Livestock price reporting system should be taken seriously

A Government Accountability Office (GAO) report released Dec. 12, 2005 on the Livestock Mandatory Price Reporting (LMPR) program shortfalls should serve as a call to action for farm groups and livestock producers everywhere.

The LMPR Act is a provision passed by Congress and enacted in 1999 that requires packers, processors, and importers to provide price, contracting, as well as supply and demand information to the U. S. Department of Agriculture (USDA), which uses the information to create price reports for livestock producers. These reports are critical to livestock producers, who use them to make production and market decisions to maximize their returns on investment.

Because livestock producers so heavily rely on this reporting mechanism to make decisions, it is very alarming to learn that data is reported less consistently than expected. For example, the GAO report, which evaluated 844 audits, found that packers incorrectly reported or failed to report all required information 64 percent of the time. Worse yet, the report showed that a USDA official took an average of 85 days to ensure packers made the needed corrections.

For a producer weighing options on when and how to market fat cattle or for a sheep producer deciding whether to market or save back replacement ewe lambs, 85 days is way, way too long. The GAO report also was critical of the lack of coordination to share price data between the Agricultural Marketing Service (AMS) and the Grain, Inspection, and Packers and Stockyards Administration (GIPSA). While AMS is concerned mostly with collecting and quickly disseminating daily and weekly livestock market price reports, GIPSA’s role in price reporting is to monitor and correct trends of anti-competitive behavior.

Rocky Mountain Farmers Union (RMFU) has long been concerned with pricing and marketing practices that discourage healthy market competition and has, several times, called on GIPSA to aggressively investigate those involved in such practices. It is disheartening to learn that inadequate price reporting and a lack of coordination of agencies within USDA are making it more difficult for GIPSA to track the anti-competitive practices that are so financially devastating to livestock producers.

RMFU is very concerned with USDA’s unwillingness to fine those who fail to report prices, as mandated by the law. In fact, the USDA has not fined a single offender in the last six years, since the LMPR was implemented. According to the GAO report, USDA also has failed to make known to producers and the public that the price reports are lacking data and that correction of errors routinely takes months.

As a former USDA employee and one who held a position within GIPSA, I am very disappointed with USDA’s passive stance on the LMPR program. Producers depend on this data and presume it is accurate. It’s a bit like receiving your bank statement every month and trying to make personal budgeting decisions with only one-third of your transactions shown on the statement.

We commend Sens. Tom Harkin, D-Iowa, and Chuck Grassley, R-Iowa, for pledging reforms that will require USDA to improve application of the LMPR. Despite the fact that the U.S. House passed a five-year extension, the U.S. Senate has been unwilling to pass the longer-term extension until the problems in the price reporting system identified and investigated by the GAO are adequately addressed. The program has been operating as a voluntary program since that time.

RMFU urges Harkin and Grassley to continue their crusade to make the LMPR a meaningful tool for livestock producers and to force USDA to disallow meat packers to regard it frivolously.