AMI Says Mandatory Pricing ‘Excessively Costly’

April 25, 2000

The American Meat Institute, commenting to USDA on the mandatory price reporting proposed rule, says the plan exceeds the scope of the law, includes inconsistent reporting categories and definitions and is excessively costly. One "clear problem" is the reporting deadline with which packers could not comply "if (they) had employees work through the night."

AMI Senior Vice President of Regulatory Affairs and General Counsel Mark D. Dopp said, "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. Yet, those are among the risks presented by the proposed rule."

Congress favored mandatory price reporting because of fluctuations in the pricing cycle, fluctuations that AMI attributes to fundamental laws of supply and demand. Those fluctuations, says AMI, cannot be remedied simply by reporting more data.

USDA’s proposed deadlines for submitting data is "one clear problem," according to AMI. 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," says AMI. "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 the impractical nature of the reporting deadlines for lamb and beef."

Packers would need "fundamental and wholesale changes to their operational and accounting systems" to comply with the reporting deadline. AMI prefers a noon reporting requirement that would enable most packers to comply with the reporting mandate.

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

USDA’s Agricultural Marketing Service has "grossly" underestimated the costs of the proposal, says AMI, and 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."

Reporting compliance costs 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, says AMI, something USDA has acknowledged.