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22–646 PDF 2006

S. HRG. 109–456

A REVIEW OF THE USDA MANDATORY LIVESTOCK

REPORTING PROGRAM

HEARING

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JUNE 22, 2005

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry

(

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

SAXBY CHAMBLISS, Georgia, Chairman 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

JAMES M. TALENT, Missouri 

CRAIG THOMAS, Wyoming 

RICK SANTORUM, Pennsylvania 

NORM COLEMAN, Minnesota 

MICHEAL D. CRAPO, Idaho 

CHARLES E. GRASSLEY, Iowa 

TOM HARKIN, Iowa 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

MARK DAYTON, Minnesota 

KEN SALAZAR, Colorado

MARTHA SCOTT POINDEXTER, Majority Staff Director 

DAVID L. JOHNSON, Majority Chief Counsel 

STEVEN MEEKS, Majority Legislative Director 

ROBERT E. STURM, Chief Clerk 

MARK HALVERSON, Minority Staff Director 

(II) 

(III)

C O N T E N T S 

Page

HEARING(S):

A Review of the USDA Mandatory Livestock Reporting Program ...................... 01

Wednesday June 22, 2005

STATEMENTS PRESENTED BY SENATORS 

Chambliss, Hon. Saxby, a U.S. Senator from Georgia, Chairman, Committee 

on Agriculture, Nutrition, and Forestry ............................................................. 01

Harkin, Hon. Tom, a U.S. Senator from Iowa, Ranking Member, Committee 

on Agriculture, Nutrition, and Forestry ............................................................. 03

Grassley, Hon. Charles, a U.S. Senator from Iowa ............................................... 02

Nelson, Hon. Ben, a U.S. Senator from Nebraska ................................................ 05

Salazar, Hon. Ken, a U.S. Senator from Colorado ................................................ 06

Stabenow, Hon. Debbie, a U.S. Senator from Michigan ....................................... 05

WITNESSES 

Panel I 

Clayton, Kenneth C., Acting Administrator, Agricultural Marketing Service, 

United States Department of Agriculture, Washington, DC ............................ 06

Panel II 

Boyle, J. Patrick, President and Chief Executive Officer, American Meat 

Institute, Washington, DC .................................................................................. 15

Caspers, Jon, Pleasant Valley Pork Corporation, Swaledale, Iowa, and Past 

President, National Pork Producers Council ..................................................... 13

Hommes, Harold, Bureau Chief, Iowa Department of Agriculture and Land 

Stewardship, Windsor Heights, Iowa ................................................................. 17

Robb, James G., Director, Livestock Marketing Information Center, Lakewood, Colorado ..................................................................................................... 18

APPENDIX 

PREPARED STATEMENTS: 

Stabenow, Hon. Debbie .................................................................................... 28

Boyle, J. Patrick ............................................................................................... 40

Caspers, Jon ...................................................................................................... 34

Clayton, Kenneth C .......................................................................................... 29

Hommes, Harold ............................................................................................... 42

Robb, James G .................................................................................................. 45

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Cachran, Hon. Thad ......................................................................................... 52

Leter from Paul R. Frishknecht (American Sheep Industry Association) ... 53

Letter from the National Livestock Producer Organization ......................... 65

Letter from the National Pork Producers Council (NPPC) ........................... 57

Testimony of the National Barley Growers Association (NBGA) ................. 67

Page

IV

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD: 

Harkin, Hon. Tom ............................................................................................ 70

Grassley, Hon. Charles .................................................................................... 72

(1)

A REVIEW OF THE USDA MANDATORY 

LIVESTOCK REPORTING PROGRAM 

WEDNESDAY, JUNE 22, 2005

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY, Washington, DC. 

The committee met, pursuant to notice, at 10:35 a.m., in room 

SR–328A, Russell Senate Office Building, Hon. Saxby Chambliss, 

[Chairman of the Committee], presiding. 

Present or submitting a statement: Senators Chambliss, Grassley, Harkin, Stabenow, Nelson, and Salazar. 

STATEMENT OF HON. SAXBY CHAMBLISS, A U.S. SENATOR 

FROM GEORGIA, CHAIRMAN, COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

The CHAIRMAN. We will move to a hearing on the livestock mandatory price reporting law that expires on September 30th of this 

year, and our first panel will consist of Dr. Kenneth Clayton, Acting Administrator, United States Department of Agriculture, Agricultural Marketing Service, here in Washington. 

You have drawn a crowd here, Dr. Clayton. I am sure they are 

coming to hear you and not Senator Grassley. 

[Pause.] 

The CHAIRMAN. I welcome you all this morning to our hearing on 

the Livestock Mandatory Reporting Act. I appreciate our witness 

making the effort to be here to provide information and testimony, 

and I want to thank the folks that are listening today as well. 

The issue of transparency in livestock markets is a subject of 

concern to all of us who care about U.S. agriculture. The sale of 

livestock and related products accounts for more than 50 percent 

of the total farm gate receipts to U.S. agriculture producers nationwide. Obviously, the vitality of this sector of our agricultural economy is critical not only to the health of rural America, but also to 

our Nation as a whole. In addition, the export of high-value livestock products contributes significantly to the total balance of trade 

for the United States. 

In the 1980’s through the 1990’s, the structure of U.S. livestock 

markets began to change, and non-cash methods of sale increased. 

Some in the U.S. livestock industry claimed that the existing 

USDA voluntary livestock price reporting system was inadequate. 

In response, Congress enacted the Livestock Mandatory Reporting 

Act, which established a Mandatory Livestock Reporting Program. 

The Livestock Price Reporting Program has now been in place for 

almost 6 years. The statute was scheduled to sunset in 2004. Last 

2

year, we extended the program until September 30, 2005, in order 

to allow us to carefully consider reauthorization. 

The committee must now decide whether the Act should be reauthorized and, if so, with what changes. I look forward to receiving 

the testimony from this excellent group of witnesses, and I am certain that the information we receive will help us in our decisionmaking process. 

Senator Harkin, of course, is not here at the present time, but 

certainly he will be allowed to make any statement he wishes to 

make at such time as he gets here. 

Would anybody else care to make an opening statement of any 

sort? Senator Grassley. 

STATEMENT OF HON. CHARLES GRASSLEY, A U.S. SENATOR 

FROM IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman, for holding this 

hearing, and I particularly want to welcome two Iowans who are 

testifying—Harold Hommes and Jon Caspers. 

We are here today in large part with the legislation to be reauthorized because way back in 1999, Iowa livestock producers urged 

Congress to pass the Livestock Mandatory Reporting Act, the idea 

to help improve market transparency and giving producers the 

maximum information so that they know they are getting a fair 

price for their product. 

Since mandatory price reporting was implemented by the U.S. 

Department of Agriculture in 2001, I have heard from producers 

across Iowa who question the integrity and the accountability of reported prices under this legislation. While there is a lack of believability regarding the information generated by the mandatory price 

reporting, nearly all producers across Iowa feel strongly that the 

information would be valuable if the program had more credibility 

and improved transparency. 

Thanks to producer comments and dissatisfaction with the current program, Senator Harkin and I offered to initiated a Government Accountability Office examination of the Mandatory Price Reporting Program. I then conditioned my support of any multi-year 

extension or revision of the mandatory price reporting on the GAO 

study results. Unfortunately, there is a growing pressure from 

packers and packer lackies to act before the General Accounting 

Office report is completed. 

Under the auspices of consensus, a number of groups serving 

packer interests are pushing agendas contrary to the interests of 

Iowa’s pork producers and cattlemen. The Iowa livestock community believes any congressional action before receipt and reserve of 

the Government Accountability Office’s report would be premature 

and would be ill-informed. The goal of reauthorizing should be to 

improve the existing legislation to the best of our ability. If the 

non-partisan GAO is not allowed to complete its work before the 

law is reauthorized, Congress will be neglecting the opportunity to 

review and reflect upon an exhaustive study. 

So let me be clear. Livestock producers in Iowa do not think it 

is prudent to move forward without substantive review and potential improvement of this current program. Only those entities that 

3

fear transparency should be fighting for a 5–year extension with no 

consideration of the GAO pending conclusion. 

