Wholesale Pork Price Reporting Analysis 

Commissioned by the 

Agricultural Marketing Service, United States Department of Agriculture 

November 2009 

A Value Ag, LLC Report 

Value Ag, LLC. 

Columbia, MO 

www.valueag.com 
Acknowledgements 

We gratefully acknowledge pork industry stakeholders providing observations, perceptions, 

concerns, and practices relative to wholesale pork trade. Their valuable input led to the reported 

findings presented here. Pork industry stakeholders providing input included producers, state 

and national producer associations, hog processors, hog processor associations, pork buyers, 

distributors, regional buying cooperatives, retailers, and retailer associations. We also 

acknowledge valuable contributions of external reviewers, Dr. Ron Plain and Dr. Randy 

Fortenberry. Reviewers provided helpful feedback on a very short timeline. Last, we extend our 

appreciation to Agricultural Marketing Service staff in the Washington DC and the Des Moines 

offices for providing background information and historical data. 

This project report represents the sole professional opinions of the researchers based on industry 

feedback, secondary data analysis, and a review of scholarly research in the area of price 

reporting. Agricultural Marketing Service staff provided technical related information upon 

request. Opinions presented in this report are solely those of the authors and do not reflect or 

represent views or opinions of Agricultural Marketing Service or U.S. Department of 

Agriculture. 

The request for proposals and identification of investigators for this research project were 

coordinated by the Livestock Marketing Information Center (LMIC). We acknowledge Jim 

Robb, LMIC, for his efforts in organizing the project and the research team. 

 
About the Principal Investigators 

Joe Parcell, PhD, is an 

Associate Professor in the 

Department of Agricultural 

Economics at the University 

of Missouri. He has been on 

faculty at the University of 

Missouri since 1998, after 

receiving his MS and PhD 

in agricultural economics 

and BA in mathematics. He 

serves in the role of 

Director of the Value Added 

Program at the University of 

Missouri. His research 

involves value chain 

demand drivers, price 

analysis, and marketing. He 

has extensive knowledge of 

supply and value chain 

issues through his research 

and practical experience 

with producer agricultural 

ventures. He has published 

over 100 articles in journals, 

proceedings, symposia, or 

chapters. His many 

extension publications relate 

to marketing, pricing, 

strategy, and value added. 

He is co-author of the 

textbook titled, The 

Agricultural Marketing 

System. He is founder and 

president of Value Ag., 

LLC. Value Ag, LLC, 

headquartered in Columbia, 

MO, is an economic 

consultancy group 

committed to, “Analyzing 

Innovative Ideas for 

Tomorrow’s Agriculture.” 

You are invited to learn 

more about Value Ag, LLC 

by visiting 

www.valueag.com. 

 

Ted C. Schroeder, PhD, is 

a University Distinguished 

Professor of Agricultural 

Economics at Kansas State 

University. He has a B.S. 

from University of 

Nebraska and Ph.D. from 

Iowa State University. He 

has been on the faculty in 

Agricultural Economics at 

Kansas State University 

since 1986 teaching and 

conducting research. He is 

director of the North 

American Institute for Beef 

Economic Research 

(NAIBER.org). Ted has 

done extensive research in 

livestock market risk 

management, beef demand, 

cattle and beef marketing, 

and price discovery with 

more than 90 published 

journal articles and 

numerous other 

publications. Schroeder has 

worked as a consultant on 

numerous beef and cattle 

value added projects and he 

has also been the principal 

investigator on a large 

number of external grants. 

Glynn T. Tonsor, PhD, is a 

faculty member at Michigan 

State University (MSU) in 

the Department of 

Agricultural, Food, and 

Resource Economics. Prior 

to joining MSU, Tonsor 

obtained a Ph.D. in 

Agricultural Economics 

from Kansas State 

University. Tonsor’s broad 

research interests and 

experiences span issues 

throughout the meat supply 

chain and include 

improving information 

transfer, enhancing quality 

controls, and examining 

end-user consumer issues. 

Through both applied 

research and first-hand 

knowledge with livestock 

production, Glynn has 

expertise in topics including 

animal identification and 

traceability, animal welfare 

and handling, food safety, 

price risk management and 

analysis. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Table of Contents 

Executive Summary .................................................................................................................1 

Chapter 1: Introduction and Procedures .............................................................................4 

1.1 Introduction ....................................................................................................................4 

1.2 Objectives ......................................................................................................................5 

1.3 Procedures ......................................................................................................................6 

Chapter 2: Hog-Pork Industry Background .........................................................................9 

 2.1 Value Chain Overview ...................................................................................................9 

 2.2 Hog Production ............................................................................................................11 

 2.3 Hog Processing ............................................................................................................14 

 2.3.1 Barrow and Gilt Processors ................................................................................15 

 2.3.2 Sow and Boar Processors ....................................................................................18 

 2.3.3 Value of Pork Primals .........................................................................................21 

 2.4 Cold Storage Stocks .....................................................................................................23 

 2.5 Exports .........................................................................................................................28 

Chapter 3: Voluntary Wholesale Pork Price Reporting ....................................................32 

 3.1 Overview ......................................................................................................................32 

 3.2 AMS Data Analysis .....................................................................................................34 

 3.3 Summary ......................................................................................................................42 

Chapter 4: Mandatory Price Reporting ..............................................................................43 

 4.1 Overview of Mandatory Price Reporting .....................................................................43 

 4.2 Review of Selected Mandatory Price Reporting Literature .........................................43 

 4.3 Welfare Assessment .....................................................................................................47

 4.4 Summary ......................................................................................................................48 

Chapter 5: Assessment of Reporting Procedures ..............................................................50 

 5.1 Industry Perspectives-Current Wholesale Pork Price Reporting .................................50 

 5.2 Industry Perspectives-Possible Improvements to Wholesale Pork Price 

 Reporting......................................................................................................................52 

 5.3 Increasing Price Reporting Frequency .........................................................................57 

 5.3.1Analyzing Market Liquidity ................................................................................57 

 5.3.2 Exports ................................................................................................................64 

 5.3.3 Product Form, Enhanced Product, and Value Added .........................................64 

 5.3.4 Hedonic Analysis Primer ....................................................................................66 

Chapter 6: Costs and Benefits of Mandatory Wholesale Pork Price Reporting .............68 

 6.1 Swine Processor Compliance Cost ..............................................................................68 

 6.2 Other Potential Drawbacks ..........................................................................................71 

 6.3 Societal Benefits ..........................................................................................................72 

 6.4 Summary ......................................................................................................................72 

Chapter 7: References ...........................................................................................................74 

Appendices ..............................................................................................................................78 

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibits 

Chapter 1: Introduction and Procedures 

Exhibit 1.3.1 Summary Sample of Industry Stakeholders Contacted to 

 Provide Feedback. ..........................................................................................................8 

Chapter 2: Hog-Pork Industry Background 

 Exhibit 2.1.1 Schematic Representation of Pork Value Chain ..........................................10 

 Exhibit 2.2.1 Barrow and Gilt, Sow, and Stag/Board Annual Slaughter, 1994-2008 .......11 

 Exhibit 2.2.2 Percentage of Hogs Purchased on Negotiated Cash Market, 1994-2009 .....12 

 Exhibit 2.2.3 Percentage of U.S. Hogs Sold using Various Pricing Arrangements, 

 January 1999-2009 .......................................................................................................13 

 Exhibit 2.3.1 Daily US Slaughter Capacity, 1994-2008 ....................................................14 

 Exhibit 2.3.2 Hog Processing Firm and Plant Numbers, Selected Years, 1980-2006 .......15 

