a

GAO

United States Government Accountability Office

Report to Congressional Requesters

December 2005 LIVESTOCK MARKET 

REPORTING

USDA Has Taken 

Some Steps to Ensure 

Quality, but Additional 

Efforts Are Needed

GAO-06-202
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

December 2005

LIVESTOCK MARKET REPORTING

USDA Has Taken Some Steps to Ensure 

Quality, but Additional Efforts Are 

Needed 

Highlights of GAO-06-202, a report to 

congressional requesters 

Livestock producers, with gross 

income of $63 billion in 2004, 

depend on USDA’s daily, weekly, 

and monthly livestock market news

reports. These reports provide 

them and others in the industry

with livestock and meat prices and 

volumes, which are helpful as they

negotiate sales of cattle, hogs, lamb 

and meat products. Packers also 

use the average prices in these

reports as a basis for paying some 

producers with whom the packers 

have contracts. In 1999, the

Livestock Mandatory Reporting Act 

was passed to substantially 

increase the volume of industry

sales transactions covered by

USDA’s market news reports and

thereby encourage competition in 

the industry. In the context of

ongoing discussions about the 

renewal of this act, GAO reviewed

(1) USDA’s efforts to ensure the 

quality of its livestock market news

reports and (2) the coordination 

between two USDA agencies that 

are responsible for promoting

competition in livestock markets.

What GAO Recommends

GAO recommends, among other 

things, that USDA improve the 

transparency of its market news

reports, and its auditing of packers’ 

transactions. GAO provided a draft

of this report to USDA for 

comment. USDA generally agreed

with the report and stated it has 

started to implement the report’s

recommendations. 

While the U.S. Department of Agriculture (USDA) took important actions to 

produce quality livestock market news reports, GAO found that USDA could 

improve the reports’ transparency. Although packers with large plants must 

report all of their livestock transactions to USDA, GAO found that USDA 

market news reporters regularly excluded some transactions as they 

prepared USDA’s reports. For example, GAO’s analysis showed that from 

April through June 2005, USDA reporters excluded about 9 percent of the 

cattle transactions that packers had reported. When USDA excluded 

transactions, this sometimes changed the low, high, and average prices that 

USDA would have otherwise reported. However, USDA has not informed its 

readers of the extent of this practice. Moreover, USDA’s instructions for 

guiding its market news reporters as they prepared their reports lacked 

clarity and precision, leading to inconsistency in their reporting decisions. 

In addition, GAO found the accuracy of USDA’s livestock market news 

reports is not fully assured. About 64 percent of 844 USDA audits of 

packers—conducted over 36 months ending in April 2005—identified 

packers’ transactions that were inaccurately reported, unsupported by 

documentation, or omitted from packers’ reports. Moreover, some packers 

have not promptly corrected problems. Since 2002, USDA has sent 11 

packers 21 letters urging the packers to correct longstanding problems and 

warning them of the consequences of delay. Twice USDA has levied $10,000

fines on packers, but suspended the fines when these packers agreed to 

comply. As of September 2005, USDA had continuing issues with 2 of the 11 

packers. USDA officials noted that packers’ errors are relatively few 

compared to the large volumes of data that packers report daily. However, 

USDA has not (1) assessed the overall quality of packers’ data, (2) used its 

audit results to help focus future audit efforts, and (3) ensured that follow-up 

promptly resolves problems. 

Two USDA agencies have addressed competition in livestock markets—the 

Agricultural Marketing Service (AMS) and the Grain Inspection, Packers and 

Stockyards Administration (GIPSA). GAO found the coordination between 

these agencies to be limited, primarily due to the legal authority within 

which each operates. AMS has implemented the Livestock Mandatory 

Reporting Act. That act did not provide authority for AMS to share 

individual packer transaction data within USDA except for enforcement 

purposes. In two investigations, AMS provided packers’ data to GIPSA. On 

the other hand, GIPSA enforces the Packers and Stockyards Act and is 

responsible for addressing unfair and anti-competitive practices in the 

marketing of livestock. Furthermore, GAO found that GIPSA monitors cattle 

and hog markets by analyzing publicly available livestock market news 

reports—an approach that has limitations because it lacks the companyspecific information that would be useful for detecting anti-competitive 

behavior. 

www.gao.gov/cgi-bin/getrpt?GAO-06-202.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robert A. 

Robinson at (202) 512-3841 or 

robinsonr@gao.gov. 
Page i GAO-06-202 Livestock Market Reporting

Contents

Letter 1

Results in Brief 3

Background 5

AMS Striving for Quality, but Has Faced Some Challenges 7

GIPSA and AMS Coordination Has Been Limited 18

Conclusions 20

Recommendations 21

Agency Comments and Our Evaluation 22

Appendixes

Appendix I: Objectives, Scope, and Methodology 24

Appendix II: Analysis of Transactions AMS Excluded From Reports 28

Appendix III: Additional Information Concerning AMS Warning Letters to 

11 Packers through September 2005 39

Appendix IV: Comments from the Department of Agriculture 42

Appendix V: GAO Contact and Staff Acknowledgments 47

Tables Table 1: Cattle, Hog, and Beef Transactions Excluded from AMS 

Reports, April through June, 2005 10

Table 2: Cattle Transactions Excluded From AMS Reports, May 

through October, 2003 11

Table 3: Examples of Changes in Cattle Prices AMS Reported, May 

through October, 2003a

 11

Table 4: AMS Market News Reporters’ Instructions 12

Table 5: Content of ARC Audits of Packers 14

Table 6: Examples of ARC Audit Findings 16

Figures Figure 1: Percent of Negotiated Cattle Transactions Excluded by 

Size of Lot, Dressed Basis, May through October, 2003 29

Figure 2: Percent of Negotiated Cattle Transactions Excluded by 

Size of Lot, Live Basis, May through October, 2003 30

Figure 3: Percent of Hog Transactions Excluded by Size of Lot, 

Negotiated Sales, October 2003 through March 2004 31

Figure 4: Distribution of Cattle Prices Before Exclusions, Dressed 

Steers, May through July, 2003 32

Figure 5: Distribution of Cattle Prices After All Exclusions, 

Dressed Steers, May through July, 2003 33
Contents

Page ii GAO-06-202 Livestock Market Reporting

Figure 6: Range of Cattle Prices Before and After Excluded 

Transactions, Dressed Steers, May through October, 

2003 34

Figure 7: Difference in Weighted Average Prices With and Without 

Transactions AMS Excluded for Market Reasons, Live 

Weight Cattle, May through October, 2003 35

Figure 8: Difference in Weighted Average Prices With and Without 

Transactions Excluded for Market Reasons, Dressed 

Weight Cattle, May through October, 2003 36

Figure 9: National Daily Direct Morning Hog Report: Differences of 

Weighted Average Prices With and Without Transactions 

Excluded, October 2003 through March 2004 38

Abbreviations

AMS Agricultural Marketing Service

ARC Agricultural Marketing Service, Audit, Review, and Compliance 

Branch

GIPSA Grain Inspection, Packers and Stockyards Administration 

USDA U.S. Department of Agriculture

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately.
Page 1 GAO-06-202 Livestock Market Reporting

United States Government Accountability Office

Washington, D.C. 20548

A

December 9, 2005 Letr

The Honorable Tom Harkin

Ranking Democratic Member

Committee on Agriculture, Nutrition, and Forestry

United States Senate

The Honorable Charles Grassley

United States Senate

Livestock producers’ sales of cattle, hogs, and sheep to meatpackers are a 

significant component of the U.S. agricultural industry. In 2004, producers’ 

gross income from these livestock totaled about $63 billion. For producers 

to be well prepared to negotiate a fair price for their livestock, they need to 

be able to track changes in livestock prices. For many years, producers 

have relied on the U.S. Department of Agriculture’s (USDA) livestock 

market news reports, which until 2001, were based on livestock sales 

information obtained voluntarily from producers, packers, feedlot 

operators, and others. However, over the past several decades, producers 

and packers increasingly have made livestock sales through contracts that 

were not covered in USDA’s livestock market news reports. By 1999, about 

35 percent of cattle and 60 percent of hogs were sold through such 

contracts. Because of these gaps in the coverage of USDA’s livestock 

market news reports, many producers believed that they could no longer 

effectively assess livestock prices, negotiate with packers, or obtain a 

competitive price when they sold livestock. Some producers have been 

concerned that there have been “sweetheart” deals between packers and 

certain cattle feeders, that unreported livestock sales among packers have 

lowered livestock prices, and that reduced competition in the packing 

industry has adversely affected their livelihood. In 1999, Congress enacted 

the Livestock Mandatory Reporting Act to provide livestock market 

information that could be readily understood by producers, packers, and 

other market participants and to encourage competition in the marketplace 

for livestock and livestock products. Under the act and USDA regulations, 

packers with large packing plants1

 were required to report to USDA all of 

their purchases of cattle, lamb, and hogs, as well as their sales of beef and 

1

Under the act and AMS regulations, packers who slaughter an average of at least 125,000 

cattle, 100,000 hogs, or 75,000 lambs per year over the last 5 years were required to provide 

market information to USDA. Packers were required to electronically report their livestock 

purchases and sales one to three times each business day depending on the species. 
Page 2 GAO-06-202 Livestock Market Reporting

lamb meat. Based on packers’ reports of their transactions, USDA 

publishes about 100 various livestock market news reports, which are 

available over the Internet.2

In December 2004, when it was due to terminate, the Livestock Mandatory 

Reporting Act was extended until September 30, 2005. As of September 30, 

2005, USDA has continued the program as a voluntary, instead of 

mandatory, reporting program. Congress, as of December 2005, is 

considering proposed legislation to extend the mandatory program.3

USDA’s Agricultural Marketing Service (AMS) administered the Livestock 

Mandatory Reporting Act and produced the livestock mandatory market 

news reports, among other market reports.4

 Specifically, about 20 AMS 

market news reporters located in Des Moines, Iowa and St. Joseph, 

Missouri, reviewed the packers’ livestock purchases and meat sales 

transaction data each day and completed AMS’s reports. In addition, AMS 

staff visited packers’ facilities several times a year to audit the accuracy of 

information that packers reported to AMS. Another USDA agency—the 

Grain Inspection, Packers and Stockyards Administration (GIPSA)—has a 

related responsibility. GIPSA is responsible, under the Packers and 

Stockyards Act, for addressing unfair and anti-competitive practices in the 

marketing of livestock. Among other things, GIPSA monitors competition 

in livestock markets and investigates complaints of unfair and anticompetitive practices under the act. 