So I thank you again for holding this meeting, Mr. Chairman, 

and if I could, to you, Mr. Chairman, as you look in the weeks 

ahead that you are considering reauthorization of this, besides 

what I said, I would just make a comment off the cuff to you personally, Mr. Chairman, and also to Senator Harkin because he is 

leading the minority on this committee. We worked to get this bill 

passed in the first place, and I know, Mr. Chairman, you, just as 

a Senator, besides being chairman, often find various departments 

of Government maybe not following congressional intent on legislation that we pass. That is an institutional problem in our system 

of Government over a long period of time. But with this particular 

piece of legislation, I do not think I have seen legislation that we 

have worked so hard to get passed that I have seen end up doing 

less than the previous law did, and we were trying to improve upon 

the previous law. I have never seen a conspiracy between the food 

chain beyond the farmer and the bureaucracy at the USDA than 

the way the regulations gutted the intent of this legislation that we 

passed. 

So upon reviewing this and reauthorizing it, and as a Senator, 

I know somebody that wants the bureaucracy to follow what 

Congress’s intent is, that we make sure that the next piece of legislation we pass, that the regulations do not gut it and even go beyond gutting it, doing contrary to what we did, to the point where 

there is a feeling among our producers in Iowa and southern Illinois that that market reporting information is even less valuable 

today than it was prior to 1999. 

So that is what I would ask the chairman, to consider that history as we reauthorize this legislation. 

The CHAIRMAN. As the Senator knows, I have great respect for 

his opinion on many subjects, agriculture being certainly one of 

those at the top. And coming from the area of the country that you 

do where livestock is such a critical product, know that this chairman values your opinion and your input on this topic very highly. 

And when you are upset about what is going on relative to this 

issue, let me assure you the chairman is also upset about it. 

I think we all share that frustration of working hard to get good 

legislation passed, and then all of a sudden the bureaucracy does 

inject itself and put regulations in place that change the initial intent of the legislation. So thank you for those comments. 

Senator Harkin? 

STATEMENT OF HON. TOM HARKIN, A U.S. SENATOR FROM 

IOWA, RANKING MEMBER, COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

Senator HARKIN. Thank you, Mr. Chairman. I just want to concur in the comments of Senator Grassley, not only here, but if you 

want to see how the bureaucracy has screwed up what we did here 

in terms of legislation, you look at this and you also look at the 

Conservation Security Program, what they have done to that over 

the last 3 years. Hopefully we will get into that some other time. 

Mr. Chairman, when we passed this bill, it was to provide more 

transparency and more competition in the marketplace. We impleVerDate 0ct 09 2002 11:25 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\22646.TXT TOSHD PsN: LAVERN
4

mented it in 2001. We had some growing pains. But I would say 

right now it is an integral part of setting prices paid for livestock 

in the United States, both under contracts and in the open bid system. 

As we know, the current authority is set to expire September 

30th. That is why I commend you, Mr. Chairman, for having this 

hearing and starting the process to review this important law. 

I think it is generally agreed that mandatory price reporting—

MPR, as we call it—is meeting its mandated goal and it should 

continue. The real question is what can be done to make the program more transparent and identify areas that will strengthen the 

existing law. 

I have heard from many of my livestock producers who want the 

program to continue, but they have grave concerns that there 

needs to be better oversight and external review of the program, 

improved reporting times for the morning and afternoon reports, 

inclusion of wholesale pork cuts, and an ability for producers to 

verify that their own livestock were accurately reported in the system. 

I have also heard concerns that there is insufficient coordination 

at USDA among the specific branches responsible for enforcement 

and compliance activities, which may cause price reports to be less 

accurate than they should be. The lack of strong oversight in enforcement at USDA complicates Congress’ ability to determine 

whether the problems are due to limitations of the law itself or 

simply the administration. 

So in order to get as many facts as possible for purposes of reauthorizing this law, last year both Senator Grassley and I requested 

a Government Accountability Office, GAO, investigation to examine 

issues related to compliance and enforcement activities. Currently, 

GAO is reviewing the timeliness of required reports filed by packers, given that late filed reports will alter the true prices paid. 

GAO is evaluating USDA’s authority to require accurate reporting 

of premiums and discounts by packers. They are also evaluating 

the specific branches responsible for compliance and enforcement at 

USDA to see if they are actually talking to each other and sharing 

information. 

These are just a few of the issues GAO is examining right now 

that may need to be resolved legislatively. The GAO report will 

provide answers that will be very useful for long-term reauthorization of mandatory price reporting. Unfortunately, we find ourselves 

with a timing issue since the law will expire in September and the 

GAO report will not be finished until December. 

It would be unfortunate for Congress to provide a long-term reauthorization without critical analysis and the facts needed from 

the GAO audit that reflect the issues that need to be resolved legislatively right now, and preliminary information suggests that is the 

case. 

As the committee moves forward with reauthorization of the 

Livestock Mandatory Price Reporting Act, I look forward to working with you, Mr. Chairman, and members of the committee to find 

a suitable solution in regard to the timeframe of extending, changing, and perhaps modifying the existing law. 

Thank you, Mr. Chairman. 

5

The CHAIRMAN. Does anybody else have any opening comment 

they wish to make? Senator Stabenow? 

STATEMENT OF HON. DEBBIE STABENOW, A U.S. SENATOR 

FROM MICHIGAN 

Senator STABENOW. Thank you, Mr. Chairman. I would like first 

just to submit opening remarks into the record. 

The CHAIRMAN. Certainly, without objection. 

[The prepared statement of Senator Stabenow can be found in 

the appendix on page 28.] 

Senator STABENOW. And I just wanted to indicate that I support 

the comments of Senator Harkin and Senator Grassley. I think the 

fact that the GAO is expected to complete a report on this very important program by the end of the year and make recommendations would say to us that it would make sense for us to have an 

opportunity to look at that report and any recommendations or 

changes before we would extend for another 5 years this program. 

So I hope that we will take that into consideration as we are working toward the extension of the program. 

I would also just indicate that we have had a number of things 

that have come up in relationship to implementing laws and implementing parts of the farm bill. We still have not seen specialty crop 

provisions that deal with commodity purchases that I authored 

fully implemented. We could go through a number of things where 

the bureaucracy has not implemented what we put into the farm 

bill and agreed on in a bipartisan basis. And so I hope that we will 

take what time is necessary in order to have the opportunity to see 

the GAO report and move forward together on how we choose to 

proceed with the program. 

Thank you. 

The CHAIRMAN. Thank you. 

Senator Nelson? 

STATEMENT OF HON. BEN NELSON, A U.S. SENATOR FROM 

NEBRASKA 

Senator NELSON. Thank you, Mr. Chairman. I just wanted to 

make one comment because having dealt with bureaucracy as a 

Governor and now seeing it back here from the legislative side, it 

is disconcerting to try to get something through as law only to have 

the intention, the purpose, and the effect of it totally frustrated by 

the bureaucratic approach of if they do not agree with it, they will 

change it. And that is not their focus. 

The challenge we have is trying to work with—and I hope Dr. 

Clayton and others will take the message to USDA, and I am sure 

the Secretary is fully aware of it as well, and that is, we cannot 

be dealing with what I call ‘‘weebees’’—‘‘We be here when you 

come, we be here when you go’’—and will want to do the things the 

way they want it done rather than the way that law establishes the 

requirements. And so I hope that that message will be taken back 

not simply on this. I have been as frustrated about this as anybody 

has. I join with Senators Harkin and Grassley in the comments. 

But I would say it would be true of other instances as well. It is 

not the role of the bureaucracy to improve or write law, but to implement law, whether they agree with it or not. 

6

And so I would just add my comments to what I think are some 

fairly stern comments about not having to put on the legislation a 

clause at the end saying, ‘‘And we mean it.’’

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Salazar? 

STATEMENT OF HON. KEN SALAZAR, A U.S. SENATOR FROM 

COLORADO 

Senator SALAZAR. Chairman Chambliss, I will submit my statement for the record, and I just want to say a couple of quick things. 

First, Mr. Robb, who is here from Colorado, I very much welcome 

you here to our Nation’s capital and look forward to your testimony 

later on in the panel. 

Second, I associate myself with the comments from both Senator 

Grassley and Senator Harkin and my colleagues with respect to the 

concerns relating to moving fast forward without the benefit of having the results of the GAO investigation before us. 

The CHAIRMAN. Thank you. 

We welcome again Dr. Kenneth Clayton, who is the Acting Administrator for USDA’s Agricultural Marketing Service. Dr. Clayton holds a Ph.D. in agricultural economics from Purdue University 

and has served American agriculture in a number of Government 

positions, most recently as the Associate Administrator for Marketing Programs for the USDA Agricultural Marketing Service and 

as Acting Administrator. 

