Livestock Mandatory Reporting Act Requires: beef, pork, and lamb processors of specified slaughter volume to electronically report details of all transactions of livestock purchases and wholesale trade (beef and lamb only) twice daily to USDA. Also calls for monthly retail meat price and margin reporting. USDA summarizes and reports information subject to confidentiality clause
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Enacted into law October 1999Operational April 2001
An amendment to Agricultural Market Reporting Act of 1946
Objective:Provide information to better reflect the overall supply and demand situation of the marketplace and would allow producers to better determine prevailing market prices, conditions, and arrangements pertinent to the marketing process (Federal Register, 2000)
beef, pork, and lamb processors of specified slaughter volume to electronically report details of all transactions of livestock purchases and wholesale trade (beef and lamb only) twice daily to USDA. Also calls for monthlyretail meat price and margin reporting.
USDA summarizes and reports information subject to confidentiality clause
2. Initially confidentiality guidelines resulted in less frequent reports than under voluntary system After modifications, problem resolved(Schroeder, Grunewald, and Ward)
3. Increased price information should:reduce packer costs of information reduce producer uncertainty about terms of
tradeinform otherwise uninformed participantsimprove production efficiencyenhance price discovery process
(Bastian et al., Azzam, Anderson et al., and others)
35%
15% 13%
8%
19%
6%1% 1% 2%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1 2 3 4 5 6 7 8 9
Level of Agreement (1=SD to 9=SA)
Perc
enta
ge
Effectiveness of ActEffectiveness of Act
Cattle Feeder Survey response to:
Mandatory Price Reporting has Enhanced my Abilityto Negotiate with Packers
Source: Schroeder et al. 2002 Feedlot Survey
Disagree | Agree
Effectiveness of ActEffectiveness of Act
Cattle Feeder Survey Response to:
Mandatory Price Reporting is Benefiting Beef Industry
22%
11%8% 8%
22%
7% 7% 5%9%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1 2 3 4 5 6 7 8 9
Level of Agreement (1=SD to 9=SA)
Perc
enta
ge
Source: Schroeder et al. 2002 Feedlot Survey
Disagree | Agree
Effectiveness of ActEffectiveness of Act
4. Timeliness of reports has raised concerns (Schroeder et al.)
5. Collection and reporting have been expensiveAppears compliance costs were underestimated
Who pays for compliance costs? - producers, consumers, and packers
Policy ImplicationsPolicy Implications
1. Reliable, Relevant, and Timely Market Information essential for efficient price discovery
2. Diminished cash livestock market trade made changes in Market News necessary
3. We replaced a voluntary system with an expensive mandatory system without careful study of:
- costs of mandatory reporting- benefits of mandatory reporting
4. Just because mandated reporting did not reveal any “special deals” it has been criticized
that is not a valid critique
Policy ImplicationsPolicy Implications
5. Have we been enacting “experimental policymaking” in livestock markets?
Without careful assessment of cost, benefits, and impacts we have enacted recent policies:
- Mandatory Price Reporting Act- Country of Origin Labeling
.
.
.What’s next-Ban certain parties from owning livestock?-Limits on producer-packer marketing contracts?