In the context of the ongoing congressional discussions about the 

Livestock Mandatory Reporting Act and the quality of information in the 

reports it provides to producers, we reviewed (1) AMS efforts to ensure the 

quality of its livestock mandatory market news reports, and (2) the extent 

to which AMS and GIPSA coordinate their efforts to promote competition 

in livestock markets. 

2

See http://www.ams.usda.gov/marketnews.htm

3

See S. 1613, 109th Cong. (1st Sess. 2005); H.R. 3408, 109th Cong. (1st Sess. 2005).

4

AMS also provides market reports about fruits, vegetables, and specialty crops; milk and 

other dairy products; cotton and tobacco; grain and hay; poultry and eggs. AMS reports 

include information on prices, volume, quality, and condition for specific markets and 

marketing areas. These data are disseminated within hours of collection via the Internet, 

and made available through electronic means, in printed reports, by telephone recordings, 

and through the news media.
Page 3 GAO-06-202 Livestock Market Reporting

To review AMS’s efforts to ensure the quality of its livestock mandatory 

market news reports, among other things, we observed AMS’s Market News 

Branch (Market News) reporters as they checked packers’ transaction data 

prior to publication and prepared livestock mandatory market news 

reports for cattle, hogs, lamb, beef, and lamb meat. We reviewed AMS 

reporters’ instructions for preparing livestock mandatory market news 

reports and assessed how AMS reporters used their instructions for cattle, 

hogs, lamb, beef, and lamb meat. We evaluated AMS’s efforts to audit 

packers’ records to ensure that packers were accurately reporting their 

transactions to AMS. In addition, we reviewed AMS’s computer system 

documentation and conducted some limited tests of its performance. We 

found AMS computer-processed data to be sufficiently reliable for our 

purposes. To determine the extent of coordination between GIPSA and 

AMS, we reviewed their legislative authority, identified activities and 

investigations involving both agencies, reviewed investigation case file 

information, and discussed them with GIPSA and AMS officials. Our review 

focused on the livestock mandatory reporting program that terminated on 

September 30, 2005. Appendix I provides additional details on our 

objectives, scope, and methodology. We conducted our review between 

February and November 2005 in accordance with generally accepted 

government auditing standards.

Results in Brief AMS took several steps for producing quality livestock mandatory market 

news reports. Among other things, AMS developed a near real-time Webbased reporting system with automated and manual screening of packers’ 

transaction data, and established an audit surveillance program to ensure 

that packers report accurately. While important steps have been taken, 

AMS has not yet fully assured the transparency and accuracy of these 

reports. Concerning transparency, AMS has not informed readers of 

livestock mandatory market news reports that it regularly excluded certain 

transactions in an effort to present prevailing market conditions. Our 

analysis of AMS market news data shows, for example, that from April 

through June 2005, AMS reporters excluded about 9 percent of the cattle 

transactions that packers reported to AMS. AMS officials explained that, in 

general, AMS excluded transactions that were outside the prevailing 

market price ranges to avoid reporting price ranges that would be too 

broad to be useful to market participants. They also said that AMS market 

news reports were intended to convey overall market conditions rather 

than precise statistics. According to our interviews with some agricultural 

economists, they and other readers of AMS market news reports were 

unaware of the extent of this practice and the effect this practice has on the 
Page 4 GAO-06-202 Livestock Market Reporting

prices that AMS reports. In addition, we found that AMS’s instructions to 

reporters for excluding transactions lacked clarity and precision, and 

differed for cattle, hogs, lamb, beef, and lamb meat. AMS officials said that 

as a result of the information that we brought to their attention, they 

started improving AMS’s instructions to reporters. AMS officials also said 

they would consider providing market news report readers with additional 

information about AMS’s reporting practices. 

Concerning accuracy, the quality of AMS reports depends on the extent to 

which packers submit correct transaction information. However, AMS 

audits have frequently identified instances when packers incorrectly 

reported transactions. Of 844 AMS audits of packers, which were 

conducted over the 36 months ending in April 2005, 540—64 percent—

identified instances when packers did not report data to AMS correctly. 

AMS officials said that packers’ reporting errors were of concern, but that 

considering the hundreds of thousands of pieces of transaction data that 

packers report each day, the errors identified by AMS audits were 

proportionately few. Nevertheless, a closer look at 86 AMS audits from 

June through September 2004 shows that AMS identified 46 instances when 

22 packers submitted incorrect transaction data that AMS classified as 

possibly affecting the accuracy of AMS reports. Moreover, some packers 

did not promptly correct the problems that AMS identified. Between 2002 

and September 2005, AMS sent 11 packers 21 warning letters because these 

packers delayed making corrections in their reporting of transactions. 

Eight of these warning letters were sent to six packers from January 2004 

through September 2005; six letters involved cattle and two involved hogs. 

AMS twice levied $10,000 fines on packers, but suspended these fines 

provided the packers went a year without additional violations. Despite 

this record, AMS officials said that they have seen improvement in packers’ 

reporting of transactions over the past 4 years, and that they believed that 

most packer transactions were accurately reported to AMS. However, AMS 

has not developed a method for evaluating the overall accuracy of the 

transaction data. To lend greater reliability to the reports, AMS officials 

said they would consider (1) auditing a statistical sample of transactions as 

a basis for assessing the overall quality of the transaction data, and (2) 

further assessing their audit results to develop strategies for improving 

packers’ reporting of transactions.

Coordination between GIPSA and AMS has been limited, primarily due to 

the legal authority within which each operates. AMS implemented and 

enforced the Livestock Mandatory Reporting Act while GIPSA implements 

and enforces the Packers and Stockyards Act. The Livestock Mandatory 
Page 5 GAO-06-202 Livestock Market Reporting

Reporting Act did not provide authority for AMS to share confidential 

packer transaction data within USDA unless the Secretary of Agriculture or 

the Attorney General directed AMS to disclose the information for 

enforcement purposes. GIPSA monitors cattle and hog markets by 

analyzing publicly available AMS livestock reports. This approach to 

market monitoring has limitations because it does not include companyspecific transaction data that would be useful for detecting anticompetitive behavior. AMS provided packers’ transaction data to GIPSA for 

two investigations after formal GIPSA requests for those data. Both 

investigations were closed by GIPSA without finding potential violations of 

the Packers and Stockyards Act. Nevertheless, in one of those 

investigations, which GIPSA closed in 2005, GIPSA found that a packer 

reported transactions to AMS that were not fully supported by 

documentation. Since our review of that case indicates there may be a 

further role for both agencies, we suggested, and GIPSA and AMS officials 

agreed, that both should consider further investigation on the propriety of 

certain low-price and other transactions. In November 2005, an AMS 

official also told us that AMS started to obtain information from the packer 

to address these transactions.

In anticipation of the extension of the Livestock Mandatory Reporting Act, 

we are making a number of recommendations to the Secretary of 

Agriculture to improve the transparency and accuracy of AMS livestock 

mandatory market news reports.

Background The Livestock Mandatory Reporting Act of 1999 amended the Agricultural 

Marketing Act of 1946. The act established a livestock marketing 

information program to (1) provide producers, packers and other industry 

participants with market information that can be readily understood; (2) 

improve USDA price and supply reporting services; and (3) encourage 

more competition in these markets. Under the act, packers were required 

to report livestock market information that had previously been voluntarily 

reported5

 and new information not previously reported to the public—such 

as information about contract livestock purchases. Under the voluntary 

program, USDA employees, referred to as reporters, gathered information 

daily by talking directly with producers, packers, feedlot operators, 

retailers, and other industry participants; by attending public livestock 

5

AMS continues to collect and report much livestock market information on a voluntary 

basis. 
Page 6 GAO-06-202 Livestock Market Reporting

auctions, visiting feedlots and packing plants; and taking other actions. 

Under the Livestock Mandatory Reporting Act, packers were instead 

required to report on their cattle and hog purchases, and their sales of 

beef.6

 The act also authorized USDA to require that packers report on 

lambs. 

USDA implemented the Livestock Mandatory Reporting Act by establishing 

a livestock mandatory reporting program to collect packers’ marketing 

information and disseminate it to the public through daily, weekly, monthly, 

and annual reports. Packers were required to electronically report hog 

purchases three times each day, cattle purchases twice each day, lamb 

purchases once daily, domestic and export sales of beef cuts twice daily, 

and sales of lamb carcasses and lamb cuts once daily. As of June 2005, 116 

packers and importers were required to provide information under the 

Livestock Mandatory Reporting Act.

Two branches of USDA’s AMS administered the livestock mandatory 

reporting program—Market News and the Audit, Review, and Compliance 

Branch (ARC). Market News was responsible for collecting and generating 

market news reports from information supplied by packers. Market News 

reporters gathered and reviewed this data, contacted packers to resolve 

any questions they had, and prepared reports. Reporters were required to 

ensure that they did not breach the confidentiality of packers by providing 

information that would allow the public to identify an individual packer. In 

addition to preparing reports, Market News personnel interacted with any 

packers that AMS believed needed to make changes in reporting to comply 

with the Livestock Mandatory Reporting Act.

To identify compliance problems, ARC personnel audited the transaction 

data of packing plants three times a year. When ARC found packers that 

were reporting incorrectly, ARC notified the Market News reporters, who 

were responsible for notifying and following up with packers until the 

packers reported correctly. The Secretary of Agriculture was authorized to 

assess a civil penalty of up to $10,000 a day per violation on a packer that 

violated the act.

6

The act did not require packers to report on sales of pork products. 
Page 7 GAO-06-202 Livestock Market Reporting

AMS Striving for 

Quality, but Has Faced 

Some Challenges

AMS designed its livestock mandatory market news reporting program 

with elements intended to ensure the quality of its news reports. USDA 

officials, for example, developed a Web-based reporting system with 

automated and manual screening of packer transaction data and 

established an audit surveillance program to ensure packers reported 

accurately. However, we found that while AMS had made progress, its 

livestock market news program fell short of ensuring reliability because 

AMS reporting was not fully transparent, and AMS audits of packers 

revealed some problems with the quality of packers’ transaction data. 