Dr. Clayton, we are pleased to have you here today. I will have 

to tell you that we have a vote that we are expecting any minute 

on the Feinstein amendment, for Senators’ information, so we probably are going to have to interrupt your testimony at some point 

in time. But we welcome you. We look forward to your comments. 

STATEMENT OF KENNETH C. CLAYTON, ACTING ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE, UNITED 

STATES DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 

Mr. CLAYTON. Mr. Chairman, members of the committee, thank 

you very much. I certainly appreciate the invitation to appear before you this morning to discuss the Livestock Mandatory Reporting Act. I will be fairly brief in my opening remarks. Hopefully that 

will coincide with the schedule you have identified. 

As you know, USDA launched the Livestock Mandatory Price Reporting Program on April 2, 2001. Under this program, USDA’s Agricultural Marketing Service receives and manages some 500,000 

data elements each day from packers and does so under very tight 

time constraints. These data are reported by USDA in over 100 

daily, weekly, or monthly reports that cover market transactions 

for fed cattle, swine, lamb, lamb meats, and beef. Currently, there 

are 116 packers and importers that are required to report. All reporting packers are subject to regular and ongoing audits of their 

records. 

Clearly, the Livestock Mandatory Price Reporting Program has 

resulted in the release of additional information on pricing, purchasing, and supply and demand conditions for livestock and meat. 

We are now reporting 85 to 90 percent of the boxed beef market, 

75 percent of the lamb meat market, 75 to 80 percent of the steer 

7

and heifer cattle market, 60 percent of the lamb market, and 95 

percent of the hog market. 

With over 4 years of experience with the Livestock Mandatory 

Price Reporting Program, USDA, the participating packers, and the 

users of data provided through this program have been provided an 

opportunity to gauge the strengths and the weaknesses of the reporting system. For our part, USDA has modified and added reports to provide information in a manner that is most helpful to 

those who use it. We have had a chance to learn how to manage 

a system of electronic data transfer that has moved literally hundreds of millions of data elements. We have learned how to screen 

and process some 500,000 data elements each day moving them 

into report formats for release within a single hour of receipt. 

Through our experience in implementing this program, USDA 

has identified several areas in which program improvements and 

enhancements could be made. For example, providing more flexibility in packer and USDA reporting times could be considered as 

it might allow program reports to better reflect changing market 

conditions. Also, certain statutory definitions do not delineate as 

clearly as they might the data to be reported. In other instances, 

data are required to be submitted by packers even though they 

could be easily calculated from other data already being provided. 

We are also aware that industry groups have been considering 

possible changes to the Livestock Mandatory Price Reporting Program. Reportedly, a variety of changes have been considered, including: modifying the timing for data submissions and the 

issuance of reports to reduce reporting burdens and allow reports 

to better reflect market conditions; separately reporting sows from 

other swine as well as cows and bulls from steers and heifers; and 

expanding coverage to include transactions involving pork products. 

The President’s fiscal year 2005 budget includes funding for the 

Livestock Mandatory Price Reporting Program, and, of course, as 

you have noted, the program is authorized through this current fiscal year. USDA is currently developing a legislative proposal that 

would extend the Act through fiscal year 2007 and in doing so address some of the concerns and changes that could enhance the effectiveness of the program. 

During this 2–year extension, USDA plans to conduct an indepth analysis to evaluate whether mandatory price reporting has 

addressed the original purposes set forth in the Act. This analysis 

will provide a basis for USDA recommending any future reauthorizations of the Act. 

Mr. Chairman, in conclusion, it is USDA’s objective to provide 

timely, accurate, and unbiased market information to buyers and 

sellers of agricultural products, for livestock and meat as well as 

the many other agricultural products that we cover. Such information benefits our farmers and ranchers as well as other participants 

in the marketplace. Implementation of the Livestock Mandatory 

Reporting Act clearly has resulted in the release of more information which, in turn, has contributed to greater transparency in the 

marketplace. 

Mr. Chairman, thank you again for the opportunity to appear before you today. We look forward to working with the committee and 

8

interested industry and producers in the reauthorization process. I 

will be happy to answer any questions that you or other members 

of the committee might have for me. 

The CHAIRMAN. Thank you very much, and I am going to yield 

my initial questioning time to Senator Grassley for questions hopefully before we go vote. 

Senator GRASSLEY. Thank you, Mr. Chairman. 

Dr. Clayton, there could be a few packers who have tried to skirt 

the law. So out of fairness to those firms doing it right, does a report exist to document the violations reported by the Agricultural 

Marketing Service audit and compliance personnel, say like in the 

recent 2–year period of time or any period of time you might want 

to suggest? 

Mr. CLAYTON. Senator, let me answer it this way: The data do 

exist. They do not exist in a report form per se. I can certainly address in very brief fashion, if you would like, some of those results 

here this morning even. 

Senator GRASSLEY. Maybe just a short—well, the fact that they 

exist is good enough, and I will follow up with you on that point 

later on. 

Mr. CLAYTON. Certainly. 

Senator GRASSLEY. How many firms and how many fines have 

been levied against packers? And if a violation is found, what happens in terms of follow-up to correct the behavior of the violating 

packing company? 

Mr. CLAYTON. There is, in fact, a very regimented process when 

so-called non-compliances are identified through the audit process. 

There is a very structured timetable in terms of follow-up with the 

packer where we may have found a non-compliance. There is an expectation that corrections will be made within particular periods of 

time. 

Over the course of the program, we have, in fact, issued 18 warning letters to participating packers notifying them that if corrections were not made immediately, there would be legal action to 

follow. And in two instances, we, in fact, have assessed civil penalties against two packers for $10,000, which were held in abeyance provided that no further violations were committed within a 

1–year period of time. 

Senator GRASSLEY. OK. Are you aware of the 1,150 missing cattle reported to us from Nebraska? Did the Department investigate 

the incident? And what did the Department discover? And then, 

last, if a farmer has a concern as to how his or her livestock were 

reported, could they get confirmation that the livestock they sold 

was reported correctly by the packer? 

Mr. CLAYTON. Senator, if I might, let me start with the second 

one. I think I can answer that one more quickly. 

We do, in fact, welcome inquiry by producers, ranchers who have 

sold cattle and might have some concern about whether or not that 

transaction was picked up in our reports. We have fielded those 

questions since the beginning of the program. We continue to do 

that. We, in fact, encourage that, within some reason, as an adjunct to our compliance program. The ‘‘within reason’’ part, obviously it takes people, it takes time to research those inquiries. At 

some point they become overburdening, but as a general statement, 

9

we do welcome those kinds of questions, and we do very much try 

to respond to them. 

As to the Nebraska issue, I am very much aware of the concern 

that was raised. We did, in fact, investigate that. The cattle in 

question, in fact, were included in our reports. They were properly 

reported on the front end at the time that the transaction was negotiated. I think part of the problem there was that the producer, 

in fact, had negotiated a transaction with a packer, but under the 

definitions of the statute, that particular arrangement was a forward contract, not a ‘‘negotiated transaction.’’

I think understandably the producer looked to our negotiated 

price reports and was concerned that his transaction was not there. 

In fact, it was not because it should not have been. It was a forward contract. It was properly reported to us by the packer. We 

further researched it and found the lots of cattle in question 

showed up at the point of slaughter. We could trace them through 

the reports. There was a small reporting problem as to the way 

those cattle were reported to us at the closure of the transaction 

in that they were reported on a dressed basis rather than a live 

basis. They should have been reported live because that is the way 

the transaction was originally set up. 

But I think importantly, none of that transaction fitted into the 

negotiated price data that we provide, which I believe is probably 

the more important benchmark that folks use in developing contractual relationships. 

Senator GRASSLEY. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Gentlemen, the vote has been called. It started 

at 11:02. I think perhaps we ought to go vote and come straight 

back. 

[Recess.] 

Senator GRASSLEY. Mr. Chairman, I used my 5 minutes, but 

could I just have 60 seconds to discuss something with you as well 

as Mr. Clayton, Dr. Clayton. 

The CHAIRMAN. Certainly. 