 Exhibit 2.3.3 2006 Hog Processing Plant Size Distribution ..............................................15 

 Exhibit 2.3.1.1 US Barrow and Gilt Processors and Daily Plant Slaughter 

 Capacities, 2009 ...........................................................................................................16 

 Exhibit 2.3.1.2 Geographic Locations of US Barrow and Gilt Processing 

 Plants, 2009 ..................................................................................................................18 

 Exhibit 2.3.2.1 US Sow and Boar Processors and Daily Plant Slaughter 

 Capacities, 2009 ...........................................................................................................19 

 Exhibit 2.3.2.2 Geographic Locations of US Sow and Boar Processing Plants, 2007 ......20 

 Exhibit 2.3.3.1 Weekly Average AMS Reported Wholesale Pork Prices ($/cwt) 

 for Processing Cuts, 2001-October 2009 .....................................................................21 

 Exhibit 2.3.3.2 Weekly Average AMS Reported Wholesale Pork Prices ($/cwt) 

 for Retail Cuts, 2001-October 2009 .............................................................................22 

 Exhibit 2.3.3.3 Weekly Average Pork Carcass Cutout Prices ($/cwt), 

 2001-October 2009 ......................................................................................................22 

 Exhibit 2.4.1 Monthly Pork Belly Cold Storage Stocks, 1995-October 2009 ...................24 

 Exhibit 2.4.2 Monthly Ham Cold Storage Stocks, 1995-October 2009 ............................24 

 Exhibit 2.4.3 Monthly Pork Loins Cold Storage Stocks, 1995-October 2009 ..................25 

 Exhibit 2.4.4 Monthly Butt Cold Storage Stocks, 1995-October 2009 .............................25 

 Exhibit 2.4.5 Monthly Spare Ribs Cold Storage Stocks, 1995-October 2009 ...................26 

 Exhibit 2.4.6 Monthly Bone-in Picnic Cold Storage Stocks, 1995-October 2009 ............26 

 Exhibit 2.4.7 Monthly Variety Pork Meat Cold Storage Stocks, 1995-October 2009 ......27 

 Exhibit 2.4.8 Monthly Pork Trimmings Cold Storage Stocks, 1995-October 2009 ..........27 

 Exhibit 2.5.1 U.S. Pork Export Volume and Percentage of Pork Export Volume 

 Relative to U.S. Pork Production, 1999-2008..............................................................28 

 Exhibit 2.5.2 U.S. Pork Exports by Country, Percentage Volume Shares, 2008 ..............29 

 Exhibit 2.5.3 Value of U.S. Pork and Byproduct Exports per Head of Total U.S. 

Slaughter, 1986-2008 ...................................................................................................29 

 Exhibit 2.5.4 Annual Fresh, Chilled, and Frozen Pork Exports, by Destination, 

 1989-2008 ....................................................................................................................30 

 Exhibit 2.5.5 Annual Frozen Pork Exports, by Destination, 1989-2008 ...........................30 

 Exhibit 2.5.6 Annual Prepared, Preserved Pork Exports, by Destination, 1989-2008 ......31 

 Exhibit 2.5.7 Annual Fresh/Chilled Pork Cut Exports, by Destination, 1989-2008 ..........31 

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Chapter 3: Voluntary Wholesale Pork Price Reporting 

 Exhibit 3.2.1 Average Load Volume Reported in Daily AMS Wholesale Pork 

 Trade, 2001-October 2009 ...........................................................................................36 

 Exhibit 3.2.2 Percentage of Weekly Pork Loin Production Captured Through 

 Voluntary Price Reporting, 2001 – October 2009 .......................................................36 

 Exhibit 3.2.3 Percentage of Weekly Pork Picnic Production Captured Through 

 Voluntary Price Reporting, 2001 – October 2009 .......................................................37 

 Exhibit 3.2.4 Percentage of Weekly Pork Rib Production Captured Through 

 Voluntary Price Reporting, 2001 – October 2009 .......................................................37 

 Exhibit 3.2.5 Percent Weekly Pork Ham Production Captured Through 

 Voluntary Price Reporting ...........................................................................................38 

 Exhibit 3.2.6 Percentage of Weekly Pork Belly Production Captured Through 

 Voluntary Price Reporting, 2001 – October 2009 .......................................................38 

Exhibit 3.2.7 Percentage of Weekly Pork Butt Production Captured Through Voluntary 

Price Reporting, 2001 – October 2009 ........................................................................39 

Exhibit 3.2.8 Percentage of Weekly Pork Total Loads Production Captured Through 

Voluntary Price Reporting, 2001 – October 2009 .......................................................39 

 Exhibit 3.2.9 Coefficient of Variation in Daily AMS Wholesale Pork Load 

 Volumes, 2001-October 2009 ......................................................................................40 

 Exhibit 3.2.10 Frequency of Days When AMS did not Report a Wholesale 

 Pork Price, Selected Products, 2001- October 2009 ....................................................41 

 Exhibit 3.2.11 Summary Statistics on Relative Contributions towards Total 

 Load Counts, 2001-October 2009 ................................................................................41 

 Exhibit 3.2.12 Summary of Statistics on Relative Contributions towards Total 

 Load Counts, 2001 – October 2009 .............................................................................41 

 Exhibit 3.2.13 Relative Contributions Towards Composite Cutout Value ........................42 

Chapter 4: Mandatory Price Reporting 

 Exhibit 4.3.1 Graphical Depiction of Economic Surplus and Welfare Benefits 

 from Adoption of Mandatory Price Reporting Accounting for Increased Price 

 Transparency and Potential for Packer Collusive Behavior (recreated from 

 Njoroge et al. 2007) .....................................................................................................49 

Chapter 5: Assessment of Reporting Procedures 

 Exhibit 5.2.1 Summary of Survey Pork Buyer Perceptions and Preferences ....................54 

 Exhibit 5.2.2 USDA Market News Pork Price Reported Values do you 

 Regularly Use? (Percent Indicated Yes) ......................................................................55 

 Exhibit 5.2.3 For the Following Primal, or Cuts from that Primal, What is the 

 Most Appropriate Time Window to Consider as the “Negotiated Cash” Market? ......55 

 Exhibit 5.2.4 For the Following Primal, or Cuts from that Primal, What Percentage 

 of Your Operations’ Purchases are Typically Value Added or Enhanced? .................56 

 Exhibit 5.2.5 For the Following Primal, or Cuts from that Primal, What Percentage 

 of Your Operations’ Purchases are Priced Using the Negotiated Cash Market? .........56 

 Exhibit 5.2.6 Summary of Industry Sentiment Related to Mandatory Pork Price 

 Reporting......................................................................................................................57 

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

 Exhibit 5.3.1.1 Summary of Statistically Inferred Load Counts Based on Chosen 

 Level of Accuracy ........................................................................................................60 

 Exhibit 5.3.2.1 Assessment of Expected Pounds of Pork Captured through 

 “North American” Trade Added to Reports ................................................................64 

 Exhibit 5.3.3.1 Branding of Pork Cuts for Retail Purchase ...............................................65 

 Exhibit 5.3.3.2 Composition of Pork Cut Product Form for Purchase ..............................65 

 Exhibit 5.3.4.1 Example Hedonic Model Applied to Data for Bone-In Loins .................67 

Chapter 6: Costs and Benefits of Mandatory Wholesale Pork Price Reporting 

 Exhibit 6.1.1 Electronic Submission Development and Annual System Maintenance 

 Cost per Respondent ....................................................................................................69 

 Exhibit 6.1.2 Annual Recordkeeping Cost per Respondent ..............................................69 

