National Meat Association

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September 24, 2007

Chief, Livestock and Grain Market News Branch,

Docket No. LS-07-01,

1400 Independence Ave., SW., Room 2619-S,

Washington D.C. 20250-0252

Re: Docket No. AMS-LS-07-0106; LS-07-01

RIN 0581-AC67

*Federal Register,* Wednesday, August 8, 2007

Vol. 72, No. 152

Pages 44671-44722

Gentlemen:

On behalf of the members of National Meat Association (NMA), we
respectfully submit the following comments in response to the *Federal
Register* Proposed Rule entitled, "Livestock Mandatory Reporting;
Reestablishment and Revision of the Reporting Regulation for Swine,
Cattle, Lamb, and Boxed Beef."

Organized in 1946, NMA represents the interests of meat packers and
processors throughout the United States. With approximately 300 general
member companies, all of which could feel the ramifications of the
"livestock mandatory reporting; reestablishment and revision of the
reporting regulation for swine, cattle, lamb, and boxed beef," NMA has a
great interest in this *Federal Register* Proposed Rule.

The National Meat Association supports most of the proposed changes in
the regulation. Although practically all of the changes will result in a
cost to reprogram current systems, several of the changes will eliminate
the requirement to submit and retain records of information that is of
little or no value. Further, minimizing the submission of information
should make the USDA audit process more efficient and lessen the burden
on packers.

Fr: National Meat Association September 24, 2007

To: Chief, Livestock, and Grain Market News Branch Page 2

Recordkeeping

NMA supports the change that eliminates the requirement on lamb
importers to report the time of day of a sale.

Definitions

Many of the modifications proffered in this section of the proposed rule
seem reasonable. With that said, NMA does not concur with the proposed
modification of "the definitions of the terms 'negotiated purchased' and
'negotiated sale' by removing the language 'and agreement on a delivery
day.'" The stated reason for making this change is that it would provide
for timelier price reporting. Although this may be true, NMA believes it
forces the packer to make several assumptions and speculations that may
turn out to be inaccurate. Remember, a transaction is viewed as final
between a buyer and seller when the price and delivery dates are
established. In addition, AMS tries to match the slaughter transaction
with the purchase transaction, thus the proposed rule would be more
burdensome for AMS. Reporting the price before a delivery date is known
assumes a date will be agreed upon, and the sale will be finalized.
Also, the packer would have to speculate that the delivery date will be
within 14 days in order to report the transaction as a negotiated
purchase or negotiated sale. In short, NMA believes accuracy is more
critical than timeliness. Further, with such a modification, there will
be unnecessary reprogramming costs placed on the packers. For these
reasons, NMA feels the delivery day should not be omitted from the
definitions of the terms "negotiated purchased" and "negotiated sale."

Cattle

The proposed rule proposes to separate the reporting requirements for
cows and bulls from that of steers and heifers. NMA has previously
supported this change to, as the rule states, "minimize the reporting
burden on cow and bull packers where possible and to make the
information published for cows and bulls and the resulting meat products
more meaningful to the industry." This change takes into account the
industry's burdens associated with reporting and makes them more
manageable. In addition, cow and bull reporting would be on a "day
prior" basis, as opposed to twice per day. This change should save time
for cow and bull packers and relates better to the difference in
marketing for this class of product and thereby the usefulness of the
reported information.

Although not proposed by the Agency, NMA suggests changing the current
method of collecting quantity information on delivered cattle. As
currently collected, this information provides little to no value and
creates a significant amount of record keeping.

Fr: National Meat Association September 24, 2007

# To: Chief, Livestock, and Grain Market News Branch Page 3

If the Agency believes there is value in this information, they should
consider a method similar to the "prior day reporting for swine."