Senator GRASSLEY. I asked this question, if a farmer has a concern as to how his or her livestock were reported, could they get 

confirmation that the livestock they sold was reported correctly to 

the packer. Now, I do not have any reason to doubt that Dr. Clayton gave us the answer that he believes is the right answer, but 

let me read from an e-mail that was between a Brittany Dreier located for the Market News Service there in St. Joe, Missouri, to 

one of the next witnesses, Harold Hommes. It says, about this can 

we get this information, it says, ‘‘Under the law’’—and I am not 

going to read the whole thing here, but, ‘‘Under the law I am not 

allowed to tell anyone whether those cattle showed up or not’’—

meaning the 1,150 missing cattle that I was talking about. ‘‘This 

is confidential information that is protected by law. I could track 

them down to make sure that they did show up, but I would not 

be allowed to tell you about it. However, if the details of the transaction were fully disclosed, I could at least walk through the reporting process and where the cattle that were purchased, that 

purchase type would show up.’’

10

So, you know, we have an e-mail saying that this is confidential 

information and the cattle producers cannot get this information. 

And Dr. Clayton is telling us that it is allowed. So I assume Dr. 

Clayton, higher up in the bureaucracy, is reporting the accuracy of 

the law, and so I would expect farmers to be able to get this information in the future, or else if Dr. Clayton has to stand corrected, 

then he would stand corrected. But I believe him in his testimony. 

The CHAIRMAN. Dr. Clayton, do you have any comment on that? 

Mr. CLAYTON. Mr. Chairman, if I could just briefly. The statute 

is very specific in terms of disclosure of any information that USDA 

receives under this program to the extent that criminal penalties 

apply to any of our staff who divulge any of that information that 

is provided to us. 

The way that we approach this issue is that if an individual producer who has entered into a transaction involving sale of cattle, 

hogs, what have you, wants to approach us about a transaction in 

which he or she was involved, if they can demonstrate to us that 

they are who they purport to be, and if they can give us something 

to go on in terms of a sales invoice or something of that sort, we 

will work with that individual producer to determine whether or 

not a particular transaction is reflected. 

Can we talk to third parties about whether individual transactions are there or not? Our read of the law would be that it restricts us from doing that. 

Senator GRASSLEY. Thank you. 

The CHAIRMAN. Senator Harkin? 

Senator HARKIN. Thanks, Mr. Chairman. 

Dr. Clayton, the livestock mandatory price reporting law and the 

final rules states that livestock are to be reported at the packing 

plant before the application of any premiums or discounts. 

Now, I have heard concerns from a lot of producers that the base 

price paid by packers is not always being reported as just delivered 

to the plant. Again, this may not sound that important to many 

people, but this issue can have profound negative effects on the 

livestock marketplace. 

For example, if a packer pays, say, $71 a hundredweight for hogs 

but reports to USDA that it bought them for $68 a hundredweight, 

by splitting off the $3 for a premium, it ultimately depresses the 

prices paid for all other producers in the marketplace, both for contracts and open market. USDA should have the authority to stop, 

refuse to report, or correct questionable manipulation of premiums 

and discounts that affect the true base price paid by packers. 

My question is: To what extent is USDA aware of this problem? 

And what has USDA done within its authority to stop, correct, or 

refuse to report questionable base prices paid to producers? 

Mr. CLAYTON. Thank you, Senator. That is an area where we 

have had to go through a learning process with those required to 

report. As you are aware, there are premiums that may apply for 

a variety of reasons. A portion of them relate to the value of the 

carcass itself, and it would seem to us that the statute makes clear 

that those are to be separately identified. Where some arguable 

ambiguity arose at the outset is what happens in terms of things 

like transportation costs and should that sort of thing be included 

or not included in the price which is reported. 

11

Our view——

Senator HARKIN. Excuse me. May I interrupt you there? What 

transportation costs? 

Mr. CLAYTON. Well, you may have a load of hogs that are purchased in California and delivered to the Midwest for slaughter. 

What is the price of those hogs delivered? I mean, you need a common denominator, I guess is the point, and I think the expectation 

is that that price will be reported on a delivered basis, which would 

mean price as they would arrive in the Midwest. 

There was some confusion, particularly early on, as to what you 

did with that transportation cost. We have issued guidance and 

have at every turn, when we have become aware of it, emphasized 

that the price reported should include that transportation. We force 

people to add that in so that you are comparing apples to apples 

when you are talking about a delivered price. 

And certainly, Senator, if I could add, if there are continuing concerns that are being expressed, we certainly would appreciate those 

being brought to our attention, as that is something that we have 

tried to be vigilant on and would certainly like to continue to be 

so. 

Senator HARKIN. Correct me if I am wrong. Am I interpreting 

your statement as saying that the only aspect of this that you are 

aware of is just the transportation costs, I mean in terms of deductions for premiums and things like that being reported? You don’t 

have any evidence or any knowledge of any of this taking place outside of the transportation issue? 

Mr. CLAYTON. I used transportation as an example, and certainly 

there may be other premiums aside from the carcass merit itself. 

Our position has been that all non-carcass premiums should be reflected in that delivered price. The carcass merit premiums are reported separately as the statute would suggest. 

Senator HARKIN. Are you suggesting that there is too much 

vagueness in the definition of a non-carcass merit premium in the 

law? Are you suggesting that? I am asking this just to find out 

whether or not this is one area that we really have to pay—attention to, and if we have to make some changes in the law on that? 

Mr. CLAYTON. Senator, if I could, I think arguably there is a bit 

of vagueness. We certainly have applied our authority in carrying 

out that law to try to ensure that all of those non-carcass premiums do get reflected in the price. Certainly any additional guidance from the Congress would be helpful. 

Senator HARKIN. Well, and likewise, if your Department has any 

suggestions on how we might tighten this up to make it work better—I am sure I speak for all of us—we would be open to take a 

look at what you might suggest for us. 

Mr. CLAYTON. Certainly we would be happy to work with you on 

that. 

Senator HARKIN. Thank you, Dr. Clayton. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Let me ask a question or enter into a dialog with 

my colleagues here before I ask a question. Senator Grassley, Senator Harkin, you all have requested this GAO study. Obviously you 

have some real concerns about the way the law is being implemented today. My understanding is that you all would like to see 

12

us extend this law maybe for another 6 months or so until we get 

that study back before we make any final decision. Is that correct? 

Senator GRASSLEY. The answer is we do not want to write a permanent extension of the law for 5 or 6 years until we have it. 

Senator HARKIN. That is right. 

The CHAIRMAN. And is there the potential to correct problems 

that you folks want addressed by regulation as opposed to rewriting the law? 

Senator HARKIN. I do not know the answer to that question. That 

is why I was asking Dr. Clayton about this. This is one aspect that 

I just happened to focus on, the premiums and discounts. 

Now, we have put that in the law, but somehow maybe—I have 

heard that maybe it is a little too vague, but maybe they can handle it on regulations. I do not know. Again, this is part of that GAO 

study that is coming back. That will help us decide whether or not 

we need to do something legally in the law or whether it is just 

regulation. I cannot answer that question. 

The CHAIRMAN. OK. Dr. Clayton, my question to you is: What effect will a 6–month, a 9–month extension, whatever we think is appropriate, of the current law have at USDA? 

Mr. CLAYTON. As long as the authority is in place, we will certainly keep the program running. We clearly would be concerned 

were there to be any lapses in that authority because, clearly, that 

is disruptive to us in trying to run the program. It is disruptive to 

those who have to report. Certainly in the final analysis, you know, 

more certainty is preferred to less in terms of the underlying authority for this program, as any other, I suppose. 

The CHAIRMAN. So your position primarily is that you need a 

law, a continuing law in place for whatever period of time the committee may agree to. 

Mr. CLAYTON. That would be true, yes. 

Senator HARKIN. That is what happened last year, is what you 

are talking about, that 2–month or 3–month lapse. 

Mr. Chairman, that happened last year because of our appropriations process. Since this 1–year extension expires on September 

30th, we would have to do something prior to that, hopefully, so 

that we do not have that 2– or 3–month lapse. I do not know when 

our appropriations bills will get done. We have to look for some 

way of doing this so that it is in place before September 30th. 

The CHAIRMAN. Is any appropriation involved in the implementation of this? 

Senator GRASSLEY. Well, I assumed that we did it on the appropriations bill just as a matter of convenience. 

Senator HARKIN. That is right, yes, but then it got held up. I 

mean, it would get done in time. That was all. 

The CHAIRMAN. OK. 

[Pause.] 

Senator HARKIN. They hot-lined it and got it through separately. 

The CHAIRMAN. OK. 