 Exhibit 6.1.3 Number of Submission Hours per Respondent per year ..............................69 

 Exhibit 6.1.4 Annual Cost Burden to Respondents (All Processors) ................................70 

 Exhibit 6.1.5 Annual Cost Burden to Respondents (Barrow and Gilt Processors only) ...70 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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EXECUTIVE SUMMARY 

The United States Department of Agriculture (USDA), Agricultural Marketing Service 

(AMS) reports prices for wholesale pork trade using information provided to them by hog 

processors and/or pork buyers. Wholesale pork price reporting by packers is voluntary 

unlike swine, cattle, boxed beef, lamb, boxed lamb imports, and boxed lamb markets where 

price reporting for qualifying packers is mandatory under the authority of the Livestock 

Mandatory Reporting Act of 1999. Concerns have surrounded AMS reporting of wholesale 

pork prices for a long time, and over the past ten years minor adjustments in voluntary price 

reporting guidelines have occurred. In the mean time, several concerns regarding pork price 

reporting have become more problematic. One of the strategies being considered to enhance 

pork price reporting is to make pork price reporting mandatory for qualifying swine packers. 

The purpose of this study was to determine advantages, drawbacks, and potential 

implementation issues associated with adopting mandatory wholesale pork price reporting. 

Public price reporting provides important information that facilitates trade and enhances 

market efficiency. Effective price reporting helps individual transaction prices converge 

more quickly to a market-clearing price. Faster convergence reduces pricing errors which are 

costly to market participants and thus to society as a whole. Publicly reported prices are used 

as a base in formula priced trade, which amplifies the importance of accurate price reporting. 

Price reporting reduces asymmetric information among market participants, which helps to 

level the playing field and counter-balance possible market power. Price information signals 

resource allocation, production, processing, and marketing decisions. Price data from 

different market levels such as farm, wholesale, and retail are used to calculate marketing 

margins, which reveal changes in marketing costs among vertical industry sectors. The 

broad private and public importance of price information makes reliable, accessible, timely, 

and accurate price reporting a valuable activity worthy of public investment. 

Scope of project: 

♦ Identifying problems with current pork price reporting. 

♦ Determining how changes in pork processing and trade are affecting pork price reporting. 

♦ Assessing to what extent mandatory price reporting would reduce pork price reporting 

problems. 

♦ Identifying potential benefits and costs of moving to a mandated pork price reporting 

system. 

To accomplish the goals, we completed a number of tasks that included: 

♦ Information gathering through phone interviews, in-person discussions, and surveys with 

swine producer associations, swine packers, pork processors, retailers, food service firms, 

and organizations representing several facets of the hog and pork industries. 

♦ A review of relevant literature regarding price reporting and its value. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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♦ Analysis of historical trends in hog and pork pricing practices, trade, cold storage, pork 

prices, exports, and related industry developments. 

♦ Summarizing pork price reporting volume and frequency of missing or unreportable price 

quotes from analysis of historical AMS daily and weekly price reports. 

Results: 

Wholesale pork price reporting is thin and suffers from frequent missing or unreportable 

price quotes for subprimals and the frequency has worsened over time. Missing or 

unreportable price quotes are mostly associated with changes over time in the way pork is 

traded. Causation of reduced reporting frequency lies largely with industry practices that are 

inconsistent with current USDA guidelines defining reportable trades. In particular, more 

pork is being:

◊ traded in forms that are either not reported or not reportable (e.g., enhanced product, 

case ready product, branded product, or frozen product), 

◊ transacted through intra-firm transfer, through inter-firm transfer, through formula 

pricing, through forward price contracts well in advance of delivery (beyond 7 or 10 

days forward as used by AMS), and 

◊ destined for export markets which are excluded from AMS pork price reports for the 

negotiated cash guidelines used by USDA. 

Pork price reporting thinness is resulting in less trust in reported prices by industry 

participants, raising concerns about potential selective price reporting, and generally causing 

reduced public value of published price reports. 

Overall, moving to mandatory price reporting has some support at every segment of the 

industry we interviewed (producers, packers, processors, retailers, and food service). 

However, that support is certainly not unanimous among all industry participants in every 

industry segment. Mandatory price reporting would offer potential societal benefits to 

producers and consumers. However, benefits of adopting mandatory pork price reporting 

would likely be modest and smaller than some industry participants might anticipate. 

However, regardless of the decision to adopt mandatory reporting, several other 

considerations are worth considering in enhancing overall effectiveness and value of 

wholesale pork price reporting. 

Implications: 

♦ Mandatory wholesale pork price reporting would likely reduce the number of missing 

daily pork subprimal product price quotes, unless confidentiality clauses became 

problematic precluding publication of specific prices. 

♦ The seriousness of the limitations caused by confidentiality clauses in pork price 

reporting would in part depend upon the aggregation scheme AMS designed versus trying 

to report price for more differentiated products. As the number of pork subprimal 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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product specifications that are reported increases, the more likely the confidentiality 

clause would be binding. 

♦ Mandatory wholesale pork price reporting would reduce concerns about potential 

selective price reporting. 

♦ Mandatory wholesale pork price reporting would encourage more industry participants to 

use weighted-average prices in formula trade instead of market top prices, as is current 

practice with a majority of pork trade. 

♦ Mandatory wholesale pork price reporting would increase price information to small 

market participants more than it would to large volume market participants. However, 

large firms tend to have a comparative advantage in data analysis making them more able 

to analyze and utilize additional published data that might come with mandated price 

reporting. 

♦ Mandatory wholesale pork price reporting alone would not address many of the concerns 

of industry. In particular, industry largely would like to see a price reporting system 

designed and implemented to effectively: 

◊ capture increasing product heterogeneity that requires development of more category 

items to report by AMS or development of appropriate ways to convert prices of 

differentiated products back into forms that can be combined with a reported product 

form, 

◊ capture various enhanced products, 

◊ capture case ready product because of branding and product heterogeneity, 

◊ include export sales to Canada and Mexico, 

◊ deliver separate reports for formula and forward pricing methods, and 

◊ capture pork belly transactions that better reflect what industry actually trades. 

♦ If wholesale pork price reporting is made mandatory, the price reporting legislation 

should provide AMS with the flexibility necessary to modify price reports as the industry 

evolves. For example, AMS needs to be able to modify price reporting to accommodate 

evolving technologies for enhancing product, new industry processing practices, and 

changes in product segmentation and labeling. Without additional flexibility, important 

price reporting modifications over time are too cumbersome, slow to occur, and costly. 

♦ Reporting wholesale pork prices for differentiated products should be explored further by 

AMS because such products are likely to continue to grow in importance. As these 

products grow in popularity, they remove product from reportable trade under current 

AMS reporting guidelines. We recommend assessing use of hedonic modeling 

techniques to convert heterogeneous wholesale pork subprimal product prices into 

comparable prices for more broadly defined products that can be reported in summary 

fashion. 

♦ Additional enhancements to consider for broader implementation include incorporating 

prices of pork being exported to Mexico and Canada and product to be delivered within 

three weeks instead of just ten days or two weeks in wholesale pork price reporting. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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CHAPTER 1: INTRODUCTION AND PROCEDURES 

1.1 INTRODUCTION 

The United States Department of Agriculture (USDA) Agricultural Marketing Service 

(AMS) is responsible for public price reporting in the wholesale pork market. Wholesale 

pork price reporting is completed by AMS market reporters who compile market news 

reports based on information collected via daily phone surveys of hog processors and pork 

buyers. Participation by pork sellers and buyers in AMS reporting efforts is currently 

voluntary. Because of the voluntary nature of price collection, together with changing pork 

market pricing, trading practices and product forms over time, the value of current price 

reporting is being questioned and changes appear worth considering. 