Steps AMS Took to Ensure 

Quality

AMS developed a mandatory livestock market news reporting program 

incorporating a number of features to ensure quality. More specifically, 

AMS took the following steps to ensure the quality of its livestock 

mandatory market news reports:

• AMS hired two contractors to assist in developing a rapid and reliable 

reporting system: Computer & Hi-Tech Management, Inc. was hired to 

assess the capability of the packing companies to provide electronic 

data; and PEC Solutions developed the computer software processes 

upon which the mandatory livestock reporting system is now based. 

AMS and PEC Solutions developed a software system that allows 

packers to provide their transaction data on web-based forms or to 

upload completed files into the reporting system data base. PEC 

Solutions prepared an industry guide to give packers instructions for 

correctly submitting transaction data. 

• PEC Solutions used programmers who did not participate in developing 

the systems to test the functioning of the system. AMS further tested the 

system using simulated production data, because packers had not 

started reporting actual data. As a further validation step, AMS staff 

manually calculated data for several reports and compared that data 

with data generated by the system.

• AMS established computer based data security controls and 

computerized screening of packer transaction data to ensure it is being 

correctly reported. 

• AMS established an audit function to periodically test the accuracy of 

transaction data that packers submit to AMS by visiting packer facilities, 
Page 8 GAO-06-202 Livestock Market Reporting

checking documentation in support of reported transactions and testing 

the completeness of packers’ reports. 

In addition, in May 2001, the Secretary of Agriculture appointed a top level 

USDA team—the Livestock Mandatory Price Reporting Review Team7

—to 

review problems in its calculations of certain boxed-beef prices.8 In 

addition to reviewing that problem and making related recommendations, 

most of which AMS adopted, the team assessed the overall integrity and 

accuracy of the program. This team found that for the most part, AMS had 

succeeded in gathering and reporting accurate data in a timely fashion. The 

team’s major criticism was that AMS had not adequately tested its system 

to ensure it was accurately calculating data that packers had reported. 

Subsequently, AMS initiated further testing to ensure the accuracy of its 

reports. The team also found that AMS’s plan for audit surveillance of 

packers was behind schedule due to difficulties in hiring qualified auditors. 

At that time AMS had conducted audits at only 19 of the 119 packer 

facilities it planned to reach. Since then, AMS has overcome these 

problems and conducted over 1,100 audits at packers’ facilities. 

Extent of Transactions 

Excluded from AMS 

Reports Is Not Transparent 

The Livestock Mandatory Reporting Act was intended to provide producers 

with readily understandable market information on a significant portion of 

livestock industry transactions. The quality of this information is especially 

important because livestock transactions negotiated each day may be 

influenced by AMS reported prices, and some contracts between packers 

and producers rely on the weighted average prices that AMS reports. AMS 

was authorized to make reasonable adjustments in information reported by 

packers to reflect price aberrations or other unusual or unique occurrences 

that the Secretary determined would distort the published information to 

7

This team included, among others, USDA’s Chief Economist, the Associate Administrator of 

the National Agricultural Statistics Service, USDA’s Associate Chief Information Officer, and 

the Chairperson, Interagency Livestock Estimates Committee. See U.S. Department of 

Agriculture, Livestock Mandatory Price Reporting System Report to the Secretary of 

Agriculture (Washington, D.C., July 2001). This report contained recommendations on data 

entry, data analysis, audit performance, and the confidentiality of proprietary company 

information. In addition, in 2004 USDA’s Inspector General also recommended 

improvements in AMS’s computer system controls; see USDA, Audit Report - Agricultural 

Marketing Service Livestock Mandatory Price Reporting System - Application Controls

(Washington, D.C., Dec. 2004).

8

Among other things, this team reviewed USDA’s erroneous reporting of cutout values for 

choice and select boxed beef carcasses and the major components of carcasses.
Page 9 GAO-06-202 Livestock Market Reporting

the detriment of producers, packers, or other market participants.9 In 

addition, AMS should have adhered to the Office of Management and 

Budget and USDA guidelines for disseminating influential statistical and 

financial information with a high degree of transparency about the data 

sources and methods, while maintaining the confidentiality of the 

underlying information.10 In addition, AMS has recognized the usefulness of 

providing the public with information about the preparation of its market 

reports. 

We found that AMS reporters adjusted the transaction data that packers 

report in an effort to report market conditions, but this practice has not 

been made transparent. We observed that AMS reporters sometimes 

eliminated small numbers of apparent erroneous transactions, as would be 

expected. Significantly, however, we found that AMS reporters eliminated 

numerous low- and some high-priced transactions that they believed did 

not reflect market conditions, particularly when reporting on cattle. Our 

analysis shows that from April through June 2005, when livestock prices 

were declining somewhat, AMS reporters excluded about 9 percent of the 

cattle transactions that packers had reported to AMS, about 3 percent of 

the reported beef transactions, and 0.2 percent of the reported hog 

transactions. Excluding small percentages of livestock or meat 

transactions may have had a small effect on the range of prices that AMS 

reported and a negligible effect on weighted average prices. However, as 

the percent of transactions excluded increased, so too did the possibility 

that AMS weighted average prices would be changed from what AMS 

would otherwise report. Table 1 provides more details about the 

transactions excluded during this period.

9

7 U.S.C. § 1636(e).

10Office of Management and Budget (OMB), Guidelines for Ensuring and Maximizing the 

Quality, Objectivity, Utility, and Integrity of Information Disseminated by Federal 

Agencies (Washington, D.C.: Feb. 22, 2002). USDA’s guidelines were issued in response to 

OMB’s guidelines. Both call for agencies to maximize the quality, objectivity, utility and 

integrity of information, including statistical information that they disseminate to the public. 

Also, both OMB and USDA guidelines recognize that transparency does not override other 

compelling interests such as confidentiality protections. 
Page 10 GAO-06-202 Livestock Market Reporting

Table 1: Cattle, Hog, and Beef Transactions Excluded from AMS Reports, April 

through June, 2005

Source: GAO analysis of AMS data reported by packers on certain daily reporting forms.

In addition, our analysis shows that from May through October 2003, when 

cattle prices were rising and changing to greater extents, AMS reporters 

excluded about 23 percent of cattle transactions packers reported to 

AMS.11 Concerning hogs, during a period of rising prices between October 

2003 and March 2004, we found that 0.1 percent of hog transactions were 

excluded from AMS reports. Because AMS reports excluded significantly 

more cattle transactions, we performed further analyses on them. Tables 2 

and 3 show (1) information about the cattle transactions that AMS 

excluded from certain livestock mandatory market news reports from May 

through October 2003, and (2) examples of 12 days from this period 

showing the effects of the transactions that AMS excluded on the reported 

price ranges, and weighted average prices. During the period, AMS 

reporters’ decisions to exclude transactions had some effect on the cattle 

data we analyzed in AMS reports on about one third of the days and almost 

no effects on the others.

Cattle Hogs Beef

Number Percent Number Percent Number Percent

Transactions 

Reported by 

packers 207,459 97,419 831,622

Excluded by 

AMS 18,286 8.8 153 0.2 22,436 2.7

Head count

Reported by 

packers 9,043,064 11,140,099 -- --

Excluded By 

AMS 136,086 1.5 17,431 0.2 -- --

Weight (lbs.)

Reported by 

packers -- -- -- -- 4,096,490,216

Excluded by 

AMS -- -- -- -- 111,567,704 2.7

11According to AMS reporters’ log notes, cattle were excluded for various reasons such as 

price, low price, high price, base price, or lot size. 
Page 11 GAO-06-202 Livestock Market Reporting

Table 2: Cattle Transactions Excluded From AMS Reports, May through October, 

2003

Source: GAO analysis of all AMS cattle data reported by packers on the Live Cattle Daily Report (Current Established Prices).

Table 3: Examples of Changes in Cattle Prices AMS Reported, May through October, 

2003 

Source: Selected dates from AMS’s Five Area Daily Weighted Average Direct Slaughter Cattle Report, Negotiated; and GAO analysis of 

AMS data for 35 – 65 percent choice steers, dressed weight as reported by packers on the Live Cattle Daily Report (Current Established 

Prices).

a

GAO replicated these AMS-reported average prices, ensuring that our calculations using AMS data 

produced similar results. For our calculations of average weighted price and price ranges, we included 

those transactions that AMS had excluded for market reasons, such as high or low price, or size of lots, 

but we did not include those transactions that AMS had removed because they thought them to be 

base prices.

Cattle

Transactions Number Percent

Reported by packers 399,471

Excluded by AMS 90,998 22.8

Head count

Reported by packers 15,792,982

Excluded by AMS 2,921,956 18.5

Dollars per hundredweight

Date

AMS 

reported 

price 

ranges

GAO price 

ranges with 

transactions 

excluded by 

AMS

AMS 

reported 

weighted 

average 

price a

GAO weighted 

average price 

with transactions 

excluded by AMS 

Change in 

weighted 

average price 

reported by 

AMS

May 5 $123 - $126 $122 - $126 $123.30 $123.25 $0.05

May 16 124 - 125 105 - 125 124.63 123.12 1.50

May 19 125 - 128 124 - 128 126.16 125.86 0.30

June 12 121 - 125 113 - 125 123.37 123.32 0.05

July 11 116.50 - 120 115 - 120 119.05 118.98 0.07

August 1 127 - 127 122.50 - 127 127.00 125.21 1.79

August 11 125 - 128 123 - 128 126.28 125.65 0.63

Sept. 10 135 - 145 131 - 145 141.63 141.37 0.26 

Sept. 29 140 - 141 138 - 141 140.25 138.84 1.41

Oct. 14 170 - 182.75 150 - 182.75 176.30 175.83 0.47

Oct. 15 175 - 187 167 - 187 180.48 180.04 0.44

Oct. 29 155 - 158 155 - 180 157.52 160.27 (2.75)
Page 12 GAO-06-202 Livestock Market Reporting

Further details of our analyses are discussed in appendix I and shown in 

appendix II.

AMS guidance for its reporters on eliminating transactions is limited, 

lacking clarity and precision. These instructions advise AMS reporters to 

review transactions which packers have reported each day, and to 

eliminate certain low- and high-priced transactions. AMS’s varying 

instructions for reporters are described in table 4. 

Table 4: AMS Market News Reporters’ Instructions

Source: AMS guidance for reporters.

Senior AMS supervisors review reporters’ decisions to eliminate 

transactions, and AMS headquarters officials monitor the number of—and 

reasons why—transactions are being excluded by reporters. AMS officials 

explained, in general, their reviews and adjustments are intended to 

exclude transactions that are outside the prevailing market price ranges, 

and to avoid reporting ranges of prices that appear overly broad. 

