market participants.  However, by 1999 many producers had come to notice fundamental changes in the market structure.  About 35 percent of fed cattle sales in 1999 occurred via contract agreements that were not covered by USDA’s livestock Market News reports.  Many producers believed that these unreported transactions hampered their ability to accurately assess livestock prices, negotiate with packers or obtain a fair price when selling their livestock.  With these concerns in mind the Livestock Mandatory Price Reporting Act (LMPR) was passed in 1999.  The LMPR aimed to:

·         provide producers with readily understandable information regarding pricing, contracting for purchase, and supply and demand conditions for livestock, livestock production, and livestock products;

·         improve upon past price and supply reporting services of the Department of Agriculture; and

·         encourage competition in the marketplace by substantially increasing the volume of industry sales transactions reported by USDA Market News reporters.

With five firms now slaughtering approximately 85 percent all fed cattle, producers have come to rely on the information provided by the LMPR to aid in their negotiation of sales prices for cattle and meat products. 

On December 12, 2005 the GAO released their report, Livestock Marketing Report: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed, and outlined six areas for improvement based upon their review:

1.       Clarify Agricultural Marketing Service (AMS) reporters’ instructions to make them more specific and consistent.

2.       Report to market news readers the criteria reporters’ use in making reporting decisions to reflect the prevailing market conditions.

3.       Audit a statistical sample of packers’ transactions to ensure the overall accuracy of the transaction data being reported.

4.       Work to improve the timeliness and consistency of AMS reporters’ efforts to follow-up on audit findings.

5.       Further develop AMS audit strategies to identify recurring significant problems.

6.       Improve communication between AMS and the Grain, Inspections, Packers and Stockyards Administration (GIPSA).

While NCBA encourages the USDA to move forward in implementing the improvements identified by the GAO report, we also believe that each of the aforementioned recommendations can be adequately addressed administratively by the regulatory agencies involved. 

Key Points:

·         The information provided by the LMPR serves as a vital asset to producers negotiating the sales of their beef and meat products by improving market transparency and contributing to greater competition within the market place. 

·         The GAO report made several recommendations to the USDA for improving the program, and the Agricultural Marketing Service (AMS) has demonstrated a willingness to move ahead in implementing their recommendations.  This is significant because all of the issues identified by the GAO report can be adequately dealt with administratively.

·         While NCBA encourages the AMS to move forward in implementing the improvements identified by the GAO report, we also recognize the importance of providing producers with readily available and understandable market information and ask for a 5-year extension of the LMPR as soon as possible.

·         Although a majority of U.S. packers have continued to voluntarily submit the prices previously required under the LMPR, a few cow slaughter facilities have stopped providing information.  NCBA will be monitoring USDA’s rulemaking process on MPR and hope that the law will be implemented soon so that producers continue to benefit from the reporting of price information from packers.