Lack of adequate and reliable public price information in wholesale pork markets has been a 

substantial concern for industry participants for a long time. In 1996, Sparks Companies Inc. 

completed a report for the American Meat Institute assessing needs for pork price reporting 

improvements (Sparks, 1996). Conclusions of the Sparks study included that deficiencies 

were present in pork price reporting, much of which were related to prominence of formula 

pricing and inter-company transfers. They further determined that a lot of negotiated trade 

was not being reported to USDA for a variety of reasons. The report concluded, “The 

challenge to the pork industry would seem to be one of making sure that a viable price 

discovery and reporting system is maintained for, if it isn’t, one could certainly visualize 

political interference and possibly a mandatory price reporting system in the not-too-distant 

future” (p. 63). 

Not much has changed in wholesale pork price reporting since the 1996 Sparks report. 

Multiple wholesale pork products frequently do not have a reported daily price quote 

available, and when price quotes are released, there is a perilously low percentage volume of 

trade being represented in public price reports. Selective reporting of trade by packers is a 

concern that is often voiced. Changing pork product specifications and differentiated 

products that do not match products reported in public market news, together with more 

enhanced products, growing case-ready production, and export destined products that are 

excluded from wholesale price quotes, are resulting in thinner public price reports. These 

concerns, along with packer-to-packer pork sales that are not included in price reports and a 

shift over time away from negotiated cash commodity trade to formula pricing, have raised 

concerns about the usefulness of current publicly reported wholesale pork market news. 

Concerns about public wholesale pork market price reports have lead to less trust and use by 

market participants, which raises the cost of collecting market intelligence for firms engaged 

in wholesale pork markets. Furthermore, lack of public price reports leads to asymmetric 

price information among market participants and potential for greater vertical and horizontal 

market power imbalances among firms engaged in the market. Consequences can include 

ultimately lower prices for hog producers and/or higher prices for pork consumers as a result 

of higher costs, greater uncertainty, and potential leverage of market power by wholesale 

pork market participants. As a result of these concerns, some industry participants and 

observers have suggested that moving to a mandatory wholesale pork price reporting system 

might reduce problems associated with current voluntary reporting. However, many of the 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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challenges with price reporting are not likely to be resolved by solely mandating pork price 

reporting. That is, changes other than simply mandating price reporting are necessary to 

address many evolving industry concerns regarding pork market information. 

1.2 OBJECTIVES 

The purpose of this research report is to determine the economic tradeoffs of moving from 

the current voluntary pork price reporting to a mandatory price reporting system. We also 

identify issues associated with pork trade that are important considerations for enhancing the 

value of AMS market news, regardless of whether pork price reporting is voluntary or 

mandatory. 

Mandatory pork price reporting potentially has both advantages and disadvantages. 

Advantages include providing a systematic and objective means of collecting terms of trade 

for every qualifying transaction from processors required to comply with reporting 

requirements. Having a complete set of transaction data from a substantial segment of 

industry trade might enable USDA to provide price reports based upon a summary of 

confirmed transactions. However, formal reporting by USDA of terms of trade may raise 

other concerns. For example, USDA follows strict confidentiality guidelines when reporting 

wholesale beef prices, which are under a mandatory reporting system, so that reported prices 

and volumes do not disclose individual company transaction information (the “3/70/20” 

rule).1

 Given the structure of the pork packing industry, evolving product differentiation and 

possible thinness of trade in daily-negotiated prices, application of confidentiality rules to 

mandatory wholesale price reporting could actually result in fewer wholesale pork price 

quotes being published than under the current voluntary reporting system. That is, the 

confidentiality rule could result in USDA not being able to report prices for many pork 

products for multiple consecutive reporting periods that they otherwise do report under 

voluntary reporting. Whether this would occur or not can only be determined through 

examination of a data sample of what mandatory pork price data would comprise. 

Other disadvantages of mandated reporting include costs of compliance by pork packers who 

would be required to routinely report daily wholesale pork trade to USDA. Furthermore, 

many of the challenges associated with wholesale pork price reporting have little to do with 

whether information is collected via voluntary or mandatory methods. That is, factors such 

as changing pork product forms over time, increased product differentiation and branding, 

more case ready product being produced that does not trade on a wholesale commodity basis, 

more export market trade, and increased reliance on forward and formula pricing are all 

substantial issues that simply moving from voluntary to mandatory price collection and 

reporting will not resolve without development and refinement of price reporting procedures. 

Particular objectives of this project include: 

                                                           

1

 The 3/70/20 confidentiality rule followed by USDA for mandatory price reporting is: “The guideline consists 

of three requirements: (1) At least three reporting entities need to provide data at least 50 percent of the time 

over the most recent 60-day time period, (2) no single reporting entity may provide more than 70 percent of the 

data for a report over the most recent 60-day time period, and (3) no single reporting entity may be the sole 

reporting entity for an individual report more than 20 percent of the time over the most recent 60-day time 

period.” Federal Register, May 16, 2008 (p. 28,618) 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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1. Document procedures employed by AMS to collect, analyze, and report wholesale 

pork prices under voluntary price reporting with emphasis on identifying data and 

information that are collected and reported versus data and information that are not 

collected and/or reported. 

2. Identify industry concerns with current voluntary price reporting procedures and 

reliability of reported prices. 

3. Discuss the extent to which confidentiality rules in AMS price reporting under a 

mandatory system would affect the ability of AMS to report prices for all wholesale 

pork primal products on a daily basis. 

4. Identify pervasiveness (and quantify) various terms of trade in wholesale pork 

product markets including: i) how far in advance prices and other contract terms are 

typically established relative to product flow, ii) methods used to discover prices 

(such as negotiated, formula pricing, etc.), iii) uniqueness of transactions that would 

make it difficult to summarize prices and volumes for individual primal cuts. 

5. Assess current sentiment within the pork industry, including packing/processing 

firms, regarding the impacts of switching to mandatory price reporting. 

6. Summarize strengths and weaknesses associated with switching from current 

voluntary to mandatory wholesale pork price reporting. 

7. Determine additional research required to assess comprehensive costs and benefits of 

switching to mandatory wholesale pork price reporting. 

1.3 PROCEDURES 

A core activity of this project was to gather feedback from pork industry stakeholders who 

participate in wholesale pork markets and/or who consider wholesale pork price reports an 

important source of information. Accordingly, our research team interviewed pork 

processors, pork buyers, hog producer associations, and other key market participants to 

determine how they use AMS wholesale pork market news, identify problems with the 

current system, and learn what improvements they recommend. Members of the research 

team have recently used similar information collection procedures to examine benefits and 

costs of the National Animal Identification System, estimate costs associated with new beef 

packer regulations following BSE discovery in the U.S., and examine impediments to fed 

cattle price discovery and value based pricing (NAIS Benefit-Cost Research Team, 2009; 

Coffey et al., 2005; Schroeder et al., 1998). This is an invaluable part of determining where 

commonalities and disparities of industry stakeholders’ opinions are with respect to their 

perceptions and market information needs. Moreover, this type of information gathering is 

imperative to gaining insights on complex and dynamic issues, such as wholesale pork price 

reporting, that influence an industry characterized by operations varying notably in size and 

business activities. 