Furthermore, Market News officials explained that this process is 

conducted because they believe that livestock market reports are intended 

to convey overall market conditions rather than precise statistics. Also, an 

AMS official noted that AMS Market News reporters mostly exclude lowprice transactions involving small quantities, because those transactions 

often are lower quality animals or products. Concerning hogs, AMS’s 

reporters of hog transactions said that they were verbally instructed to 

Cattle • Narrow up price spreads, if possible, depending on how trade took place the previous week. Keep price ranges 

within $5 of the bulk of the trade and narrower, if possible.

• Remove weights that are unusually high or low for an animal.

• For cattle sold on formula, a market news reader should not see the lowest or highest cattle prices packers’ 

reported. The lower prices should be the lower end of marketable cattle prices within explainable limits; and on the 

high side, the best price that would be reasonable and obtainable by marketing desirable type cattle. (GAO note: 

“explainable limits,” “reasonable,” and “desirable type” are not defined.)

Beef • Scan reports to determine whether prices fell in the expected range and eliminate small trades that are outside the 

expected price range for each item. Contact packers when large quantities of beef fall outside expected price range.

• The expected price range for a beef item is to be based on historical and current price ranges for the item, current 

market conditions for the item, and overall beef market conditions.

• Consider excluding trades when prices are not within close proximity of another packer. 

Hogs • If there are problems with prices for barrows, gilts, or sows, contact the packer to verify the information. 

Lamb (live) • Review the data to determine if there are any high, low or questionable prices that need to be removed.

• Separate the outliers.

Lamb (meat) • Edit extremes for all price ranges in question.

• Review the report and check any price ranges that appear out of line. (GAO note: “out of line” is not defined.)
Page 13 GAO-06-202 Livestock Market Reporting

exclude few hog transactions by headquarters officials soon after the start 

of the program. AMS headquarters officials said that these verbal 

instructions were provided after one or more large packers complained 

that it appeared AMS was excluding transactions because of price alone.12

Given that AMS reporters’ decisions to exclude transactions modified the 

prices they reported, AMS has not well-explained this practice to readers of 

AMS livestock market news. AMS’s Web site does not address the subject, 

and AMS livestock mandatory market news reports are unqualified. Some 

agricultural economists who study the livestock market and other industry 

experts we interviewed said that they were not aware of the extent of 

adjustments that AMS made. An AMS official explained that AMS has not 

previously provided public information on this process because it would be 

difficult to capture the nuances of AMS’s report preparation in a public 

document. Nevertheless, AMS previously acknowledged that it may be 

useful to provide information to the public about types of adjustments that 

it makes to its livestock mandatory market news reports.13 AMS officials 

also recognized that it would be desirable for AMS to improve its 

instructions for reporters and disclose more about its reporting practices to 

livestock market news report readers. Our review of AMS’s database 

indicates that further analyses could provide AMS with more information 

about the reasons why reporters eliminate transactions, the consistency of 

reporting, as well as the extent of changes in AMS’s presentation of prices. 

AMS’s Livestock and Seed Program Deputy Administrator said that, as a 

result of the information we brought to his attention, he had started to 

improve the reporters’ instructions. 

Since AMS reports help provide the industry with signals about when, 

where, and at what price to buy and sell livestock and meats, some industry 

participants may have been guided to somewhat different decisions on 

certain days if they had a greater understanding of AMS report content. In 

addition, the lack of transparency over the content and preparation of the 

livestock mandatory market reports may have also limited the confidence 

that some readers place in AMS reports. 

12AMS officials said that they did not have correspondence or documentation about these 

complaints or their instructions to staff that report on hogs.

1365 Fed. Reg. 75,464, 75,479 (Dec 1, 2000).
Page 14 GAO-06-202 Livestock Market Reporting

ARC Audits Identified 

Instances When Packers 

Reported to AMS 

Inaccurately

ARC regularly audited packers to provide assurance that the packers 

reported all of their transactions accurately and in compliance with AMS’s 

regulations.14 The quality of AMS reports depends on packers submitting 

correct transaction information. Once every 4 months, ARC auditors visited 

each of the 116 packers’ plants, or associated company headquarters, to 

review livestock transaction data. 15 These audits usually included: (1) a test 

of the completeness of the packer’s reports, and (2) a detailed review of a 

sample of transactions to determine that each transaction in the sample 

was reported accurately and was supported by appropriate documentation. 

ARC has conducted over 1,100 audits at packers’ facilities since 2001. 

Detailed information was available for 844 of these audits conducted over 

the 36 months ending in April 2005.16 Table 5 contains additional 

information about the content of ARC audits.

Table 5: Content of ARC Audits of Packers

Source: AMS records.

14AMS officials told us that since September 2005, their auditors have continued to visit 

packer facilities to monitor the quality of livestock data.

15ARC auditors review records at packers’ plants or company headquarters, depending on 

the location of records and officials that can answer auditors’ questions. During an audit, 

AMS may review more than one plant’s records at a time.

16AMS did not retain documentation on about 260 audits conducted prior to March 2002 due 

to a computer system failure that deleted ARC audit information.

Type of audit Review of a full day of packer transactions

Review of a sample of packer transactions 

reported to AMS

AMS’s audit goal To ensure packers report complete information 

to AMS

To ensure packers report accurate information to 

AMS in a timely manner

Information reviewed • Plant slaughter records

• Food Safety and Inspection Service slaughter 

records

• Sales invoices

• Bills of lading

• Documentation about why transactions not 

reported to AMS are not subject to the 

Livestock Mandatory Reporting Act

• Plant slaughter records

• Sales invoices

• Bills of lading

• Original contracts, agreements, and receipts

• Other records relating to the purchase, sale, 

pricing, transportation, delivery, weighing, 

slaughter, or carcass characteristics of livestock

Frequency of review • Three times a year for plants whose records 

are reviewed at the plant

• Once a year for plants whose records are 

reviewed at company headquarters

Three times a year
Page 15 GAO-06-202 Livestock Market Reporting

Of the 844 AMS audits for which data were available, 540—64 percent—

identified one or more instances when it appeared that packers did not 

meet AMS reporting standards. The other 304 audits, or about 36 percent, 

did not identify any such instances. AMS audits detected a wide variety of 

packer reporting inaccuracies such as the omission of livestock 

slaughtered, underreporting of purchases, delayed reporting of livestock 

purchases and meat sales, price inaccuracies, and the misclassification of 

transactions. While noting the frequency of AMS audit findings, AMS 

officials commented that packers’ reporting errors were of concern. AMS 

officials also said that its audit results should be considered in the context 

of the volume of transactions that AMS reports—compared to the hundreds 

of thousands of pieces of transaction data that packers reported daily, the 

errors identified by AMS audits were relatively few. However, our review 

shows that AMS findings are based on audits of a small portion of packers' 

transactions, and it is likely that there have also been errors in packers’ 

unaudited transactions. Furthermore, a closer look at 86 AMS audits 

completed from June through September 2004 shows that AMS identified 

46 instances when 22 packers submitted incorrect transaction data that 

AMS classified as possibly affecting the accuracy of AMS reports. Table 6 

provides examples of AMS audit findings.17

17ARC also conducted a few investigative audits at the request of Market News. In one, for 

example, ARC determined that several packers did not have a process for ensuring the 

timely reporting of livestock trades, and did not have documentation that trades occurred at 

the time they were reported. All but one of the packers corrected this problem within in a 

few months, but the other took almost a year.
Page 16 GAO-06-202 Livestock Market Reporting

Table 6: Examples of ARC Audit Findings 

Source: GAO review of ARC audit reports and interviews with AMS staff.

AMS officials said many ARC audit findings were minor and usually had 

little effect, if any, on the accuracy of AMS reports. In addition, they also 

said that since 2001, packers had clearly improved their reporting of 

transactions. AMS officials said that because of the overall improvement in 

packers’ reporting of transactions, they reduced the frequency of audits at 

each packer from four to three times a year. Our review provides some 

support for AMS officials’ view that packers were reporting better than at 

the outset of the program. From May 2002 through April 2005, the number 

of AMS audits with findings as a percent of total audits decreased each 

year, from 76 percent in 2002 to 55 percent in 2005. In addition, the average 

number of audit findings per audit decreased from 1.8 to 1.4 over that 

period. Moreover, in the first quarter of 2005, AMS audits did not identify 

any problems that rose to its highest level of concern.18 Nevertheless, AMS 

classified 22 percent of the problems it identified in the first quarter of 2005 

as possibly having some adverse effect on the accuracy of its reports. In 

addition, follow-up was sometimes lengthy on problems ARC auditors 

identified. Our analysis of follow-up efforts by AMS on the 86 audits it 

conducted between June through September 2004, showed that, on 

1. A packer incorrectly reported the weekly premiums it paid for its hogs on a live weight basis instead of a carcass weight basis. 

As a result, the weekly premium report was not accurate. An AMS reporter said this finding was significant at the time because 

only a small number of packers were reporting this weekly data and because the error could occur repeatedly.

2. A packer did not report the purchase of 5 lots of cattle, totaling 117 head. The packer explained that some of the cattle were 

unscheduled purchases from local producers but could not provide an explanation for the remainder. An AMS reporter said 

that unscheduled cattle purchases can present reporting difficulties for packers. AMS verified that the packer was reporting all 

its cattle purchases about 2 months after the audit was completed.

3. A packer did not report slaughter information on 780 hogs that had been purchased on a live weight basis.

4. A packer did not report two large loads of beef totaling 83,000 pounds. An AMS reporter explained that this beef product—

boneless beef trimmings—was sold in high volume, so that this omission was relatively insignificant provided that it rarely 

occurred.

5. A packer was submitting its weekly data on slaughtered cattle early—on Thursday or Friday—instead of the following Monday 

as required, thereby not reporting the data in a manner consistent with other packers.

6. A packer could not provide supporting documentation to verify the time that the price was established for its hog purchases.