Senator HARKIN. Mr. Chairman, I would assume—I was just informed by my staff—I had forgotten all the details of how that 

went through, but it was to go on appropriations, but appropriations got held up, so they hot-lined it and got it through as a separate bill. And I assume that since they hot-lined it last year and 

13

it got through OK, I assume it would be all right this year. We 

might do the same thing this year. 

The CHAIRMAN. OK. Well, that is an issue we need to stay 

plugged in—as soon as we get back from the July break, we need 

to make a decision on this. OK, great. 

Dr. Clayton, thank you very much. 

Mr. CLAYTON. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Clayton can be found in the appendix on page 29.] 

The CHAIRMAN. Our second panel is comprised of four individuals, and if you all will please come forward. Mr. Jon Caspers, 

Pleasant Valley Pork Corporation, Swaledale, Iowa; Mr. J. Patrick 

Boyle, our friend from the American Meat Institute here in Washington; Mr. Harold Hommes, Bureau of Marketing Chief, Iowa Department of Agriculture and Land Stewardship, Windsor Heights, 

Iowa; Mr. James Robb, Director, Livestock Marketing Information 

Center, Lakewood, Colorado. 

Gentlemen, to all of you, welcome to the committee this morning. 

We appreciate your coming to share your testimony with us. Mr. 

Caspers, we are going to start with you, and, gentlemen, we will 

go right down the line relative to your testimony. 

STATEMENT OF JON CASPERS, PLEASANT VALLEY PORK CORPORATION, SWALEDALE, IOWA, AND PAST PRESIDENT, NATIONAL PORK PRODUCERS COUNCIL 

Mr. CASPERS. Good morning, Mr. Chairman, Mr. Ranking Member, and members of the committee. I am Jon Caspers, a past 

President of the National Pork Producers Council and a pork producer from Swaledale, Iowa. I operate a nursery-to-finish operation, 

marketing approximately 18,000 hogs per year. 

Thank you, Mr. Chairman, for scheduling this hearing to review 

the Mandatory Livestock Price Reporting Program. I ask that my 

complete written statement be submitted for the record. 

I am here this morning representing the views of the National 

Pork Producers Council and our members nationwide. NPPC appreciates the opportunity to discuss the reauthorization of the 

MPR. 

Following tremendous structural changes and severe financial 

crises in both the pork and beef industries in the mid- and late 

1990’s, many producers believed that the prices reported under the 

old voluntary system were not representative of the true market 

price for animals. Producers were looking for a more transparent 

and accurate price discovery mechanism. At congressional direction, producers and packers hammered out species-specific consensus MPR programs for hogs, cattle, and sheep. The end result 

was the Livestock Mandatory Reporting Act, or LMRA, or what we 

now refer to as the Mandatory Price Reporting Program, which was 

included in the fiscal year 2000 agricultural appropriations bill. 

Livestock producers believe that a properly functioning price reporting system should be a mirror to the marketplace. Such a system would not affect the market, but would clearly and without 

distortion reflect market conditions. The MPR program has provided good and accurate information largely due to the breadth of 

its coverage on the vast majority of over 100 million hogs, 35 milVerDate 0ct 09 2002 11:25 Aug 03, 2006 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCS\22646.TXT TOSHD PsN: LAVERN
14

lion cattle, and 3 million sheep and lambs slaughtered each year 

in the U.S. 

Producers value the amount and breadth of the information generated by the system. We know more today about the number and 

prices of animals sold under various price arrangements than ever 

before. We also know more about the physical characteristics such 

as weights, grade, and leanness of animals than ever before. This 

information was not available under the previous voluntary reporting system. 

We believe that it is imperative that Congress reauthorize the 

LMRA for a 5–year period well before its September 30, 2005, expiration date. 

Last fall, NPPC, along with the American Farm Bureau Federation, the National Cattlemen’s Beef Association, and American 

Sheep Industry Association, submitted joint requests to the Senate 

and House Ag Committees to extend MPR provisions for a period 

of 1 year. The request was made so that each group could consider 

recommendations for reauthorization. 

As you recall, the extension of the Act was caught up in lastminute business in both the House and Senate right before adjournment, and it expired on October 22, 2004. 

Producers were extremely concerned about the expiration and 

the potential loss of market information. Most pork packers continued to provide the data required by the Act; however, they had no 

legal obligation to do so. Congress should not put producers and 

packers in such a position again, especially when Congress has a 

clear consensus request for action and ample time to act. 

Since late last year, NPPC and these other groups, at the request 

of the House Agriculture Committee, have worked to reach a consensus to support a 5–year reauthorization. On May 6th of this 

year, they sent a joint letter to the House Agriculture Committee 

chairman and ranking member requesting speedy action on the reauthorization of MPR, including three pork industry consensus enhancements supported by NPPC and pork packers. The three consensus enhancements are: No. 1, a new section to increase cull sow 

and boar coverage to over 80 percent of all sow and boar packing 

capacity; No. 2, moving reporting and publication times for priorday slaughter data to later in the day in order to enhance accuracy; 

and, third, reporting the daily distributions of net prices within 

narrow portions of the price range that will provide additional detail to the market and more fully characterize price distributions. 

In summary, the LMRA generates better information than we 

have ever had before about prices, quantities, and practices in livestock markets. This data supports decisions that are being made 

today and will affect livestock markets for years to come. Uncertainty about the nature and availability of market information in 

the future makes these decisions more difficult and more risky. We 

must have a stable business environment and foreknowledge of the 

type of market information available to producers. Therefore, we 

believe it is imperative for Congress to reauthorize the Act for 

hogs, cattle, and sheep for 5 years before September 30, 2005, and 

to include the three pork industry consensus enhancements outlined in my testimony. 

15

Thank you, Mr. Chairman and members of the committee, for 

your time and attention. 

[The prepared statement of Mr. Caspers can be found in the appendix on page 34.] 

The CHAIRMAN. Thank you. 

Mr. Boyle, always good to see you. 

STATEMENT OF J. PATRICK BOYLE, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, AMERICAN MEAT INSTITUTE, WASHINGTON, DC 

Mr. BOYLE. Thank you very much, Mr. Chairman. Always a 

pleasure to be here. I appreciate the opportunity to testify before 

this committee representing the American Meat Institute. We have 

submitted a statement for the record, and I would ask, Mr. Chairman, that it be included. 

The CHAIRMAN. Without objection. 

Mr. BOYLE. Also, as an aside, before I begin a summary of my 

remarks, I would like to thank you, Mr. Chairman, for your continued involvement and engagement in trying to restore trade of U.S. 

beef exports relating to our BSE crisis. I appreciate your continuing 

conversations with the Secretary earlier today and your ongoing efforts to try to get us back into those important export markets, so 

thank you. 

AMI members include 250 of the Nation’s meat and poultry food 

manufacturing companies. Collectively, they produce 95 percent of 

the beef, pork, veal, and lamb food products in the United States, 

and three-quarters of the turkey processed here in our country. 

The meat-packing industry is heavily regulated and intensely 

scrutinized by the Federal Government with respect to competitive 

practices within the industry and with respect to our relations with 

livestock producers. 

Long before the Livestock Mandatory Reporting Act became law, 

AMI opposed this unfunded mandate due to the added costs borne 

at the packing and processing level, costs that would generate negligible new information, most of which was already available 

through voluntary price reporting programs. Currently, AMS has 

hundreds of different commodity reporting programs ranging from 

390 fruit and vegetable reports, 37 cotton reports, 51 dairy reports, 

94 poultry reports, 31 tobacco reports, all of them voluntary and 

the vast majority of them submitted on a daily basis. 

Meat and livestock are the only reporting programs that are 

mandatory. The viability and reliability of these voluntary commodity reporting programs, let alone the high volume of cattle and 

hog contracts traded on the Chicago Merc each day, are a compelling illustration that mandatory livestock reporting is an unnecessary Federal mandate. 

I observed, Mr. Chairman, firsthand the scope and effectiveness 

of the price discovery mechanism through these voluntary market 

news programs during my 3–year tenure as the Administrator of 

the Agricultural Marketing Service in the late 1980’s. 

For that reason, I concur with some of the comments made earlier today by Senator Grassley, his comments to the effect that in 

some instances the mandatory generated information has actually 

been less helpful to producers than the information previously 

16

available to them through a voluntary program. AMI’s view prior 

to the passage of the law comports with the comments and observations of Senator Grassley. Mandatory reporting was not likely to 

provide producers with more useful and helpful information; rather, it would just impose additional costs on packers and processors. 

I do, however, Mr. Chairman, wish to differ with some of the 

other comments made here today regarding the implementation of 

the statute at the Department of Agriculture. 