To gather industry information, both personal and electronic venues were used. In particular, 

a sequence of phone conference call interviews, face-to-face discussions, and on-line and 

written surveys were used. These sources of information collectively provided project 

investigators with a comprehensive set of insights and suggestions. This comprehensive 

information collection process was designed to ensure that entities of all varying sizes and 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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business structures in the hog-pork industry had ample opportunity to provide feedback and 

influence this study. The range of entities invited to provide feedback is demonstrated by the 

lengthy list of contacted parties summarized in Exhibit 1.3.1. In addition to the parties listed 

in Exhibit 1.3.1, we met with USDA AMS staff to gather insights on a) the political 

environment behind current and possible future wholesale pork price reporting systems 

administered by USDA AMS, b) details on current and past market news procedures, c) an 

overview of current problems and practical solutions that are available, and d) relevant 

experiences for wholesale pork price reporting from the beef sector and its conversion to 

mandatory price reporting. We also collected and analyzed historical wholesale pork price 

reporting data from AMS to determine thinness of price reporting. 

We conducted numerous phone interviews and had several in-person meetings with industry 

leaders and firm representatives from supply chain segments including hog processors, pork 

processors, pork retailers, pork food service, and producer associations. We also conducted 

in-person meetings at the Packer Processor Industry Council (PPIC) and Retail Advisory 

Committee (RAC) meetings coordinated by the National Pork Producers Council and the 

Pork Board. We also spent time at USDA AMS offices in both Washington DC and Des 

Moines gathering detailed information about how pork price reporting is accomplished and 

assessing how mandatory price reporting would change current practices and associated 

market information. 

In addition to phone conversations and in-person discussions, we sent a survey to a large 

portion of the hog-pork industry encouraging them to further provide industry sentiments and 

suggestions. In particular, we sent surveys to each state pork producer association, hog 

packers (including both barrow and gilt packers and sow and boar packers), and pork buyers, 

listed in Exhibit 1.3.1, to further ensure we gathered insights from parties throughout the 

industry.2

 As shown in Exhibit 1.3.1, the entities contacted range widely in size and scope. 

It was our intention to separately incorporate results from these surveys, differentiated 

between responses from pork producer, hog packer, and pork retailer respondents in our 

project report. Unfortunately, low survey response rates generally precluded us having 

sufficient confidence that responses were representative. In particular, we received partially 

complete surveys from only three pork producer associations, four hog packers, and 11 pork 

retailers.3

 Accordingly, to protect the anonymity of respondents we do not include any 

summary tables or figures from the pork producer association or hog packer survey response 

data. However, we do include survey results from pork retailers (discussed in Chapters 3-5).

                                                           

2

 The complete survey documents are included in Appendix A. 

3

 Confidential feedback was invited from anonymous stakeholders beyond those listed in Exhibit 1.3.1. As 

shown in the discussion of industry structure, consolidation has reduced the number of firms operating at every 

level of the pork value chain. Information reported in this study reflects the sentiment of firms representing 

approximately 80% of U.S. barrow and gilt processing, 60% of the wholesale pork procurement and 

merchandising, and approximately 50% of combined retail, foodservice, and cooperative buyer association pork 

volume. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 1.3.1 Summary Sample of Industry Stakeholders Contacted to Provide Feedback. Producer Associations Oklahoma Swaggerty Sausage Co Premium Iowa Pork Raley’s Alabama Oregon USA Pork Products Seaboard Farms Remke MArizona Pennsylvania Wampler's Sausage Sioux-Preme Packing Sam’s CluArkansas South Carolina Williams Sausage Company Smithfield Schnuck California South Dakota Southern Quality Meats Supervalu Colorado Tennessee Spectrum Meats Sysco Connecticut Texas Barrow & Gilt Processors Swift Target Delaware Utah Carleton Packing Company The Pork Company The GreaFlorida Virginia Cloverdale Foods Triumph Foods Topco Georgia Washington Dakota Pork, Inc Tyson Foods (IBP) Wal-Mart Hawaii West Virginia Dayton Meat Co. VanDeRose Farms WegmanIdaho Wisconsin Dealaman Eterprises, Inc. Verschoor Meats Whole FoIllinois Wyoming Dekalb Packing Company Vin-Lee-Rom Winn DixIndiana Cargill Meat Solutions Weltin Meat Packing Yerecic LIowa Fisher Ham and Meat Yosemite Meats Kansas Sow & Boar Processors Greenwood Packing Kentucky Abbyland Foods Hatfield Quality Meats Industry Louisiana Avco Heritage Acres Foods Pork Buyers AgricultuMaine Bob Evans Farms Hormel Amazing Taste Foods, Inc. American Maryland Calihan Packing Company Independent Meats BJ’s Wholesale Club Food MarMichigan Dean Sausage Indiana Packing Co. Bozzuto’s Inc. Glenn GrMinnesota F.B. Purnell Sausage J.H Routh Burgers’ Smokehouse National Mississippi Gunnoe Sausage Jim's Farm Meats Darden Restraunts National Missouri J.C. Potter Sausage Kapowsin Meats, Inc. Delhaize Rob MurpMontana Jimmy Dean (Sara Lee) Leidy's Food Lion, LLC Steve MeNebraska Odom's Sausage Martin's Pork Products Giant Eagle, Inc. Nevada Oldham's Sausage Masami Meat Company HEB Grocery Company New Hampshire Owens Sausage Morris Meat Packing Kroger New York Pine Ridge Farms Olson Meat Company Meijer North Carolina Pioneer Packing Company Parks Family Meats Nash Finch Company North Dakota Pork King Packing Peoria Packing Penn Traffic Ohio Southern Pride Meats Pork King Packing Publix Super Markets Inc. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

9 | Page

CHAPTER 2: HOG-PORK INDUSTRY BACKGROUND 

The hog and pork industry has experienced rapid and dramatic changes in industrialization, 

market development, and pricing systems. These changes are important to document in a 

study of wholesale pork price reporting because they directly impact the role and value of 

wholesale pork prices and price reporting in coordinating pork production and marketing. 

For example, both hog producers and pork merchandisers have increasingly adopted formula 

pricing methods for establishing output sales values. Formula pricing removes animals or 

products from cash negotiated trade, making reporting of cash prices in these markets more 

difficult as formula pricing becomes more prominent. Furthermore, the base used in formula 

pricing is often a publicly reported negotiated cash price. So, at the same time the amount of 

cash negotiated trade is declining, the importance of available and representative cash price 

information is increasing. This chapter provides a brief overview of structural changes 

occurring in the hog and pork industry that are important to understand as we evaluate 

wholesale pork price reporting needs. 

2.1 VALUE CHAIN OVERVIEW 

The pork value chain is comprised of hog producers, hog processors, pork processors, 

retailers, food service, and import and export markets (Exhibit 2.1.1). Often times, firms are 

engaged in several vertical dimensions of the value chain. For example, a sizeable portion of 

hog production and processing is vertically integrated. In addition, hog packers often further 

process pork products (e.g. bellies and hams), in which case the fresh wholesale product 

moves through the supply chain simply by intra-firm transfers without being sold in the 

market. As we explore issues and concerns about wholesale pork pricing and price reporting, 

our focus is on sales of fresh products from hog processors to pork processors, retailers, food 

service, and export customers. 