18AMS’s highest level of concern involved packers not submitting information or submitting 

incorrect information that likely would affect the accuracy of AMS reports. AMS’s second 

level of concern involved packers making inadvertent omissions or inaccuracies that could 

affect the accuracy of AMS reports. AMS had three other levels of concern relating to lesser 

potential infractions that were unlikely to affect AMS’s reports. 
Page 17 GAO-06-202 Livestock Market Reporting

average, about 85 days19 elapsed between the date of an AMS audit and the 

date AMS recorded that the packer had made the needed corrections.20

AMS reporters frequently contacted packers to convey information about 

the correct way for packers to report. Their outreach was prompted both 

by audit findings and by reporters’ reviews of the packers’ data. When 

recurring reporting problems arose, headquarters officials issued internal 

guidance to clarify proper reporting procedures for both auditors and 

reporters. On at least two occasions, AMS reporters provided information 

from this internal guidance to packers to clarify proper reporting 

procedures.21

However, some packers, including three of the largest packers, did not 

promptly correct reporting problems that AMS identified. Since 2002, AMS 

sent 11 packers 21 letters to call to the packers’ attention apparent delays 

in correcting reporting issues and warning the packers that penalties might 

be applied should there be further delays in addressing these issues. Of 

these, AMS sent 8 letters to 6 packers between January 2004 and 

September 2005, with 6 letters involving cattle and 2 involving hogs. In 

addition, twice AMS levied fines on packers of $10,000, although these fines 

were suspended provided these packers went a year without additional 

violations of the Livestock Mandatory Reporting Act. As of September 

2005, AMS had continuing issues with 2 of 11 the packers that received 

AMS warning letters. Appendix III contains additional information on the 

issues leading to AMS warning letters to packers.

While AMS audit reports identified many problems in packers’ reporting of 

transactions, there are two reasons why the reports do not provide a clear 

basis for assessing the overall accuracy of packers’ data which underlie 

AMS livestock mandatory market news reports. First, AMS did not select 

transactions for audit in a manner that would enable AMS to project the 

overall accuracy of packers’ transaction data. Second, AMS did not develop 

19The calculation of 85 days did not include data related to follow-up on five unresolved 

compliance issues.

20The Livestock Mandatory Reporting Act terminated in October of 2004 and was 

subsequently reauthorized in December 2004. This lapse in authority likely had some effect 

on AMS and packers’ efforts to address reporting issues. 

21For example, shortly after mandatory reporting started, packers often incorrectly reported 

freight costs and premium payments. AMS developed internal guidance about how these 

costs should be reported and provided this guidance to packers.
Page 18 GAO-06-202 Livestock Market Reporting

analyses that demonstrate the overall accuracy of information in its 

reports. We explored two approaches with AMS officials to (1) obtain 

better indications of the overall accuracy of packers’ transaction data, and 

(2) better direct future AMS audits. 

• First, AMS audits did not provide a basis for projecting the overall 

accuracy of packers’ transaction data. Another approach, in which AMS 

would periodically audit a statistical sample of transactions, might 

provide a basis for projecting the overall accuracy of the transactions. 

• Second, AMS could analyze its audit results, focusing on findings of 

consequence and its follow-up efforts to address those findings. Such 

analyses could be useful for identifying the relative frequency of 

concerns with packers’ transaction data, the types of recurring errors, 

the timeliness and consistency of auditor and market news follow-up on 

packer’s actions to address reporting issues, and the overall 

effectiveness of AMS efforts to quickly resolve reporting issues.

AMS officials indicated that these suggestions appeared to be reasonable 

and that they would consider taking both steps. 

Packers Sometimes 

Reported to AMS After 

Deadlines

AMS data show that from April through June 2005, 4 percent, 5 percent and 

7 percent of selected cattle, beef and hog data, respectively, were received 

from packers by AMS after the deadlines set by the Livestock Mandatory 

Reporting Act. Nevertheless, AMS officials said that while some packers 

missed the reporting deadlines, most usually submitted their transaction 

data within minutes thereafter—giving AMS reporters enough time to 

include almost all transaction data in market news reports. In addition, 

AMS officials said that if some reporting deadlines and publication times 

set in the Livestock Mandatory Reporting Act were changed, this would 

help packers working on the west coast meet the reporting schedule and 

help AMS meet changing market conditions. 

GIPSA and AMS 

Coordination Has Been 

Limited

GIPSA and AMS coordination has been limited, primarily due to the legal 

authority within which each operates.

• AMS implemented and enforced the Livestock Mandatory Reporting 

Act. While the Livestock Mandatory Reporting Act called for the 

establishment of a mandatory reporting program, it required 
Page 19 GAO-06-202 Livestock Market Reporting

information be made available to the public in a manner that ensured 

the confidentiality of the identity of persons and proprietary business 

information. Such information could not be disclosed except (1) to 

USDA agents or employees in the course of their duties under the 

Livestock Mandatory Reporting Act, (2) as directed by the Secretary or 

the Attorney General for enforcement purposes, or (3) by a court. AMS 

officials said that they have shared packer transaction data with GIPSA 

when requested for specific investigations.

• GIPSA implements and enforces the Packers and Stockyards Act. GIPSA 

monitors livestock markets and investigates when it has reason to 

believe there have been violations of the act.22

Since 1999 when the Livestock Mandatory Reporting Act was adopted, 

there have been two cases where GIPSA formally requested access to a 

packer’s transaction data from AMS for specific investigations. AMS 

provided access as GIPSA requested. One investigation involved hogs, and 

the other, lamb. In one case, opened in October 2002, GIPSA investigated 

whether a packer was manipulating reported prices in AMS’s livestock 

mandatory reporting program to reduce its procurement costs. GIPSA did 

not identify a violation of the Packers and Stockyards Act, and closed this 

investigation in 2005. However, GIPSA identified instances in which the 

packer’s reports of negotiated livestock purchases met the documentation 

standards of the Packers and Stockyards Act, but may not have met the 

standards of the Livestock Mandatory Reporting Act.23 In September 2005, 

GIPSA officials briefed AMS officials on their investigation, and suggested 

that AMS consider whether the packer was complying with the Livestock 

Mandatory Reporting Act. In response to our further questions about this 

case, officials of AMS and GIPSA said that they would consider additional 

inquiry or investigation under both statutes to determine if there have been 

repeated transactions reported to AMS for which the packer lacks certain 

22GIPSA is responsible for addressing unfair and anti-competitive practices in the marketing 

of livestock. Among other things, the act prohibits packers from engaging in or using any 

unfair, unjustly discriminatory or deceptive practice or device, or making or giving any 

undue or unreasonable preference or advantage to a person or locality. See GAO, Packers 

and Stockyards Programs: Actions Needed to Improve Investigations of Competitive 

Practices, GAO/RCED-00-242 (Washington, D.C.: Sept. 21, 2000).

23In some instances, GIPSA found that the packer’s negotiated purchases were of small lots 

that had set the low price AMS reported. As expected, the livestock in these transactions 

were of lower quality than most on the market, and also of lesser quality than the packer’s 

large volume purchases.
Page 20 GAO-06-202 Livestock Market Reporting

documentation. In the second case, GIPSA investigated the possibility that 

a packer paid less for livestock as a result of providing undue preference to 

a select group of producers. GIPSA initiated this case in May 2002 and 

closed this case in September 2005. 

GIPSA officials said that individual packer transaction data held by AMS 

would be useful for monitoring competitive behavior in livestock markets. 

However, because GIPSA could not obtain that confidential information 

unless the Attorney General or the Secretary directed disclosure of the 

information for enforcement purposes, GIPSA is making due with the 

publicly available AMS livestock market report data. This monitoring effort 

is limited because AMS reports do not include the company-specific 

transaction data that might reveal anti-competitive behavior. More 

specifically, GIPSA uses publicly available AMS report data in cattle and 

hog price monitoring programs to forecast market prices for comparison 

with actual prices. If there are notable differences, GIPSA officials attempt 

to assess whether economic conditions could be responsible. Should 

GIPSA find that a difference was not readily explained by economic 

conditions, then GIPSA would further investigate to determine if anticompetitive behavior of individual firms were involved. At such a point, 

GIPSA may request that AMS provide company specific livestock 

transaction data for GIPSA’s investigation. GIPSA officials said that while 

this monitoring effort is less informative than one that would rely on 

company specific transaction data, their monitoring programs are 

relatively new and they have not identified better alternatives at this point. 

Conclusions AMS has not achieved the level of transparency needed for establishing the 

reliability of its livestock market news reports—a level that would more 

fully disclose to market participants and observers its practices in 

reviewing packers’ transactions, and the effects on AMS reports. Without 

further disclosure of its reporting practices, market participants are less 

informed than they should be about (1) AMS reporters’ reviews, (2) AMS 

decisions on presenting prevailing prices, and (3) the results of AMS audits 

of packers’ transactions. Also, the lack of precision and clarity in AMS’s 

varying instructions for its reporters has led to inconsistent reporting 

approaches, which could adversely affect readers’ confidence in AMS 

reports. AMS market news readers should have information that enables 

them to understand AMS’s approach to reporting prices, and to have 

confidence that the approaches are based on sound statistical, economic, 

and reporting guidance. In addition, the problems which AMS audits 

identified in packers’ transaction information warrant continued vigilance 
Page 21 GAO-06-202 Livestock Market Reporting

if the mandatory reporting program is renewed. Unless AMS takes some 

additional steps, it will not have information to (1) assess the overall 

accuracy of packers’ transaction data, (2) focus its audit efforts on 

recurring significant problems, and (3) ensure that prompt and consistent 

action on audit findings is being taken. Concerning the GIPSA investigation 

in which GIPSA raised questions about a packer's documentation of its 

transactions, unless AMS and GIPSA complete further investigative work, 

neither agency can have assurance of the accuracy and propriety of the 

packers’ transactions. 

Recommendations Should Congress extend the Livestock Mandatory Reporting Act, we 

recommend that the Secretary of Agriculture direct the Administrator, 

Agricultural Marketing Service to:

• Increase transparency by (1) reporting to market news readers on its 

reporters’ instructions for making reporting decisions that reflect 

prevailing market conditions, (2) periodically reporting on the effects of 

reporters’ decisions on AMS reported prices, and (3) reporting the 

results of its audit efforts. 

• Clarify AMS reporter’s instructions to make them more specific and 

consistent by (1) consulting with packers, producers, agricultural 

economists, and other interested stakeholders, and (2) undertaking 

revisions that consider economic analyses of past reporting trends, 

livestock and meat market variations, and federal statistical and 

information reporting guidance.

• Develop information about the overall accuracy of packers’ transaction 

data by auditing a statistical sample of packers’ transactions.

• Further develop AMS audit strategies to identify recurring significant 

problems.

• Address the timeliness and consistency of AMS reporters’ efforts to 

follow-up on audit findings. 

