February 22, 2006
Honorable Mike Johanns
U.S. Department of Agriculture
1400 Independence Ave., S.W.
Washington, D.C. 20250
Dear Mr. Secretary:
The undersigned livestock producer organizations are writing to ask you to direct the U.S. Department of Agriculture’s Agriculture Marketing Service (AMS) to immediately implement the recommendations contained in the recently released Government Accountability Office (GAO) report entitled, Livestock Market Reporting: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed; as well as three additional specific enhancements in swine reporting. Those three swine reporting enhancements include: (1) adding additional sows to the report; (2) alter reporting times; and (3) adding net price distribution data.
The GAO report, released on December 9, 2005, contained a series of six administrative recommendations that we strongly support and firmly believe would enhance the transparency of the Price Reporting system for cattle, swine, and sheep. In this report, AMS agreed with the findings and recommendations presented by GAO. The Agency committed to: (1) prepare publicly available reports on the volume of transactions excluded by reporters and their effect on reported prices, and take steps to increase public awareness of reporting methods and processes; (2) clarify AMS reporters’ instructions while following federal and departmental statistical and information reporting guidance; (3) post quarterly audit information on its website and identify additional audit information to add in the future; (4) develop auditing methods to allow conclusions to be drawn about overall data accuracy; (5) review its auditing methods to increase the overall effectiveness of the compliance program; and (6) conduct a further inquiry into the issues raised during one of the Grain Inspection, Packers and Stockyard Administration’s (GIPSA) investigations.
Over the past year, we have worked with Congress to pass a bi-partisan, consensus 5-year reauthorization of the Mandatory Price Reporting law, including three enhancements to the swine reporting provisions. While the U.S. House of Representatives passed this bi-partisan consensus 5 year reauthorization, the U.S. Senate passed a one-year extension to allow for the review of the recommendations made by the GAO. The report was issued and it did not recommend any legislative changes. The Agency reviewed the GAO recommendations and has agreed to implement them in order to enhance the transparency of the current reporting system.
In the interim, the Mandatory Price Reporting Law expired on September 30, 2005. The current reporting system is voluntary, and the meat packers are voluntarily reporting pricing data for most cattle and nearly all swine. However, voluntary compliance in the lamb industry has meant that importing companies immediately stopped reporting imported lamb cuts. This represents over 40 percent of the total lamb in the U.S. market. The retail price for lamb has not been available for months and most recently, lamb carcass reports were not available for a two-week period. The lack of carcass price reports placed lamb producers who market their lambs “on the rail” at a serious disadvantage. U.S. slaughter lamb prices declined 19% from November first through the end of January 2006.
While lamb companies have resumed lamb carcass price reporting this month, Mandatory Price Reporting would increase the reliability of national carcass reporting for the industry. Therefore, the lamb industry is seeking prompt resolution of the serious market reporting situation. All of the producer groups impacted by expiration of this authorization see the lamb situation a foreshadowing of what might be to come for cattle and swine markets. This will prove disastrous for all livestock producers and the U.S. economy.
In addition, we also have concerns regarding the continuation of the retail price scanner data collection aspect of livestock mandatory price reporting. Scanner price data collection was part of the original legislation. The law was intended to procure and publish detailed information about the retail prices of beef, pork, lamb, and selected other meats. This information is critical to compiling accurate and meaningful analysis of consumer demand for meat. It is important to know how demand and price affect the price the producer receives for their product. The Department’s attorneys, however, have told us that this was just a project that should not be part of the reauthorization. Nothing in the authorizing language supports this point of view, and we are asking for your assurance that this program will continue as intended by Congress. One month of data collection has already been missed and it will be difficult to replace at a reasonable cost. Please resolve this situation to prevent further valuable historical data from being lost.
In conclusion, Mr. Secretary, livestock producers continue to demand a mandatory price reporting system to ensure that there is an orderly and accurate reporting system in the marketplace. We will all continue to work with Congress to reauthorize this legislation. However, we are asking you to immediately implement the six recommendations contained in the GAO report and the three enhancements to the swine reporting system because we believe they will enhance the current voluntary price reporting system. Thank you for your concern and leadership on this most important issue to livestock producers.
National Pork Producers Council
National Cattlemen’s Beef Association
American Sheep Industry Association
American Farm Bureau Federation