Three broad market arenas, 1) retail items, 2) processing cuts, and 3) variety meats, are the 

core of the wholesale pork market. Pork products that flow from hog processors directly to 

retailers and food service are referred to as “retail items” in Exhibit 2.1.1 and include 

products largely from loins, ribs, picnics, and butts. Pork that goes into further processing 

before going to retail, “processing cuts,” includes bellies, hams, and trimmings. Finally, hog 

processors market several variety meats. As we review wholesale pork price reporting, these 

markets are our major interest. Because retail items and processing products represent the 

vast majority of overall wholesale carcass value, they are our main focus in this study. The 

calculated composite of the three broad product category prices are combined by AMS into 

what is referred to as a carcass cutout. The carcass cutout is an estimate of the market value 

of a 53-54% lean 200 pound hog carcass based on current wholesale product prices. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

10 | Page

Exhibit 2.1.1 Schematic Representation of Pork Value Chain 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

11 | Page

2.2 HOG PRODUCTION 

Total hog production increased by 25% from the mid 1990’s to 2008 (Exhibit 2.2.1). In 

2008, federally inspected industry hog slaughter was 115 million head, of which 97% was 

barrows and gilts and the rest were cull sows, stags, and boars. This rapid industry growth in 

itself is an interesting development whose discussion and trends are well beyond the scope of 

this report.4

 Suffice it to say, the industry has experienced robust expansion over the past 

decade largely through increased production efficiency and productivity. 

Exhibit 2.2.1 Barrow and Gilt, Sow, and Stag/Board Annual Slaughter, 1994-20085

At the same time hog production was expanding, a major shift occurred in how live hogs 

were sold by producers to hog processors (Exhibit 2.2.2). In 1994, 62% of hogs were sold 

through negotiated cash markets. However, by 2007 cash negotiated sales had declined to 

less than 10% of trade.6

 Further breakdown of hog sales methods are provided in Exhibit 

2.2.3. Much of the reduction in cash negotiated hog sales has been a result of increases in 

packer-owned hogs which represented 26% of all hogs sold (or transferred inter-firm) in 

2009. Formula pricing of hogs has been common for several years representing about 45-

50% of annual sales. Formula pricing is of particular direct interest in this study for hogs 

sold using the USDA wholesale cutout reported price as a base price. Although detailed 

history of how many hogs have been sold under formula pricing using the USDA wholesale 

                                                           

4

 See Key and McBride, 2007, for a discussion of the hog industry structure.

5

USDA, ERS (Red Meat Yearbook)

6

  See Martinez and Zering, 2004, for a discussion of the role of quality control and industry organization and 

use of contracts.

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1994 1996 1998 2000 2002 2004 2006 2008 

Head Slaughtered (000 head)

Total

Barrow and Gilt

Sow, Stag/Boar
WHOLESALE PORK PRICE REPORTING ANALYSIS 

12 | Page

pork cutout price as a base does not exist, about six percent of all market hogs were sold this 

way in 2007 (Grimes, 2009, personal communication). 

Exhibit 2.2.2 Percentage of Hogs Purchased on Negotiated Cash Market, 1994-20097

                                                           

7

 Grimes and Plain (2009a)

62%

43%

36%

26%

17% 17%

14% 12% 11% 10% 9% 9% 8%

0%

10%

20%

30%

40%

50%

60%

70%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 2.2.3 Percentage of U.S. Hogs Sold using Various Pricing Arrangements, January 1999-20098

Pricing Arrangement 1999 2000 2001 2002 2003 2004 2005 2006 200Hog or meat market formula 44.2 47.2 54.0 44.5 41.4 41.4 39.9 41.8 38.3 Other market formula 3.4 8.5 5.7 11.8 5.7 7.2 10.3 8.8 8.5 Other purchase arrangement 14.4 16.9 22.8 8.6 19.2 20.6 15.4 16.6 15.2 Packer-Sold 2.1 2.2 2.1 2.4 2.6 6.7 Packer-Owned 16.4 18.1 17.1 21.4 20.0 22.7 Negotiated-Spot 35.8 25.7 17.3 16.7 13.5 11.6 10.6 10.2 8.6 

Note: In 2006, 2007, and 2008 data were reported to USDA voluntarily; in 2002 through 2005 and in 2009 repomandatory; 1999-2001 data is based on industry surveys by the Univ. of Missouri. 8Grimes and Plain (2009b) 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

14 | Page

2.3 HOG PROCESSING 

Daily hog slaughter capacity in the United States increased by over 50,000 head (13%) from 

the early 2000’s to 2008, mirroring the increase in hog production (Exhibit 2.3.1). Over the 

past couple of decades, hog processing has become much more consolidated with a reduction 

in number of firms that report to the Grain Inspection Packers and Stockyards Administration 

going from 446 in 1980 to 128 in 2006 (Exhibit 2.3.2). In addition to processor firm 

consolidation, the number of slaughter plants has also declined dramatically from 509 in 

1980 to 159 in 2006. In 2006, 28 plants slaughtered 1,000,000 head or more and represented 

about 89% of slaughter (Exhibit 2.3.3). 

Exhibit 2.3.1 Daily US Slaughter Capacity, 1994-20089

 

                                                           

9

Meyer (2009)

320,000 

340,000 

360,000 

380,000 

400,000 

420,000 

440,000 

460,000 

Head
WHOLESALE PORK PRICE REPORTING ANALYSIS 

15 | Page

Exhibit 2.3.2 Hog Processing Firm and Plant Numbers, Selected Years, 1980-200610

 Number of Reporting Packers 

Year Single Plant firms Multi-Plant Firms Total Firms Total Plants 

1980 408 38 446 509 

1985 297 41 338 403 

1990 264 26 290 335 

1995 182 27 209 245 

2000 132 20 152 186 

2003 111 14 125 154 

2004 120 16 136 166 

2005 112 19 131 163 

2006 114 14 128 159 

 

Exhibit 2.3.3 2006 Hog Processing Plant Size Distribution11

Less than 1,000 1,000-9,999 10,000-24,999 25,000-49,999 

Plants Head Plants Head Plants Head Plants Head 

No. Thous. No. Thous. No. Thous. No. Thous. 

15 6 34 135 17 258 16 609 

 

50,000-99,000 1000,000-299,000 300,000-999,999 1,000,000 or more 

Plants Head Plants Head Plants Head Plants Head 

No. Thous. No. Thous. No. Thous. No. Thous. 

22 1,542 15 2,489 12 6,382 28 93,127 

2.3.1 BARROW AND GILT PROCESSORS 

The daily slaughter capacity of barrow and gilt processors in 2009 is presented in Exhibit 

2.3.1.1. Currently all barrow and gilt processing plants that slaughter at least 100,000 head 

of swine per year on average for the immediate preceding five years are required to report 

hog purchase prices to AMS under rules of the Livestock Mandatory Reporting Act of 1999. 

This would equate to hog processing plants slaughtering roughly 400 head per day being 

subject to this reporting requirement, or roughly 50 barrow and gilt plants owned by some 30 

companies reporting prices.12 The geographic dispersion of barrow and gilt slaughter plants 

is illustrated in Exhibit 2.3.1.2. Most of the plants subject to current hog price reporting, and 

certainly the largest volume of hogs represented, are located in the Southeastern (e.g., NC, 

VA, and SC) and Midwestern (e.g., IA, IL, NE, MN, MO) regions of the United States, with 

a few also located in the West (e.g., CA). 