We also recommend that the Secretary of Agriculture direct the 

Administrators of the Agricultural Marketing Service and the Grain, 

Inspection, and Packers and Stockyards Administration to further 

investigate the reporting practices of one packer’s low-price purchases of 

livestock. 
Page 22 GAO-06-202 Livestock Market Reporting

Agency Comments and 

Our Evaluation

We provided USDA with a draft of this report for review and comment. In a 

memorandum dated November 18, 2005, we received formal comments 

from USDA’s Acting Under Secretary for Marketing and Regulatory 

Programs. These comments are reprinted in appendix IV. We also received 

oral technical comments from AMS and GIPSA officials, which we 

incorporated into the report as appropriate. 

USDA generally agreed with our findings and recommendations, and 

discussed the actions it has taken, is taking, or plans to take to address our 

recommendations. Among other things, USDA stated that AMS would (1) 

prepare publicly available reports on the volume of transactions excluded 

by reporters and their effect on reported prices, and take steps to increase 

public awareness of reporting methods and processes; (2) clarify AMS 

reporters’ instructions while following federal and departmental statistical 

and information reporting guidance; (3) post quarterly audit information to 

its website and identify additional audit information to add in the future; 

(4) develop auditing methods to allow conclusions to be drawn about 

overall data accuracy; (5) review its auditing methods to increase the 

overall effectiveness of the compliance program; and (6) conduct further 

inquiry into the issues raised during one of GIPSA’s investigations. 

Concerning the transactions that AMS excluded from its market news 

reports, USDA agreed that 22.8 percent of cattle transactions were 

excluded from May to October 2003. USDA added that AMS reporters 

excluded some transactions during that period because its computer 

system could not differentiate between the base and net prices for certain 

cattle sales. Our review indicates that AMS exclusions for that reason were 

part of the story. More specifically, AMS reporters’ log entries showed that 

of the transactions AMS excluded from May to October 2003, about 24 

percent were excluded for reasons relating to base prices, while about 34 

percent of the transactions were excluded to narrow the range of prices 

that AMS reported, and the remainder were excluded for a variety of other 

reasons such as small head count, small lots, low weight, mixed lots, or 

grade of cattle. In addition, AMS suggested that its programming change to 

differentiate base and net prices led to fewer exclusions–8.8 percent--

during the April through June 2005 period. While we agree that is part of 

the explanation, we believe, if the livestock mandatory program is 

renewed, that AMS needs to focus on the bases and methods for excluding 

transactions, and especially the extent to which AMS will be excluding 

transactions when prices are again rapidly changing, such as they did in 

2003.
Page 23 GAO-06-202 Livestock Market Reporting

AMS also stated that care should be exercised when drawing conclusions 

about packer compliance because packers’ errors are relatively few 

compared to the 500,000 data elements packers may have submitted on 

some days. We believe insufficient information is available to assess the 

overall quality of packer data. AMS audits only focused on a small portion 

of the data submitted by packers, and it is likely that packers’ unaudited 

transactions contain errors as well. We continue to believe that packer 

reporting problems that AMS identified warrant continued vigilance should 

the program be renewed and recommend that AMS develop auditing 

methods to allow conclusions to be drawn about overall accuracy of 

packer’s data.

As agreed with your staffs, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to interested 

congressional committees; the Secretary of Agriculture; the Under 

Secretary for Marketing and Regulatory Programs; the Administrators of 

the Agricultural Marketing Service and the Grain Inspection, Packers and 

Stockyards Administration; and other interested parties. We will also make 

copies available to others on request. In addition, the report will be 

available at no charge at GAO’s Web site at http://www.gao.gov.

If you or your staff have any questions about this report, please contact me 

at (202) 512-3841 or robinsonr@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix V.

Robert A. Robinson

Managing Director, Natural 

Resources and Environment
Page 24 GAO-06-202 Livestock Market Reporting

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

Our objectives were to review the extent to which (1) the U.S. Department 

of Agriculture’s (USDA) Agricultural Marketing Service (AMS) takes 

sufficient steps to ensure the quality of its livestock mandatory market 

news reports, and (2) AMS and the Grain Inspection, Packers and 

Stockyards Administration (GIPSA) coordinate efforts to encourage 

competition in livestock markets.

To review AMS’s steps to ensure the quality of its reports, we visited the 

two Market News Branch (Market News) field offices in Des Moines, IA, 

and St. Joseph, MO, and spoke with AMS reporters about their 

responsibilities related to mandatory price reporting and observed them as 

they prepared livestock mandatory reports for cattle, beef, hogs, lamb and 

lamb meat. To test AMS’s computerized reporting system, we obtained and 

analyzed unpublished data from AMS’s livestock mandatory reporting 

database for beef, cattle, and swine. For this analysis, we used data 

reported by packers through the Live Cattle Daily Report (Current 

Established Prices) (LS-113), Swine Daily Report (LS-119), and Boxed 

Beef Daily Report (LS-126) contained in AMS’s livestock mandatory 

reporting database. We reviewed USDA documents on the report 

preparation and data storage system and analyzed the flow of data into and 

through the system. We performed electronic testing and validation of 

system data developed for us from data available in the AMS system. We 

found the data were sufficiently reliable to support our analyses. We also 

replicated elements of certain reports—the Five Area Daily Weighted 

Average Direct Slaughter Cattle Report and the National Daily Direct 

Morning Hog Report—that livestock experts told us were important to 

livestock producers. 

In addition, we examined transactions reporters excluded from AMS 

reports. First, we examined transactions made between April and June 

2005.1

 More specifically, we reviewed data packers submitted on the Live 

Cattle Daily Report (Current Established Prices) (LS-113), Swine Daily 

Report (LS-119), and Boxed Beef Daily Report (LS-126) and compared it 

with the reports published during this period. Second, we examined 

transactions AMS excluded from its reports during periods of rapidly rising 

cattle and hog prices—for cattle, transactions excluded by reporters for a 

key category of live and dressed cattle prices from May through October 

2003; for hogs, those excluded from October 2003 to March 2004. To 

1

During this period, cattle prices were falling somewhat from a high plateau of the two 

previous years. Hog prices were also declining somewhat during this period. 
Appendix I

Objectives, Scope, and Methodology

Page 25 GAO-06-202 Livestock Market Reporting

determine which transactions were eliminated for market reasons,2 we 

reviewed the reporter log field in the database. The logs identify 

transactions eliminated for various reasons, such as price, low price, high 

price, or lot size.3

 We analyzed data from all days reported for this time 

period in the 35 to 65 percent choice steer grade of the Five Area Weighted 

Average Direct Slaughter Cattle Report.

4

 We then calculated the weighted 

average prices with and without the excluded transactions and the 

difference between these prices.5

 In addition, we performed a statistical 

test to determine whether the difference between the prices, as a group, 

was statistically significant.6

We discussed how AMS performed audits to ensure packers were 

complying with the Livestock Mandatory Reporting Act provisions with 

AMS’s Audit Review and Compliance (ARC) officials in USDA 

headquarters, and with auditors in both Des Moines and St. Joseph. As part 

of this effort, we obtained and reviewed the mandatory price reporting 

2

For cattle, we focused this component of our analysis only on those transactions eliminated 

because of market reasons, excluding those reporters recorded as errors that were deleted 

as part of the AMS quality control process. For hogs, we examined the weighted average 

prices with and without transactions excluded by AMS reporters for all reasons.

3

When market reporters exclude a transaction, they are to include the reason, their name, 

and the date and time in a data field called the “record log.” In order to screen out obvious 

price errors due to situations like decimal place errors, damaged animals, or live animals 

reported as dressed, etc., we set boundaries to screen out extremely high or low prices.

4

Market News reports summary data such as price, volume, and price ranges that are sorted 

according to several key characteristics of livestock transactions. The transaction 

characteristics that represent reporting are class of cattle, selling basis, quality grade, and 

purchase type. Beef grades include higher quality grades such as Prime, Choice, Select, and 

lower categories such as Standard and Commercial. Packers report to AMS the percentage 

of cattle in a lot that they expect to grade at Choice or better, and these lots are assigned 

categories of 0-35 percent, 35-65 percent, 65-80 percent, and over 80 percent. According to a 

USDA report, the 35-65 percent Choice category is the most common quality class. For a 

small number of days, we could not precisely replicate the actual average weighted price 

with the one reported because of adjustments, rounding differences or the inclusion of data 

that was reported late. We did not include in our analysis those days where we could not 

closely replicate AMS prices.

5

Each price is a weighted average price for that day where the weights are quantities of 

cattle in each transaction.

6

In order to do this, we used the “Proc t-test,” a programming routine in the Statistical 

Analysis System (SAS) package to see if the difference between paired sets of data is 

statistically significant. In this case the paired sets of data that we examined are the 

weighted average prices with and without the adjustments to the data made for market 

reasons. 
Appendix I

Objectives, Scope, and Methodology

Page 26 GAO-06-202 Livestock Market Reporting

audit reports that ARC conducted from May 2002 through April 2005. In 

particular, we used ARC’s database of audit reports to analyze the number 

of audits conducted over the time period, the number of findings related to 

those audits, and other information. ARC officials and our analysis 

indicated that the number of audit reports in the database closely 

approximated the number of audits conducted. We found this database to 

be sufficiently reliable for this purpose. Because this database did not 

provide specifics on the reasons AMS believed some companies were out 

of compliance, we performed a detailed review of all audit reports during 

one 4-month audit cycle from June through September 2004. We also 

obtained information from AMS Headquarters officials regarding the 

formal warning letters they sent packers and the penalties they assessed.

We analyzed ARC’s audit methodology for sampling transactions and the 

extent to which that sample of transactions could provide information on 

packer compliance and the accuracy of the reported prices. In addition, we 

reviewed ARC policy and procedures, the audit report database, and had 

discussions with ARC officials and auditors. Specifically, we interviewed 

ARC officials regarding their audit methodology with emphasis on their 

sampling methodology, and we reviewed their documentation on sample 

selection. Furthermore, to analyze the agency’s sampling procedure, we 

compared the time between the audit field visit and the days selected for 

the audit of a full day’s transactions, and the audit of a sample of 

transactions over the 4-month audit cycle from June through September 

2004.

