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AMI Says USDA Proposed Mandatory Price Reporting Rule Oversteps Legislative Intent

Monday, April 17, 2000

Washington, DC - The American Meat Institute (AMI) today said the U.S. Department of Agriculture’s mandatory price reporting proposed rule exceeds the scope of the “Livestock Mandatory Reporting Act of 1999,” includes inconsistent reporting categories and definitions and is excessively costly. AMI made its statement in comments submitted to USDA’s Agriculture Marketing Service.

“The Act’s intent was to enhance price reporting, not make the industry less competitive, change industry procurement or pricing practices or produce market reports that are more confusing or less accurate or relevant than those currently available,” said AMI Senior Vice President of Regulatory Affairs and General Counsel Mark D. Dopp. “Yet those are among the risks presented by the proposed rule.”

The law garnered favor in Congress as a response to fluctuations in the livestock price cycle – fluctuations that AMI and most economists attribute to fundamental laws of supply and demand. These fluctuations, in AMI’s view, cannot be remedied simply by reporting more data. For these reasons, the Institute has long opposed mandatory price reporting, given the availability of market data voluntarily submitted by packers and tracked by USDA’s Agricultural Marketing Service (AMS). However, the Institute believes now that because price reporting will become mandatory, any new requirements imposed on packers must be practical and workable.

One clear problem noted in all three sets of comments is AMS’s proposed deadlines for submitting data. For example, the proposal’s 7 a.m. Central Time deadline for submitting the Swine Prior Day Report does not consider that the data generally do not exist until well later in the day. In addition, West Coast packers would have to provide data to USDA by 5 a.m. Pacific Time. Lamb and beef packers also have concerns about their impractical nature of the reporting deadlines for lamb and beef.

“Even if a packer had employees work through the night, they still could not comply with this reporting deadline accurately without fundamental and wholesale changes to their operational and accounting systems.” Instead, AMI recommended a noon reporting requirement, which would enable most packers to comply with the reporting mandate.

AMI also said that minimum reporting thresholds are critical and would permit industry to aggregate lots of like-priced livestock and boxed meats. Under the proposal, packers are being asked to provide data on individual lots, rather than on an aggregated basis, which is unduly burdensome.

“Unless AMS intends to report each individual lot, there is no benefit to producers or packers in requiring industry to report lots individually,” Dopp said.
AMI also said that prices for boxed beef intended for export should not be included under the proposal.

“The proposed reporting of these times results from the agency’s confusion about the legislative mandate to report beef exports…the Act requires beef export sales to be reported, but they are to be reported under the Foreign Agriculture Service’s Export Sales Reporting Program,” Dopp said. “AMS has overreached by including them in the proposed boxed beef reporting requirement.”

Branded, proprietary sales of boxed beef should be exempt from the reporting requirement, according to the Institute. As written, the proposal would require the reporting of “branded product characteristics.” “These characteristics do not, and should not, extend to reporting ‘branded beef’ as the industry understands the term,” Dopp said.

Imports of lamb have a particularly significant impact on the U.S. lamb industry, according to Dopp, who said it is unclear why the proposed reporting threshold for lamb importers is 11 million pounds – twice the threshold for U.S. lamb packers. “Given the significant influence of imports on the U.S. market, all importers should be required to report, regardless of size,” he said.

AMI also expressed its concern that AMS has “grossly” underestimated the costs of the proposal and that no clear benefit has been demonstrated. USDA assumes that all companies will be able to electronically transmit reams of data several times a day, including small companies, many of whom do not currently report their data electronically and instead use fax or voice mail. USDA suggests that if companies cannot transmit electronically now, they can hire a computer consultant to build them a reporting system for $750-$1,000, yet the cost of necessary hardware alone will dramatically exceed that estimate.

USDA has acknowledged that reporting compliance costs expressed on a per head basis are going to be eight times larger for the seven smallest beef packers than for the three largest beef packers and 28 times larger for the 12 smallest pork packers than for the seven largest pork packers.

To view AMI’s comments in their entirety, visit http://www.meatinstitute.org.

AMI represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Headquartered in Washington, DC, the Institute provides legislative, regulatory and public relations services, conducts scientific and economic research, offers marketing and technical assistance and sponsors education programs.

For more information contact:
Janet Riley
Vice President, Public Affairs
James Ratchford
Manager, Public Affairs

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