                                                           

10USDA, GIPSA ( 2007)

11USDA, GIPSA (2007)

12 These are only rough estimates of firms and plants because we only have access to estimated slaughter 

capacity, not actual slaughter by year by plant. Actual slaughter by plant is confidential data not made available 

to the research team.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

16 | Page

Exhibit 2.3.1.1 U.S. Barrow and Gilt Processors and Daily Plant Slaughter Capacities, 

200913

Company Plant 

Capacity 

(head) Co. Total 

Smithfield Tar Heel , NC 33,000 

Smithfield, Virginia Gwaltney, VA 9,500 

Morrell Sioux Falls, SD 19,000 

 Sioux City, IA 14,000 

Farmland Crete, NE 10,500 

 Denison, IA 9,300 

 Monmouth, IL 10,500 

Prem. Std. Milan, MO 10,500 

Clinton, NC 10,000 126,300

Tyson Foods (IBP) Waterloo, IA 19,350 

Dakota Dunes, SD Logansport, IN 14,500 

 Storm Lake, IA 15,500 

 Col. Junction, IA 10,000 

 Madison, NE 7,800 

 Perry, IA 7,400 74,550

Swift Worthington, MN 18,500 

Greeley, CO Marshalltown, IA 18,500 

 Louisville, KY 10,000 47,000

Excel Beardstown, IL 20,000 

Wichita, KS Ottumwa, IA 18,500 38,500

Hormel Austin, MN 19,000 

Austin, MN Fremont, NE 10,500 

Clougherty Los Angeles, CA 7,500 37,000

Seaboard Farms Guymon, OK 19,200 

Triumph Foods St. Joseph, MO 19,000 

Indiana Packing Co. Delphi, IN 16,500 

Hatfield Quality Meats Hatfield, PA 10,600 

J.H Routh Sandusky, OH 4,200 

Sioux-Preme Packing Sioux Center, IA 4,200 

Greenwood Packing Greenwood, SC 3,000 

Pork King Packing Marengo, IL 2,000 

Premium Iowa Pork Hospers, IA 2,400 

Fisher Ham and Meat Spring, TX 1,500 

 Navasota, TX 500 2,000

 

                                                           

13 Meyer, 2009
WHOLESALE PORK PRICE REPORTING ANALYSIS 

17 | Page

Exhibit 2.3.1.1 (cont.) U.S. Barrow and Gilt Processors and Daily Plant Slaughter 

Capacities, 200914

Company Plant 

Capacity 

(head) Co. Total 

Spectrum Meats Mount Morris, IL 1,600 

Yosemite Meats Modesto, CA 1,500 

Dakota Pork, Inc Estherville, IA 1,500 

Leidy's Souderton, PA 1,400 

Vin-Lee-Rom Mentone, IN 1,300 

Martin's Pork Products Falcon, NC 1,300 

Heritage Acres Foods Pleasant Hope, MO 1,200 

Verschoor Meats Sioux City, IA 1,200 

Olson Meat Company Orland, CA 1,000 

The Pork Company Warsaw, NC 900 

Jim's Farm Meats Atwater, CA 850 

Cloverdale Foods Minot, ND 800 

Independent Meats Twin Falls, ID 750 

Peoria Packing Chicago, IL 600 

Masami Meat Company Klammath Falls, OR 550 

Dekalb Packing Company De Kalb, IL 500 

Parks Family Meats Warsaw, NC 450 

Carleton Packing Company Carleton, OR 375 

Morris Meat Packing Morris, IL 300 

VanDeRose Farms Wellsburg, IA 250 

Dealaman Eterprises, Inc. Warren, NJ 200 

Weltin Meat Packing Minden City, MI 175 

Southern Quality Meats Pontotoc, MS 150 

Dayton Meat Co. Dayton, OR 100 

Kapowsin Meats, Inc. Graham, WA 100 

 

                                                           

14Meyer, 2009
WHOLESALE PORK PRICE REPORTING ANALYSIS 

18 | Page

Exhibit 2.3.1.2 Geographic Locations of US Barrow and Gilt Processing Plants, 200915

2.3.2 SOW AND BOAR PROCESSORS 

Sow and boar processor capacity data are listed in Exhibit 2.3.2.1. Much like barrow and gilt 

processors, any sow and boar slaughter plant with annual slaughter of more than 100,000 

head (or about 400 head per day) on average over the past five years is subjected to 

mandatory reporting of swine purchases to AMS. In addition, in the reauthorization of the 

Act in 2006, the following phrase was added to amend the definition of a swine processor 

subjected to mandatory reporting “...the term packer also includes a person that slaughtered 

an average of at least 200,000 sows, boars, or combination thereof per year during the 

immediately preceding five (5) calendar years” (Federal Register p. 28,607).16 In effect, 

what this amendment did was add to the list of swine processors required to report purchase 

prices to AMS those with several small plants that individually may not qualify under the 

original rule but when there plant slaughter was added together would qualify under the new 

rule. Sow and boar processing plants are located mostly in the Southeastern, Midwest, and 

Southern Plains states (Exhibit 2.3.2.2). 

                                                           

15 Created from data obtained through Meyer, 2009

16 Public Law 109-296 (120 Stat. 1464).
WHOLESALE PORK PRICE REPORTING ANALYSIS 

19 | Page

Exhibit 2.3.2.1 US Sow and Boar Processors and Daily Plant Slaughter Capacities, 

200917

Company Plant Capacity (head) 

Johnsonville Foods Watertown, WI 650

 Momence, IL 1,600

 Holton, KS 1,000

Pine Ridge Farms Des Moines, IA 2,850

Jimmy Dean (Sara Lee) Newburn, TN 2,800

Pork King Packing Marengo, IL 2,000

USA Pork Products* Hazellton, PA 2,000

Abbyland Foods Curtiss, WI 2,000

Bob Evans Farms Bidwell, OH 220

 Xenia, OH 330

 Hillsdale, MI 330

 Galva, Il 330

Richardson, TX 440

Odom's Sausage Little Rock, AR 1,000

Calihan Packing Company Peoria, IL 450

Pioneer Packing Company Bowling Green, OH 425

F.B. Purnell Sausage Simpsonville, KY 400

J.C. Potter Sausage Durant, OK 400

Williams Sausage Company Union City, TN 400

Swaggerty Sausage Co Kodak, TN 300

Dean Sausage Atalla, AL 250

Wampler's Sausage Lenoir City, TN 225

Southern Pride Meats Goldsboro, NC 210

Avco Gadsen, AL 205

Gunnoe Sausage Goode, VA 110

* USA Pork Products kills 80% boars, 20% butcher hogs 

 

                                                           

17Meyer, 2009
WHOLESALE PORK PRICE REPORTING ANALYSIS 

20 | Page

Exhibit 2.3.2.2 Geographic Locations of US Sow and Boar Processing Plants, 200718

Sow and Boar Reporting Sentiment 

When one discusses the pork supply chain, a clear distinction must be made between 

products originating from barrow and gilt slaughter and those from sow and boar slaughter 

facilities. The latter is largely comprised of a whole hog sausage product, while the former 

contains a full range of primal and sub-primal products that AMS uses in its calculation of 

pork cutout values. 

It was noted in multiple discussions with industry participants that nearly all meat 

transactions originating from sow and boar facilities would not be considered eligible for 

AMS reporting. In particular, the majority of these transactions are intra-firm transactions 

associated with additional processing typically in line with value-added procedures designed 

to differentiate sausage products. Survey respondents indicated a preference for AMS to 

capture sow and boar meat trade, but respondents may not be fully aware of USDA 

confidentiality regulations that we expect would result in compliance costs that would exceed 

the value of resulting price information. 

                                                           

18 Created from data obtained through Meyer, 2009
WHOLESALE PORK PRICE REPORTING ANALYSIS 

21 | Page

Based on broad industry feedback related to challenges related to capturing sow and boar 

meat trade and the general lack of interest in capturing sow and boar meat trade, this project 

focused on barrow and gilt slaughter and associated wholesale pork market. 