To determine the extent of coordination between GIPSA and AMS, we 

reviewed their legislative authority, identified activities and investigations 

involving both agencies, and reviewed GIPSA case file documentation from 

the competition-related investigations in which GIPSA obtained packers’ 

transaction data from AMS. We met with USDA Headquarters officials from 

AMS and GIPSA. In Des Moines, we met with GIPSA’s Packers and 

Stockyards Programs regional officials, and on separate occasions, spoke 

with GIPSA’s Denver Regional Office officials regarding GIPSA and AMS 

coordination.

During the course of our review, we identified and obtained the views of 

several industry groups and associations representing packers and 

producers. We also interviewed several nationally recognized economic 

experts knowledgeable about mandatory price reporting and related 

market issues.
Appendix I

Objectives, Scope, and Methodology

Page 27 GAO-06-202 Livestock Market Reporting

We conducted our review between February and November 2005 in 

accordance with generally accepted government auditing standards.
Page 28 GAO-06-202 Livestock Market Reporting

Appendix II

Analysis of Transactions AMS Excluded From 

Reports ApendxiI

Overall, from April 2005 through June 2005, we found approximately 8.8 

percent of cattle transactions, 0.2 percent of hog transactions, and 2.7 

percent of boxed beef transactions were eliminated. From May 2003 to 

October 2003, a period of rapidly rising prices, we found that 

approximately 22.8 percent of all cattle transactions were excluded from 

AMS reports.1

 Figure 1 shows that close to 95 percent of all excluded 

dressed weight cattle transactions from negotiated sales were smaller 

lots—groupings of cattle for sales purposes—of fewer than 25 cattle.2

However, as figure 2 shows, the proportion of negotiated live cattle 

transactions that were eliminated consisted of lots that were relatively 

larger than dressed cattle lots and more consistent in size; about 75 percent 

of lots were greater than the 0 to 25 lot category and over 10 percent were 

between 201 and 400 head of cattle. Information on the size distribution of 

excluded lots is relevant because excluding large lots could have a 

relatively greater impact on weighted average prices reported by AMS than 

smaller lots. Also, the effects of excluding large lots could be greater in 

daily reports when trade volume is light, and an accumulation of excluded 

large lots could affect weekly and monthly reports. 

1

Cattle are either sold live or dressed weight. Cattle sold live (live weight) are weighed 

immediately before slaughter, and dressed carcass (dressed weight) cattle are weighed after 

slaughter. 

2

For figures 1 and 2—representing the distributions of cattle excluded—we used the 

categories of steers, heifers, and mixed steer/heifer lots for both live and dressed weight 

cattle. Lots of steers and heifers bring much higher prices than cows and other dairy herds 

and are major categories of the CT100, the cattle market report that we examined.
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 29 GAO-06-202 Livestock Market Reporting

Figure 1: Percent of Negotiated Cattle Transactions Excluded by Size of Lot, 

Dressed Basis, May through October, 2003

Percent

0

10

20

30

40

50

60

70

80

90

100

 1001-

1500

801-

1000

0-25 26-50 51-100 101-200 201-400 401-600 601-800

Source: GAO analysis of USDA data.

Head count

1.17 1.03 .28 .06 .01 .01 .01 2.78

94.66
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 30 GAO-06-202 Livestock Market Reporting

Figure 2: Percent of Negotiated Cattle Transactions Excluded by Size of Lot, Live 

Basis, May through October, 2003

Market News reporters of hog trade eliminated significantly fewer 

transactions than the cattle reporters early on in the livestock mandatory 

reporting program. For hogs, from October 2003 to March 2004, we found 

that approximately 0.1 percent of transactions were excluded, which was 

less than 0.1 percent of all hogs. Figure 3 shows that, for negotiated sales, 

while nearly 40 percent of excluded transactions were smaller lots of 50 

hogs or less, the largest category of slaughtered swine excluded—over 35 

percent—were somewhat larger lots, in the 151–200 head lot category. 

0

5

10

15

20

25

30

2001-

2500

1501-

2000

1001-

1500

801-

1000

0-25 26-50 51-100 101-200 201-400 401-600 601-800

Percent

Head count

Source: GAO analysis of USDA data.

.17 .09 .09 .09

25.34

24.40

18.64

16.75

11.08

2.92

.43
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 31 GAO-06-202 Livestock Market Reporting

Figure 3: Percent of Hog Transactions Excluded by Size of Lot, Negotiated Sales, 

October 2003 through March 2004

Effects of Eliminating 

Transactions

During a sample period of rapidly rising prices, our analysis of cattle and 

hog livestock data shows that the elimination of transactions from Market 

News reports narrowed price ranges while having a limited, but frequently 

positive, effect on the average reported price.3

 To illustrate this process, 

figures 4 and 5 show the differences in the distributions of cattle prices for 

dressed steers from May through July 2003 and how reporters’ exclusion of 

cattle transactions eliminated outlying prices and narrowed the range of 

prices. During this same time period, reporters’ exclusions decreased the 

number of packer transactions from 4066 to 3334. Excluding these 

transactions narrowed the associated price range—the difference between 

the minimum and maximum price—from $117.95 to $16.50 per 

hundredweight. 

0

5

10

15

20

25

30

35

40

0-25 26-50 51-100 101-150 151-200 201-500 501-800 

 Head count

Source: GAO analysis of USDA data.

Percent

20.59

17.65

14.71

5.88

35.29

2.94 2.94

3

Our analysis focused on a period of rapidly rising prices; the impact of eliminating 

transactions in a declining market may differ.
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 32 GAO-06-202 Livestock Market Reporting

Figure 4: Distribution of Cattle Prices Before Exclusions, Dressed Steers, May 

through July, 20034

Price in dollars per hundredweight.

Note: The mean price or average price in the insert of the figure, unlike the other averages in this 

appendix, is not a weighted mean, or adjusted for head count.

4

These prices are not weighted average prices as calculated for the mandatory livestock 

reports, but represent all actual transaction prices as reported by the packers. Each figure 

is a description of the percentage that each reported price category represents during this 

period. While figure 4 displays all transaction prices before any exclusions, figure 5 displays 

the distribution for the same period after all exclusions by market reporters had been made 

for all reasons. 

Source: GAO analysis of USDA data.

Price

0

5

10

15

20

25

30

35

40

30 40 50 60 70 80 90 100 110 120 130 140 150 160 170

Percent

N

Mean

Maximum

Minimum

Range

Median

Mode

4066

120.7583

147.95

30

117.95

123

128
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 33 GAO-06-202 Livestock Market Reporting

Figure 5: Distribution of Cattle Prices After All Exclusions, Dressed Steers, May 

through July, 2003

Price in dollars per hundredweight.

Note: The mean or average price in the insert of figure, unlike the other averages in this appendix, is 

not a weighted mean, or adjusted for head count.

Market News reporters’ elimination of data for market reasons from 

reports between May and October 2003 had the effect of narrowing price 

spreads or ranges on a daily basis.5

 For dressed steers, figure 6 shows the 

narrowing of the range of prices over this period before and after all 

excluded transactions, most of which were excluded for market reasons. 

As shown in the figure, price ranges before any excluded transactions 

during this period were from $2 to $20 per hundredweight while, after all 

market exclusions were made, the range decreased to between $0 and $12 

per hundredweight. Market News reporters are instructed to exclude 

prices that are $5 above or below the market to narrow the range of 

reported prices and AMS record logs indicate that they do so. However, 

5

These price ranges were taken from the data provided by packers on the Live Cattle Daily 

Report (Current Established Prices) (LS-113) for selected days from each week, May 

through October 2003 for dressed weight steers (35-65% Choice).

Percent

0

5

10

15

20

25

30

35

40

45

100 105 110 115 120 125 130 135 140 145 

Source: GAO analysis of USDA data.

Price

N

Mean

Maximum

Minimum

Range

Median

Mode

3334

123.1617

130.5

114

16.5

124

128
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 34 GAO-06-202 Livestock Market Reporting

when prices are rising or falling rapidly, this practice may exclude some 

transactions that should reasonably be presented as reflecting the day-today variations in the market. Also, since these are national daily reports, 

price spreads tend to be larger since they encompass the full range of 

prices for all regions. 

Figure 6: Range of Cattle Prices Before and After Excluded Transactions, Dressed Steers, May through October, 2003

During May to October 2003, a period of rapidly rising cattle prices, we 

estimate that the effect of eliminating transactions for market reasons was 

negligible about two-thirds of the time, while for the remaining third the 

reported average prices were generally higher than they would have been 

had these transactions not been eliminated. For live cattle sales, figure 7 

displays the differences between the average weighted daily prices after 

AMS exclusions (as reported in Market News reports) and the average 

weighted prices based on including the transactions that AMS had 

excluded for market reasons for 35–65 percent choice steers from May 

through October 2003. The average weighted prices published by AMS for 

0

5

10

15

20

25

After all AMS exclusions

Before all AMS exclusions

8 14 23 29 5 11 19 26 2 10 16 23 30 7 12 20 27 4 10 17 25 3 8 15 23 30

May June July August September October

Source: GAO analysis of USDA data.

Price ($/hundredweight)

Date
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 35 GAO-06-202 Livestock Market Reporting

these dates were the same about 67 percent of the time, higher 31 percent 

of the time, and lower 2 percent of the time over this period. This suggests, 

and Market News record logs confirm, that during this period when Market 

News reporters were excluding transactions, they were predominantly 

excluding transactions for reasons of lower price rather than high price. 

We found that over twice as many transactions were excluded for low price 

as for high price during this period.

Figure 7: Difference in Weighted Average Prices With and Without Transactions AMS Excluded for Market Reasons, Live Weight 

Cattle, May through October, 2003 

For 35 to 65 percent choice steers, dressed weight, figure 8 shows the 

differences between the daily weighted average prices reported by AMS, 

and the average prices that AMS would have reported if AMS reporters had 

not eliminated transactions for market reasons. These differences display 

a trend similar to the one we identified for live cattle prices. When we 

compared our calculations of the weighted average prices with those AMS 

reported, about 32 percent of the price differences were higher than those 

AMS would have reported; about 67 percent were the same or about the 

same, and 1 percent were lower. This result indicates that market reporters 

of livestock were excluding a higher proportion of low prices during this 

period. AMS reporters may have excluded low prices more frequently 

0 25 50 75 100 125

-0.5

0.0

0.5

1.0

1.5

2.0

Source: GAO analysis of USDA data.