In addition, the Agency proposed "to modify the definition of the term
'boxed beef'

to remove references to age limitations on products and to require
packers to report transactions for frozen primals, subprimals, and cuts
in addition to the current requirement for packers to submit information
on frozen beef trimmings and boneless processing beef." The National
Meat Association concurs with elimination of product age restrictions;
however, we feel that at some point the age of the product (shelf life)
is a marketing factor that may need to be considered. Without any
information on product age, the USDA market reporters may feel compelled
to speculate whether a low price is a function of a down market or
product that has reached the end of its shelf life. We recommend that
before modifying current reports, the Agency closely evaluate the new
information collected and make sure it does not distort the market. The
changes that could occur in the various reports, such as the cutout
report, could affect current marketing practices, such as forward
contracts and formula pricing.

The Agency has also made modifications to the definition of the
"carlot-based," which for cows and bull boxed beef items would include
any transaction between the seller and buyer consisting of 5,000 pounds
or more of one or more individual items, where all products in the
transaction must be reported. NMA is concerned that certain high value
cow cuts such as tenderloins may be trading in substantial volume as
individual items in less than 5,000 pounds sales, which may preclude the
reporting of a significant number of transactions. Further, it is
unclear if and/or how the Agency will use "less than "carlot-based"
transactions" that may be voluntarily reported. NMA feels the Agency
should clarify this issue before proceeding to the Final Rule.

Additionally, NMA supports the proposed modification of the definition
of the "terms of trade" to clarify that the requirement to report the
terms of trade applies only to steers and heifers to coincide with
proposed separation of reporting requirements for cows and bulls from
steers and heifers. "Terms of trade" has been modified to require
packers to distinguish between negotiated transactions that are
scheduled for delivery not later than 14 days and those negotiated
transactions that are scheduled for delivery more than 14 days, yet
fewer than 30 days. Though the proposed modifications would not require
packers to submit additional transactions, it would allow AMS to
separately identify these types of transactions.

Finally, NMA agrees with packers being required to report the quantity
of cattle purchased on a negotiated basis and on a negotiated grid basis
that were slaughtered in addition to the current requirement to report
the number of cattle purchased through forward contracts, formula
marketing arrangements and the quantity and carcass characteristics of
the packer-owned cattle that were slaughtered. Also, packers would be
required to provide the basis-level month and delivery year for all
cattle purchased

Fr: National Meat Association September 24, 2007

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through forward contracts in addition to the current requirement to
report the basis-level and delivery month. As these changes are deemed
necessary to make the information published in AMS market reports more
meaningful and useable by industry by providing a complete picture of
the prior week's slaughter with respect to the numbers of cattle
harvested under each purchase type, we advocate the Agency's efforts.

### Swine

NMA concurs with all the changes on swine reporting. The changes should
enable the Agency to publish more meaningful reports while lessening the
burden on packers.

### Lamb

Though adding to lamb packers reporting requirements, NMA feels the
modifications made in the proposed rule for lamb packers should be
beneficial. We encourage the Agency to learn from experiences on cattle
and swine reporting requirements and minimize the collection of
information that does not add value to the published reports.

NMA feels it is reasonable to require packers to submit information on
their carcass purchases in addition to the current requirement to report
carcass sales. In addition, by requiring packers to also report their
carcass purchases, the Agency will be capable of making more complete
and meaningful information available in their AMS market reports.

### Conclusion

Though NMA agrees with most of the changes in the Proposed Rule,
exceptions noted above, we are very concerned with the implementation
process and the changes to existing USDA reports. The USDA market
reports are a vital part of the marketing process for livestock and
meat. NMA strongly encourages the Agency to closely evaluate the impact
on the marketplace of any modified or new reports. Consistent with the
Agency's past practices on voluntary market reporting, we trust the
Agency will work closely with the industry and consider our input as new
or modified reports are developed. Further, we stress the importance of
allowing appropriate time for implementation and appropriate beta
testing of changes to assure a smooth transition.

Thank you for providing this opportunity to comment.

Sincerely,

Rosemary Mucklow Ken Mastracchio Satbir Bal

Director Emeritus Associate Director Regulatory Regulatory Analyst