Cattle Price Reporting Appears Faulty

May 9, 2001

During the first month of reporting under the mandatory price reporting system instituted in April, producers in some of the five reporting regions have expressed concerns that they are receiving less information than was available under the old voluntary system, according to the National Cattlemen's Beef Association. The "3/60" provision, allowing release of information only when at least three packers trade and no packer supplies 60% or more of the market, is often faulted for this decrease in information.

The "3/60" provision is not unique to USDA mandatory price reporting for livestock and meats, says NCBA. It follows similar guidelines used by the Department of Labor, the Department of Education, the Department of Health and Human Services and USDA's Economic Research Service and National Agricultural Statistics Service.

It is a provision intended to protect the confidentiality of private business information and to prevent collusion. "By using the ‘3/60' provision, USDA avoids a situation where a reporting party could gain a market advantage by subtracting its information from the aggregated report and thereby determine prices paid by the competition," according to the cattlemen..

USDA is evaluating data from regions where release of information is restricted due to the 3/60 provision. One of the options under study is to reconfigure those regions with other areas so the information can be released on a regular basis. Before that can be done, USDA must determine the best way to reconfigure a region so the price reporting data still has meaning to producers. USDA is also evaluating systems other than the 3/60 provision that would allow more information to be released while still protecting confidential information.

Some producers in other areas have complained that daily trade data is not available, NCBA continues. "While mandatory price reporting legislation requires daily morning and afternoon reports to be released, that doesn't mean that there will always be trade to report."

Randy Blach, executive vice president of Cattle-Fax, points out that the great majority of cattle still trade in a fairly narrow window -- one or two days a week. Any reporting system whether mandatory or voluntary can only report trade as it occurs. Mandatory price reporting did not change the way livestock is traded, it only defines the transactions that are required to be reported once that trade occurs.

"The new system is providing much of the information that it was designed to provide," says NCBA Chief Economist Chuck Lambert. "However, there is still work to do to increase availability and timeliness of information, and NCBA is committed to working to improve the process. We are getting commitment and delivery reports for cash, formula and contracted cattle. We are also getting prices for formula and contract transactions and price ranges that reflect the value differences for various qualities of cattle. And we are getting much more complete information on boxed beef."

None of this information was available, or in the case of boxed beef it was very incomplete, under the voluntary system, Lambert adds. "Generally, we are getting good cash cattle prices for the 5-region report, and we will continue to work with USDA to improve availability and timeliness of regional reports."

NCBA said it is monitoring the continued development and improvement of the price reporting system. Once USDA has made all the improvements it can, technically and from a regulatory standpoint, NCBA will work to pass a legislative technical corrections package if additional changes are needed. That package will give USDA further authority to implement the needed changes to make sure the system provides the most complete, accurate and timely market information possible.

Mandatory price reporting went into effect April 2 for packers who process 125,000 head of cattle annually. The reports are available on the Internet at www.ams.usda.gov/lsg/mpr/MPRreport.htm.