Price ($/hundredweight)

Reporting days
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 36 GAO-06-202 Livestock Market Reporting

during the period because prices were rising. What a reporter considered 

to be a high price during one week may have appeared to be a much lower 

price by the following week. Also, at the low end of the price ranges, 

transactions may have been excluded because the prices represented lowquality animals.6

 

Figure 8: Difference in Weighted Average Prices With and Without Transactions Excluded for Market Reasons, Dressed Weight 

Cattle, May through October, 2003

The effect of an excluded transaction on any particular day is determined 

by how large that transaction is compared to the size and number of 

transactions that took place on that day or that week, and how far it is from 

the range of reported prices. While each transaction alone may be 

considered a small lot, the total effect of a number of excluded transactions 

for this reason can cumulatively have a large effect on the weighted 

average price. 

6

Some agricultural economists suggested that it would be helpful if there were information 

in AMS reports about the distribution of livestock price ranges, and one commented that it 

would be helpful if AMS were to provide additional details about the quality of livestock 

being traded. 

0 25 50 75 100 125

-3

-2

-1

0

1

2

3

4

5

6

7

8

Source: GAO analysis of USDA data.

Price ($/hundredweight)

Reporting days
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 37 GAO-06-202 Livestock Market Reporting

To determine if there was an overall statistical difference between our 

replications of AMS prices and the prices we determined would have been 

reported had reporters not eliminated transactions for market reasons, we 

tested the two average weighted price series for both live and dressed 

cattle. We found that for both live and dressed weight cattle, there was a 

statistically significant difference in the weighted averages between 

reported AMS prices and the prices that would have been reported if 

exclusions had not been made for market reasons.7

Our analysis of data from AMS’s daily hog reports from October 2003 to 

March 2004 showed that, for the reports that we examined, reporters 

frequently eliminated transactions that they believed to be errors that 

would potentially widen price ranges.8

 However, unlike cattle, there were 

very few transactions eliminated from reports for market reasons. As a 

result, for hogs, price ranges with and without exclusions by market news 

reporters were more similar than for cattle. As illustrated in figure 9, the 

difference between prices reported by AMS and prices that would have 

been reported by Market News was notable on only 7 days for the National 

Daily Direct Morning Hog Report from October 2003 through March 2004. 

A similar analysis of the afternoon hog report shows the same pattern. 

7

The “t-test” determined that the differences in the means between the two price series for 

live weight and dressed cattle were statistically significant at the 0.01 and 0.10 levels, 

respectively. 

8

We examined the National Daily Direct Morning Hog Report (HG 202) and the National 

Daily Direct Afternoon Hog Report (HG 203), and calculated the difference between the 

weighted average price for hogs with and without exclusions by market reporters for all 

reasons.
Appendix II

Analysis of Transactions AMS Excluded From 

Reports

Page 38 GAO-06-202 Livestock Market Reporting

Figure 9: National Daily Direct Morning Hog Report: Differences of Weighted Average Prices With and Without Transactions 

Excluded, October 2003 through March 2004

0 25 50 75 100 125

$-.25

$-.20

$-.15

$-.10

$-.05

$.00

$.05

$.10

$.15

$.20

$.25

Source: GAO analysis of USDA data.

Price ($/hundredweight)

Reporting days
Page 39 GAO-06-202 Livestock Market Reporting

Appendix III

Additional Information Concerning AMS 

Warning Letters to 11 Packers through 

September 2005 ApendxiI

Packer 

Number ARC audits and warning letters Issues Actions

1 ARC Audits 8/13/02, and 12/17/02

1/21/03—Letter from Market News 

Branch Chief

3/18/03—Letter from Deputy 

Administrator (in response to 

2/10/03 letter from packer) 

5/13/03—Letter from USDA Office 

of General Counsel

• Daily lamb meat and carcass livestock sales not 

reported when prices were established

• Incorrectly rounded report sale prices to the nearest 

whole dollar

• Did not report all sales required by Livestock Mandatory 

Reporting Act 

• Did not report weekly sales of imported boxed lamb 

products on the first reporting day of the week

7/28/03—$10,000 fine 

assessed in a settlement 

agreement with AMS; fine 

suspended provided 

packer did not violate the 

Livestock Mandatory 

Reporting Act for 1 year

Subsequent audits showed 

the packer to be in 

compliance

2 ARC Audits 11/19/02, 3/25/03, 

6/17/03, and 12/1/03 

1/29/03, 4/4/03, and 8/7/03—

Letters from Market News Branch 

Chief

• Did not report daily lamb sales on the day they occurred

• Reported frozen boxed product as fresh

• Deducted average freight cost instead of actual freight 

cost

5/17/04—$10,000 fine 

assessed in a Consent 

Decision and Order; fine 

suspended provided 

packer did not violate 

Livestock Mandatory 

Reporting Act for 1 year

Subsequent audits 

showed the packer to be in 

compliance

3 ARC Audits 7/9/02, 10/1/02, and 

4/9/03

2/13/03—Letter from Market News 

Branch Chief

4/24/03—Letter from Deputy 

Administrator

• Did not report information for committed cattle

• Did not correctly report the actual weight of the animal 

with the lowest and highest weight in each lot

• Incorrectly combined and reported cattle of similar 

class and classification as single lots

Corrections completed by 

6/12/03

4a ARC Audits 8/28/02, and 10/17/02

3/11/03, and 7/1/03—Letters from 

Market News Branch Chief

• Submitted average net price data on a live weight basis 

rather than a carcass basis for prior day hog report

• Incorrectly reported prices for daily hog report

• Did not submit base price on a plant delivered basis for 

buying station purchases

• Incorrectly reported base prices—some hogs 

purchased on a live weight basis were converted to a 

carcass weight basis

Corrections completed by 

7/29/03
Appendix III

Additional Information Concerning AMS 

Warning Letters to 11 Packers through 

September 2005

Page 40 GAO-06-202 Livestock Market Reporting

4b ARC Audits 3/2/05, and 6/15/05

7/12/05—Letter from Market News 

Branch Chief

• Reported incorrect base price for 3 of 8 randomly 

selected hog lots

• Numerous data entry errors

• Incorrectly deducted from the reported price money 

placed in escrow for repayment to the producer at a 

later time

• Incorrectly reported some daily purchase data as prior 

day purchases

• Incorrectly submitted some morning daily purchase 

data as afternoon purchases

• Incorrectly submitted price data on packer-owned hogs 

with prior day slaughter data

• Incorrectly reported live weight data on hog carcass 

purchases

• Did not report purchase data for two lots of hogs

Corrections completed by 

8/11/05

5 ARC Audits 12/5/02, 3/12/03,

6/10/03, 8/18/03, and 11/5/03

12/30/03—Letter from Market News 

Branch Chief

• Did not report yield grade data for weekly packerowned lamb reportCorrections completed by 

2/17/04

6 4/26/04—Letter from Market News 

Branch Chief

• Did not submit daily hog data to AMS beginning in 

September 2002

Corrections completed by 

6/2/04

7 ARC Audits12/4/02, and 2/25/04

4/26/04—Letter from Market News 

Branch Chief

• Did not report live cattle purchases due to computer 

system problems with two reporting fields

Corrections completed by 

6/2/04

8 ARC Audits 6/12/02

7/24/02, and 9/4/02—Letters from 

Market News Branch Chief

• Incorrectly submitted base price for hogs purchased on 

a live weight basis

• Incorrectly reported the net price for formula cattle

• Incorrectly reported cattle premiums and discounts for 

daily and weekly formula purchase reports

• Submitted estimates for grade, dressing percent, and 

weight when actual information was available

• Improperly reported premiums as negative and 

discounts as positive for weekly cattle report

• Submitted cattle base prices instead of net prices on 

weekly report due to error in recordkeeping system not 

accounting for premiums and discounts

Corrections completed by 

3/11/04

9 ARC Audits 4/8/03, and 

9/14/04

8/20/04, and 3/8/05—Letters from 

Market News Branch Chief

6/30/05—Letter from USDA Office 

of General Counsel

• Did not report the quantity of cattle committed and 

delivered

• Did not report the quantity of cattle delivered in a timely 

manner 

• Did not maintain purchase records that show evidence 

of cattle and beef purchase times

• Did not correctly report all cattle information twice each 

day—provided incorrect cattle classification codes

• Did not report total beef sales twice each day

Issue pending. 

Market News reviewing 

results from 9/15/05 audit 

and will determine if further 

action is warranted. 

(Continued From Previous Page)

Packer 

Number ARC audits and warning letters Issues Actions
Appendix III

Additional Information Concerning AMS 

Warning Letters to 11 Packers through 

September 2005

Page 41 GAO-06-202 Livestock Market Reporting

Source: GAO analysis of USDA warning letters and legal agreements with packers.

10 ARC Audits 1/12/05, and 

5/18/05

6/29/05—Letter from Market News 

Branch Chief 

• Did not report delivered cattle at time of delivery

• Did not include all deductions in cattle carcass prices

• All cattle incorrectly reported as dairy bred

• Incorrectly submitted feedlot live weight instead of total 

carcass weight for a weekly cattle report 

Issue pending.

Market News reviewing 

current information 

provided by packer.

11 ARC Audit 3/31/04, and 4/1/04

2/1/05—Letter from Market News 

Branch Chief 

• Committed cattle from local producers not reported at 

correct time

• Did not report all required committed cattle data

Corrections completed by 

2/16/05

(Continued From Previous Page)

Packer 

Number ARC audits and warning letters Issues Actions
Page 42 GAO-06-202 Livestock Market Reporting

Appendix IV

Comments from the Department of 

Agriculture ApendxiIV
Appendix IV

Comments from the Department of 

Agriculture

Page 43 GAO-06-202 Livestock Market Reporting
Appendix IV

Comments from the Department of 

Agriculture

Page 44 GAO-06-202 Livestock Market Reporting
Appendix IV

Comments from the Department of 

Agriculture

Page 45 GAO-06-202 Livestock Market Reporting
Appendix IV

Comments from the Department of 

Agriculture

Page 46 GAO-06-202 Livestock Market Reporting
Page 47 GAO-06-202 Livestock Market Reporting

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Robert A. Robinson, (202) 512-3841

Acknowledgements In addition to the individual above Charles Adams, Assistant Director, Aldo 

Davila, Barbara El Osta, Paige Gilbreath, Kirk Menard, Lynn Musser, Karen 

O’Conor, Alison O’Neill, Vanessa Taylor and Amy Webbink made key 

contributions to this report.

(360547)
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548