The statute passed by Congress more than 5 years ago was highly prescriptive, giving USDA very little implementation discretion. 

In fact, the statute is an 80–page law. That is a lot of statutory 

provisions to convert a long-standing voluntary program simply 

into a mandatory program. 

For example, on page 59 of this statute, there is a reference to 

mandatory reporting for live cattle. That provision sets forth specifically the number of reports each day a packer must submit per 

plant; that would be two; the time of day that the packing plant 

must submit the report each day; that would be no later than 10 

a.m. Central time and no later than 2 p.m. Central time; and the 

prices for cattle that must be reported. They need to include the 

type of the purchase, the quantity of the cattle, the quantity of the 

cattle purchased on a dressed weight basis, on a live weight basis, 

a range of the estimated live weights of the cattle purchased, an 

estimate of the percentage of the cattle purchased that were of a 

quality grade of choice or better, and any premiums or discounts 

associated with weight, grade, or yield, or premiums and discounts 

associated with any type of purchase, which I think was the focus 

of Senator Harkin’s area of questioning just a few moments ago. 

This is a fairly detailed and prescriptive statute, and that is one 

of the reasons that complying with it and implementing it has cost 

the packers and processors a fair amount of money to develop the 

appropriate reporting systems. 

Although AMI has always opposed this mandate, our organization worked, I believe, constructively and cooperatively with the 

Department of Agriculture and our member companies to help implement and continue to comply with the law. For example, last 

year, when the law expired for about a month or so, AMI recommended strongly to all of its member companies that they continue to report, and to the best of my knowledge, they continued 

to report voluntarily during that 4–week suspension of the mandatory statute. 

Despite our long-standing opposition to the mandate, we do have 

political antennas at the American Meat Institute. We acknowledge 

the political reality of support to reauthorize this statute for an additional 5 years. We have been working with our membership as 

well as with livestock producers to develop consensus legislation to 

reauthorize the Act. 

As Mr. Caspers stated, AMI is one of the groups that has participated in that discussion, has developed support for consensus language, and we would encourage the Congress to act before the current statute expires to reauthorize this mandate for 5 more years. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Boyle can be found in the appendix on page 40.] 

17

The CHAIRMAN. Mr. Hommes. 

STATEMENT OF HAROLD HOMMES, BUREAU CHIEF, IOWA DEPARTMENT OF AGRICULTURE AND LAND STEWARDSHIP, 

WINDSOR HEIGHTS, IOWA 

Mr. HOMMES. Good morning, Mr. Chairman, Senator Harkin, 

and members of the committee. If I might, Mr. Chairman, I would 

also like to recognize my other Senator from Iowa, Senator Grassley. 

My name is Harold Hommes. I am the Marketing Bureau Chief 

at the Iowa Department of Agriculture and Land Stewardship. We 

sincerely appreciate your seeking our input into this important discussion. 

My responsibilities at the Department include the reporting of 

cash grain and livestock markets for the State of Iowa. We do this 

through a formal cooperative agreement with the Market News 

Branch of USDA Ag Marketing Service. The Livestock Mandatory 

Price Reporting Act of 1999, however, is a uniquely Federal responsibilities that we at the State level have no involvement. 

We believe that the Act has contributed significantly to better 

and more visibly market information for producers and may even 

be a contributing factor in the relatively less volatile market conditions that now exist for livestock producers. 

However, from our discussions with various producers and producer groups, we have come to believe that some changes to the 

Act are warranted. 

No. 1, if you would allow me to highlight our concerns, the inability to confirm that a trade is reported. One primary concern is the 

inability of an individual producer to confirm or verify that his or 

her livestock transaction was indeed reported and reported correctly to the AMS. During recent communications with the AMS 

staff at the St. Joseph office, I was informed that even if a producer 

were to share his or her actual settlement sheets with the AMS, 

they would not be able to confirm that the sale was reported and/

or reported correctly. The personnel in that office explained to me 

that they and USDA counsel believe that they do not have the authority under the existing law to share that information, even with 

the producer who is part of the transaction. If that assessment is 

indeed correct, I believe we need to consider changes to the law. 

No. 2, transparency and enforcement appear to be lacking. Under 

the current framework, there are no provisions or requirements for 

public accountability of violations. The Livestock Mandatory Price 

Reporting Act does have provisions for enforcement and fines, but 

it appears that no one is actively engaged in enforcement of the 

law. One option would be to implement scheduled fines and make 

public specific violations. This would ensure impartial enforcement 

of the law and enhance compliance. 

We would suggest that an annual independent and out-of-house 

audit be conducted and made public. At minimum, the audit should 

include the nature and number of findings and how they are resolved. 

No. 3, the inclusion of wholesale pork cuts. For the past 5 years, 

we have remained concerned about the lack of inclusion of wholesale pork cuts in the existing law. Despite the inclusion of boxed 

18

lamb and boxed beef in the law, we still do not have mandatory reporting of pork cuts. We would ask your support to have pork 

primals, sub-primals, and case-ready pork public sector included in 

any new or updated version of the Mandatory Price Reporting Act. 

This should be included even in a 1–year reauthorization. 

No. 4, an ongoing investigation. As you are no doubt aware, there 

is now an ongoing Government Accounting Office investigation of 

the Mandatory Price Reporting Act. It is my understanding that a 

final report will be provided later this year. We would urge you to 

give the findings of that report due consideration. We are hopeful 

that their report may provide more insight into some of the concerns that we have raised here today. 

Some groups are now advocating a 5–year extension to the existing law. It is our recommendation, however, that the authorization 

be extended for only 1 year to ensure the valuable input of the 

GAO. It seems that moving forward without that input would be 

nothing short of a waste of taxpayer dollars. 

By waiting 1 year, we would all be in a much more informed position, and together we would likely be much more successful in 

framing an improved program. 

In conclusion, I would like to reiterate our ongoing support for 

the Livestock Mandatory Price Reporting Act of 1999. Our primary 

concerns like with the issues surrounding transparency, enforcement, and the additional of wholesale pork cuts. Rather than extending the Act for a longer period of time, we urge patience. We 

are willing to wait another year in the hope that the GAO will provide additional guidance and recommendations. 

I am hopeful that the House Agriculture Committee will join you 

in seeking the valuable input of the GAO. 

Thank you again for this opportunity. I appreciate your time. I 

will yield. 

[The prepared statement of Mr. Hommes can be found in the appendix on page 42.] 

The CHAIRMAN. Thank you. 

Mr. Robb. 

STATEMENT OF JAMES G. ROBB, DIRECTOR, LIVESTOCK 

MARKETING INFORMATION CENTER, LAKEWOOD, COLORADO 

Mr. ROBB. Mr. Chairman, members of the committee, I am very 

pleased to be here today to share insights from the members and 

staff of the Livestock Marketing Information Center on the USDA 

Mandatory Livestock Reporting Program. The Livestock Marketing 

Information Center is a cooperative effort of 24 land grand universities, six USDA agencies, and associate livestock industry organizations. We have been providing a continuous flow of market analysis and data for 50 years. Each cooperating institution has a designated professional who serves as a member of the Center. This 

effort allows reduction in duplication of effort while maintaining regional and local expertise on livestock markets. 

We feel it is a high priority that all aspects of mandatory price 

reporting legislation be continued. Further, that continuation 

should be for a multi-year timeframe, which will reduce market 

and market participant uncertainty, including those of USDA agencies. 

19

From a broad perspective, market transparency provides a foundation for efficient markets. Transparency occurs when relevant 

prices and transaction conditions throughout the marketing chain 

are readily available. Government available price reporting has 

proved successful because: access is ensured to all market participants; second, concerns about manipulating the data are minimized; and, third, it obviously greatly reduces the costs of individuals maintaining background information on market conditions. 

USDA has had major involvement in livestock price reporting since 

the 1940’s. Until MPR was legislated for livestock in 1999, the system was based on voluntary price reporting, with collection, evaluation, and synthesis of data by professional USDA market reporters. 

Largely because of changes that were occurring in the slaughter 

hog and cattle marketing arrangements, including formulas and 

forward contracts not being captured with the traditional voluntary 

system, MPR was legislated. 

