December 12, 2003 

John E. Van Dyke, Chief
Livestock and Grain Market News Branch
Livestock and Seed Program
Agriculture Marketing Service
USDA
1400 Independence Avenue, SW
Room 2619-South Building, Stop 0252
Washington, DC 20250-0242 

Docket No. LS-01-08: “Livestock Mandatory Reporting; Amendment to Revise Lamb Reporting Definitions” 

The American Sheep Industry Association (ASI) is the national trade association for the United States sheep industry representing 60,000 producers through the 41 State affiliates. We appreciate the opportunity to provide comments on this proposed rule. 

ASI appreciates the publication of this proposed rule to amend the definitions of “carlot-based” sales or transactions and we believe that the change is appropriate in light of current industry market dynamics and will result in improvements in the volume and accuracy of the price data for boxed sales. We also appreciate the proposal to amend the definition of “importer”. The lack of reporting on imported lamb prices has been very detrimental to the entire system of sheep and sheep meat price reporting. With imported lamb now accounting for over one third of total lamb supplies, public reporting of imported boxed lamb prices is essential to the accuracy and reliability of the entire data set being reported by AMS and will allow market participants to be better informed decision makers. 

“Carlot-based” transactions

ASI agrees the AMS on this definition change. Defining carlot-based transactions, as those sales consisting of 1,000 lbs or more of one or more individual boxed lamb items and thus separating true-boxed lamb sales from distributive-based sales should result in meaningful reporting of boxed lamb sales. ASI appreciates the background discussions and analyses that AMS has engaged in with lamb processors and other industry sectors to arrive at a more appropriate, accurate and meaningful method of reporting carlot-based boxed transaction prices. Distributive sales are important and may become more so. 

We recommend that AMS analyze marketing practices involving this classification of products and design a system to capture and report these prices. 

Definition of “Importer”

Mandatory inclusion of imported lamb reporting was a priority for ASI in the establishment of the MPR system as it is only fair and appropriate that companies handling imported lamb be subject to the same requirements and costs associated with reporting that domestic lamb companies incur. 

ASI is on record and agrees that the current volume threshold of 5,000 metric tons per year for the preceding 5 calendar years included in the definition of “importer” is too high and not comparable to the domestic lamb packer threshold of 75,000 head. As is stated in the docket, imported lamb makes up over one third of total lamb supplies in the U.S. and can affect prices for domestic lamb. As stated above, we believe that it is imperative, in order to have a complete picture of the U.S. lamb market place, to have reporting of imported lamb prices. 

ASI appreciates the analysis AMS conducted for the years 1998-2002 on U.S. Customs Service data and the proposal to lower the reporting threshold to 2,500 metric tons. According to the docket description, this change would result in prices being reported by 8 firms. Since ASI does not have access to the actual data used to calculate the market share that would be reported under this definition change, we cannot make direct comparisons. However, we urge AMS to change the definition so as to affect setting the threshold level for reporting imported prices such that the portion of the market covered by LMR regulations is equal for imported and domestic boxed lamb. ASI’s in-house analysis indicates that the threshold should be 2,000 metric tons rather than 2,500 in order to be equivalent to domestic reporting and would include 9 importers at this level. We urge AMS to evaluate the threshold on the basis of equivalent volume of product reporting in the final rule. 

ASI also recommends that AMS carefully examine and evaluate the parts of the definition of “boxed lamb” using “manufacture date” as part of the criteria and make necessary adjustments on the “older than” requirement. Our concern involves the uses of modern packaging technologies and extended product life. A majority of the lamb imported is in the form of fresh or chilled product with a shelf life of several weeks or months. Packaging technologies used on frozen product allows product to maintain acceptable quality for nearly a year. We urge AMS to make the appropriate adjustments in the boxed lamb definition so that product that was manufactured prior to the dates described in the definition does not disqualify these products from reporting under LMR. 

Guy Flora 
President