Today, the MPR system effectively provides timely and critical 

livestock market information on prices that do reflect the underlying supply and demand conditions in the marketplace. But early 

on, the system had several problems, and the evolution of the marketing reporting system has taken time. Problems included defining confidentiality, accuracy of reports, terminology used in those 

reports, and report release times. Each year, MPR data, though, 

has become more and more integrated into the livestock and meat 

markets. Small local cooperative producer groups that focus on organize and natural niche markets rely on MPR to set base prices 

for their slaughter animals. Also, large multinational companies 

use MPR to set their invoicing and automatic billing of many of 

their customers. So changing major aspects of the price reporting 

system is not only costly for USDA agencies, but also for the firms 

that must compile, report, and also distribute and synthesize that 

data into their marketing information systems. 

Compared to the prior voluntary price reporting system, MPR 

has greatly enhanced price discovery and has added to the depth 

and breadth of available market data and information. Accuracy of 

the price data for the livestock and meat industry has improved. 

The major tradeoffs have been in the area of timeliness of data, especially slaughter animal reports. But market participants and analysts raise fewer and fewer of those questions each year since 

MPR has been implemented, indicating that in many ways they 

have compensated for some of those changes. 

Overhaul of the system we do not think is necessary. In fact, that 

could be a detrimental step. But the livestock and product markets 

continue to evolve, and the price reporting system must also continue to evolve. 

Based on what we know today, improvements can be made, but 

we feel no major changes are required in MPR. The recommendations we would make here should be considered but not a necessary 

requirement for continuation on a multi-year basis of existing legislation. I will highlight three areas that consistently are brought up 

by our members and staff. 

First of all, this wholesale price reporting on pork cuts and pork 

items which is not included in the current legislation, the consensus is that that should be added to MPR. 

20

MPR has many dimensions, and one of those other dimensions 

has to do with retail price reporting. That is the secondary data 

system and does not require retailers to actually report data, and 

that has been a test pilot program done by Economic Research 

Service, which is now completed. We think that needs to be an ongoing effort. And if we could suggest one addition to that effort, it 

would be to include along with beef, lamb, poultry, pork, and other 

prices, dairy products with that system. 

Thank you very much. 

[The prepared statement of Mr. Robb can be found in the appendix on page 45.] 

The CHAIRMAN. Thank you. 

Senator Harkin. 

Senator HARKIN. Jon Caspers, let me go over something with you 

here. I have got some reports here that I want to cover. 

I have heard concerns from producers about the timing of reports. Now, in the law we have the morning report and we have 

the afternoon report. It is very prescriptive. And then there is a 

comprehensive report, called the prior day’s report. So there are 

three reports—morning, afternoon, prior-day report. 

Now, what has happened, since the reporting times are not equal 

for the morning and afternoon reports, many bids, I have found, 

are not being made until after the release of the afternoon report. 

So you have the afternoon report, then you get a lot of bids that 

come in. But bids made after the release of the afternoon report are 

not known until the next day with the release of the prior-day report. 

So I have heard of situations where buyers will wait to bid higher-priced hogs until late in the day to avoid reporting until the next 

day. So this causes higher-priced hogs to not be included in either 

the morning or afternoon reports. 

So it sets up an inherently tilted system for producers since most 

contracts are based on the morning report. By comparing the morning, the afternoon, and the prior-day reports, the morning report is 

almost always the lowest, and yet contracts are based on that. So 

I have here three reports from in June. Here is the morning report, 

base price, weighted average, $67.98. I have here the afternoon report, weighted average, $68.78. Then I have the prior day’s report 

that came out, weighted average, $69.64. But the contract is based 

upon the morning report, which was $67.98. But the prior day’s report said the weighted average was $69.64. 

So, again, I ask this again: Are you aware of the problems with 

the morning report? Will the National Pork Producers be making 

any recommendations about this and how we might get a better reporting system? I know we prescribed it in the law, but I am just 

wondering. This is not fair. This strikes me as inherently unfair. 

Mr. CASPERS. Well, just to say, as producers, I think we have recognized that for a long time, and I suspect that the same conditions 

existed under the old voluntary program. There were producers 

that had suspicions of the same thing. And, in fact, under the old 

voluntary program, pigs that were sold after the publishing of the 

afternoon report never actually even had a home to be reported in. 

And so today, with the prior-day report that comes out early in the 

morning, it does capture all the trades that take place. 

21

I think Dr. Glen Grimes down in Missouri has studied that quite 

often, and his recommendation—and he has talked in public sessions and been published widely in the trade press—has suggested 

that producers not base their contracts on the morning reports and, 

in fact, more and more as they recognize the differences, are trying 

to base their contract prices on reports that encompass the entire 

volume of hogs traded. And if you go and use the prior-day report 

that comes out early morning, then your contract prices would be 

based on the entire amount of hogs traded in that business day and 

is probably a much sounder basis in which to price your pigs under 

contract. 

Senator HARKIN. Does anyone else have any views on this? 

Mr. BOYLE. I would just concur with what Mr. Caspers said. 

From a packing perspective, we concur with his observations. 

Senator HARKIN. So are you saying that contracts then should be 

shifted and based on the prior-day report? 

Mr. BOYLE. No, but I think Mr. Caspers is correct in his observation that more producers are working with packers to base their 

contracts on the morning report of the prior-day activities. 

Senator HARKIN. That is what they are doing now. 

Mr. BOYLE. They are moving in that direction, yes. 

Senator HARKIN. But I am saying that the morning report is inherently unfair. 

Mr. BOYLE. No, the morning report of the prior day’s total sale. 

Senator HARKIN. Oh, I see, the prior-day report. 

Mr. BOYLE. That would encompass the morning and the afternoon report. 

Senator HARKIN. OK, the prior. Well, but how are we going to 

do this since contractors usually take it or leave it, either take the 

morning or not? I am asking do we need to do something legislatively. I mean, contracts are basically take it or leave it contracts. 

Mr. BOYLE. I have a view of contracts from a packer’s perspective, and I think it is the generally recognized view in contract law 

that contracts are the arrangements between two consenting parties. We have an increasing number of contracts, as you well know, 

Senator, with our pork producers as well as with cattle producers, 

that are designed to provide benefits to both parties under the 

terms of that contract. 

Mr. CASPERS. If I could add also, Senator, we have tried to make 

our members and producers aware of some of the obstacles and recommend that they use the prior-day report. Certainly it is a better 

report to base that on, and those contracts have been available and 

a lot of packers have actually either moved away from the morning 

report to the afternoon report or the prior day. But we have been 

able to get those contracts put in place. 

Senator HARKIN. So you are saying, you are telling me that from 

the producer’s standpoint, there is nothing that we need to look at 

legislatively to deal with this problem? 

Mr. CASPERS. Well, the difficulty is you are dealing with the marketplace, and if you change the times of reporting, the market just 

adjusts. And I think you have the same—buyer and the seller in 

the marketplace all have different goals. 

Senator HARKIN. Right. 

22

Mr. CASPERS. And so it is just the marketplace at work, and we 

have told producers for a long time they maybe ought not to use 

the morning price report because it is a very thin market, it is 

based on very few pigs. Certainly the buyers are reluctant to push 

the bids, and later in the day if they are short, you know, they 

start to bump prices. It is just the marketplace at work. 

But I think, again, it is an education process. We tried to convince our producers that they need to move to—if they are basing 

a contract on some kind of a published report, it needs to be based 

on the entire scope of pigs that are reported under the price system. 

Senator HARKIN. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Grassley. 

Senator GRASSLEY. I would start out with Mr. Caspers. You 

know, because there are some differences of opinion between like 

some members of the Iowa—and I suppose other States as well, 

from the National Pork Producers Council position on this legislation, could you tell me approximately or how you determine at the 

national level to support an extension of this legislation the way 

you have as opposed to some of your other producers? 

Like, for instance, do you know how many pork producers groups 

support your recommendations of the National Pork Producers 

Council? 

Mr. CASPERS. Well, I am not aware of a poll we have done of our 

State organizations. I believe you are correct with the Iowa organization and their opinion. I am probably not as familiar with Senate 

procedures as I could be, I guess, but it occurs to me that last fall, 

with the difficulties of getting the legislation reauthorized, we had 

a gap there where we had no legislation in place, and I think there 

is quite a risk to the marketplace that you could essentially have 

a collapse of the system, I guess, without that underlying legislation in place. And there are so many contracts our producers have 

today that it appears in my mind, I think, that a longer extension 

would just give more certain to the marketplace and we would have 

that underlying legislation in place. And if after this the GAO report, whenever that becomes available, if there are fundamental 

problems that are found or changes that ought to be made, certainly at that point there is nothing to prohibit USDA or Congress 

themselves from enacting those changes. 

Senator GRASSLEY. Could I also ask you then, along that line, we 

have been talking in your case 5–year extensions; Senator Harkin 

and I have just been suggesting here an extension long enough to 

get the GAO report in for consideration. And my question would be: 

If some producers support a 5–year extension, wouldn’t they also 

support a shorter extension, let’s say 6 months or 1 year, to consider the findings of the GAO report? 

Mr. CASPERS. Well, again, our suggestion is that you extend it for 

a long period of time and still be able to come back and take a look 

at the report and, if need be, you and/or USDA could act to correct 

any problems that are found under the investigation of the GAO. 

Senator GRASSLEY. OK. And, Mr. Hommes, I am going to follow 

on to a question that Senator Harkin asked a couple other people, 

and just for your comment and consideration. Have you heard any 

23

complaints from producers regarding how formula price pigs are 

calculated? 

Mr. HOMMES. Yes, I have, sir. We believe that in both cases it 

is a limitation that AMS has to live with, and I think the law itself 

requires a 14–day requirement for negotiated hogs. Anything beyond that is traded a number of ways. It could be traded as packerowned. It could be traded as a forward contract, formula-priced 

hog. But the 14–day negotiated basis is clearly a concern in that 

if it were longer—and I noted that Mr. Robb’s comment that there 

could be other provisions put in place. We think that moving to a 

30–day or possibly a 60–day, there are more cash-negotiated contracts that are certainly more than 2 weeks ago. And they should 

be treated as that. 

Unfortunately, the law now requires that they be put into another form, and it does somewhat tie AMS’s hands, and I think 

there are certainly ways that that could be remedied. And, unfortunately, the cash trade is what they are settled off of so much, oftentimes a 3–day rolling average or a weighted average of what USDA 

publishes. So it is very important that that be accurate and that, 

you know, when we are looking now at only 10 percent of all the 

market hogs sold currently are reported that way under a cash-negotiated basis, if we can move from 14 to 30 days, we will probably 

have 20 percent of the hogs reported on a cash basis. 

So, yes, I think there are some things, but I recognize that AMS 

does have some limitations on how they are treated. But we need 

to have an open discussion on that. It is one of the issues that I 

would hope might be highlighted by the GAO. 

Senator GRASSLEY. And my last question would be to Mr. Boyle. 

I am anxious to understand from your point of view the fact that 

your organization previously had opposed mandatory price reporting, so today you are before us supporting only a 5–year extension. 

What changed your organization’s position? 

Mr. BOYLE. It is a stunning posture in which to find the American Meat Institute, isn’t it, Senator? We actually for a number of 

reasons, which I articulate in my statement, opposed the mandate 

due to added cost without discernible benefits. I think some of your 

producers in Iowa have the same point of view, and you articulated 

that at the start of this hearing. 

But at the end of a 5–year statutory period with a 1–year extension that the Congress passed to keep the program in place, it 

seems inevitable, politically inevitable to us that the Congress is 

going to reauthorize the mandate, we would hope for another 5 

years. The huge costs that are incurred by packers and processors, 

the largest costs incurred by packers and processors, are incurred 

at the implementation phase of a new regulatory obligation. Those 

costs have been incurred. We have ongoing maintenance costs 

going forward, but the big expenses are behind us. We are complying with the law. It is part of our way of doing business. We are 

supportive of reauthorizing the law. 

I will be perfectly candid with you, Senator. We would like a law 

that is reauthorized with minimal changes in the existing requirements, because new requirements, additional obligations raise the 

specter of once again additional implementation costs for the packers and processors. And if a bill of that sort would begin to emerge 

24

through the legislative process, my board might want to reconsider 

their support for reauthorization. But if it is the current bill with 

minimum changes, we are spending the money now to comply; we 

are happy to continue to do so under the current regulatory and 

statutory regimen. 

Senator GRASSLEY. Thank you, Mr. Chairman. 

The CHAIRMAN. Gentlemen, it appears that the biggest disagreement among our witnesses is the time for which the current law 

ought to be reauthorized, and you have heard our colloquy here 

today among Senator Grassley, Senator Harkin, and myself relative to waiting for the GAO report to come back before we have 

a lengthy extension or reauthorization of current law. 

I would just like, for the sake of clarity and the record, for each 

of you to coment very quickly on what you think about the time 

line for reauthorization. Should it be for 5 years or do you have a 

problem with doing it for 6 months, a year, or whatever it takes 

to get the GAO study back and incorporate the ideas that may 

come out of that? Mr. Caspers? 

Mr. CASPERS. Yes, Mr. Chairman, we have asked for a 5–year extension, and it is essentially just to put some certainty into the 

marketplace. If I as a producer have a contract where the price is 

based on a published report of USDA and all of a sudden the underlying legislation goes away, even whether it is just somewhat 

inadvertently because it gets tied up in last-minute business at the 

end of the session, I think that represents quite a danger to our 

price structure and market reporting system and how we price 

pigs. And a lot of producers are rightly concerned about that. So 

that is why we have asked for the 5–year extension so that we do 

not have to face these annual reauthorizations, essentially. 

It would seem to me that, irregardless of whether it is extended 

for 1 year or 5, it really does not impact the ability to come back 

and change the law or the regulations if need be based on the GAO 

report. I think we are certainly supportive of that report. I think 

it needs to be analyzed carefully when it comes out, and if there 

are improvements or adjustments that need to be made, we would 

certainly be willing to take a look at those and offer any recommendations. But certainly it does not impinge Congress’s ability 

to come back and change the law or USDA’s ability to change rules 

and regulations, even if it is extended 5 years. 

The CHAIRMAN. Mr. Boyle? 

Mr. BOYLE. Well, AMI agrees with NPPC and with NCBA, the 

American Sheep Industry Association, the Farm Bureau Federation. We have all worked together for the last 2 years to review existing law, critique the statutory language and the USDA regulations. We are comfortable with a reauthorization of 5 years of the 

existing statute with some modest changes that we have agreed 

upon through those 2 years of discussions. And for the reasons that 

I articulated a moment ago to Senator Grassley’s question, we have 

incurred the costs to implement this program. Right now it is a 

cost of doing business on a go-forward basis. We are paying those 

costs. We are complying with the regulation. The program is here 

today. We are comfortable to see it here for another 5 years. 

The CHAIRMAN. Thank you. 

Mr. Hommes? 

25

Mr. HOMMES. In my statement, I indicated that we were supporting—we are asking for a 1–year extension. Frankly, there is no 

magic timeframe. All we are asking for is that the wisdom and the 

counsel of the GAO be given proper consideration, and that everyone have time to look at that report, give it 60, 90 days. Once that 

occurs, we can have again a more open debate, all be more informed of what they are doing right, what may be going wrong. I 

think we can have this discussion and everyone can have their 

input. And at that point whether it is 1 or 5 years, we wouldn’t 

have any problem. 

The CHAIRMAN. OK. Mr. Robb? 

Mr. ROBB. In my formal testimony, Mr. Chairman, we wrote 

down 4 years, but we are really not tied to that number. We think 

multi-year is important, and that is really input from the 24 land 

grand universities livestock extension economists that deal with 

this every day. And so we are looking—we are recommending that 

you consider a multi-year timeframe. Thank you. 

The CHAIRMAN. OK. Well, I think, gentlemen, you can see by virtue of the fact of who is here asking questions where the interest 

primarily comes from relative to this issue. And certainly Senator 

Harkin and Senator Grassley, as the primary proponents of the 

original law, are going to have significant influence on the members of this committee as to what we do. And I do not know what 

we will do. I think we will all need to get our heads together in 

a short time to make that decision. 

But the one thing, I think, that all of you can take to the bank 

with you, as you say, Mr. Boyle, the political landscape is such that 

we are going to have this law. So whether we do it for 1 year with 

the idea of coming back with a 5–year extension or whether we do 

5 years with the idea of modifying based upon the GAO report, I 

don’t know. We will have to make that decision. But from a certainty standpoint, I think it is pretty certain that this law is going 

to be in place and we are going to have to deal with it. 

I really appreciate all of you being here. I appreciate your patience in allowing us to interrupt the process for a vote. And I 

thank you very much. 

We will leave the record open for 5 days for any additional questions or any additional statements that needed to be submitted by 

anyone. 

With that, this hearing is concluded. 

[Whereupon, at 12:20 p.m., the committee was adjourned.] 

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A P P E N D I X

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