2.3.3 VALUE OF PORK PRIMALS 

Weekly average prices over the 2001 to October 2009 period as reported by AMS for 

individual pork primals and the calculated pork cutout are reported in Exhibits 2.3.3.1 

through 2.3.3.3. Pork prices vary considerably over time, with highest prices being 100% or 

more above the lowest prices. This reveals the magnitude of price variation firms face in the 

wholesale pork industry. Furthermore, individual primals have different price patterns over 

time. Thus, having individual price reports for each primal is important for individual 

product market information, price discovery, risk management, and formula pricing. 

Exhibit 2.3.3.1 Weekly Average AMS Reported Wholesale Pork Prices ($/cwt) for 

Processing Cuts, 2001-October 200919

 

                                                           

19 LMIC (2009)

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Ham Belly
WHOLESALE PORK PRICE REPORTING ANALYSIS 

22 | Page

Exhibit 2.3.3.2 Weekly Average AMS Reported Wholesale Pork Prices ($/cwt) for 

Retail Cuts, 2001-October 200920

Exhibit 2.3.3.3 Weekly Average Pork Carcass Cutout Prices ($/cwt), 2001-October 

200921

                                                           

20 LMIC (2009)

21 LMIC (2009)

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

Loin Butt

Picnic Rib

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200
WHOLESALE PORK PRICE REPORTING ANALYSIS 

23 | Page

2.4 COLD STORAGE STOCKS 

Pork cold storage stocks are an important component of the pork value chain (see Exhibits 

2.4.1 through 2.4.8). However, pork that is sold from cold storage stocks is not considered 

part of AMS price reporting.22 In most instances, hog processors initiate the movement of 

product from fresh into cold storage. Wholesale pork primal cold storage seasonality occurs 

within a given calendar year, reflecting seasonal hog supply and seasonal demand for 

particular primal. For example, hog production has tended to historically spike during the 

fall. Thus, hog processors may move excess pork meat into cold storage during fall months 

to balance supply spikes. Some pork products also experience significant seasonal demand 

spikes: Ham demand spikes during Thanksgiving to Christmas. Hog processors respond to 

such market signals by warehousing cold storage stocks at times of low demand, relative to 

supply (i.e. low prices). This is not to say the buyer has not already committed to purchase 

the products (forward purchase) for future delivery, but the product is withheld from the 

market until a later date. 

 

Export balancing refers to the process of building cold storage stocks of certain products in 

response to fluctuations in export. Note, pork exports, as a percent of total domestic pork 

disappearance, has increased from 6.45% in 1999 to 19.38% in 2008 (see Exhibit 2.5.1). For 

example, Butt export demand has grown substantially. But, other pork primals are not as 

popular in international markets. For instance, loins are not as favored outside the US. Thus, 

the buildup of pork loin cold storage stocks has trended up substantially over time (see 

Exhibit 2.4.3). 

The following exhibits are used to summarize historical trends and within year seasonality of 

pork meat cold storage stocks, by primal or variety meats. One can note seasonality by 

seeing the within year peaks and valleys. 

                                                           

22 AMS currently captures pork transferred to cold storage if the transaction represented the initial sale of a 

fresh product. AMS does capture frozen product trade for boxed beef and boxed lamb under mandatory price 

reporting, and such information is reported separately from fresh meat trade.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

24 | Page

Exhibit 2.4.1 Monthly Pork Belly Cold Storage Stocks, 1995-October 200923

Exhibit 2.4.2 Monthly Ham Cold Storage Stocks, 1995-October 200924

                                                           

23 USDA, NASS (Cold Storage Stocks Report)

24 USDA, NASS (Cold Storage Stocks Report)

0

20,000

40,000

60,000

80,000

100,000

120,000

(000 lbs)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

(000 lbs)

Bone-in

Boneless
WHOLESALE PORK PRICE REPORTING ANALYSIS 

25 | Page

Exhibit 2.4.3 Monthly Pork Loins Cold Storage Stocks, 1995-October 200925

Exhibit 2.4.4 Monthly Butt Cold Storage Stocks, 1995-October 200926

                                                           

25 USDA, NASS (Cold Storage Stocks Report)

26 USDA, NASS (Cold Storage Stocks Report)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

(000 lbs)

Bone-In

Boneless

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

(000 lbs)
WHOLESALE PORK PRICE REPORTING ANALYSIS 

26 | Page

Exhibit 2.4.5 Monthly Spare Ribs Cold Storage Stocks, 1995-October 200927

Exhibit 2.4.6 Monthly Bone-in Picnic Cold Storage Stocks, 1995-October 200928

                                                           

27 USDA, NASS (Cold Storage Stocks Report)

28 USDA, NASS (Cold Storage Stocks Report)

0

20,000

40,000

60,000

80,000

100,000

120,000

(000 lbs)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

(000 lbs)
WHOLESALE PORK PRICE REPORTING ANALYSIS 

27 | Page

Exhibit 2.4.7 Monthly Variety Pork Meat Cold Storage Stocks, 1995-October 200929

Exhibit 2.4.8 Monthly Pork Trimmings Cold Storage Stocks, 1995-October 200930

                                                           

29 USDA, NASS (Cold Storage Stocks Report)

30 USDA, NASS (Cold Storage Stocks Report)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

(000 lbs)

0

20,000

40,000

60,000

80,000

100,000

120,000

(000 lbs)
WHOLESALE PORK PRICE REPORTING ANALYSIS 

28 | Page

2.5 EXPORTS 

Domestic pork exports have increased both in total volume and as a percentage of production 

(Exhibit 2.5.1). In 2008, nearly 20% of U.S. pork production was marketed to foreign 

customers, compared to slightly less than seven percent in 2000.31 Major importers of U.S. 

pork are Japan, China, Mexico, and Russia (Exhibit 2.5.2). During 2008, neighboring 

countries Mexico and Canada accounted for 23.4% of U.S. pork exports (Exhibit 2.5.2). 

Pork and by-product export sales have significantly increased over the past 20 years, 

resulting in a growing contribution of pork exports to the value of live hogs (Exhibit 2.5.3). 

Of particular interest is pork exports constituting trade within North American Free Trade 

Agreement (NAFTA) countries. Exhibits 2.5.4 through 2.5.7 show U.S. pork export trends 

to Mexico, Canada, and the rest-of-the-world. These data exclude variety meats and byproducts. Pork export trade to Canada and Mexico has increased over time, but realized a 

slower volume increase than pork exports to the rest-of-the-world (Exhibit 2.5.4). A large 

portion of U.S. pork exports to the rest-of-world has been in frozen form (Exhibit 2.5.5). 

U.S. frozen pork exports to Mexico have remained constant over time but have increased for 

Canada. Prepared and preserved pork exports to Canada and Mexico have increased 

substantially (Exhibit 2.5.6). Similarly, pork cut exports in fresh/chilled state to Mexico and 

Canada have trended upward but at a much slower rate than to the rest-of-the-world (Exhibit 

2.5.7). 

Exhibit 2.5.1 U.S. Pork Export Volume and Percentage of Pork Export Volume Relative 

to U.S. Pork Production, 1999-200832

                                                           

31 USDA, FAS (WASDE)

32 USDA, FAS (WASDE)

6% 7%

8% 8% 9%

11%

13% 14% 14%

20%

0

500

1,000

1,500

2,000

2,500

3,000

0%

5%

10%

15%

20%

25%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

000 Metric Tons

Percent of US Pork Production Exported
WHOLESALE PORK PRICE REPORTING ANALYSIS 

29 | Page

Exhibit 2.5.2 U.S. Pork Exports by Country, Percentage Volume Shares, 200833

Country % of U.S. Exports 

Japan 28.4 

China (mainland) and Hong Kong 18.2 

Mexico 14.4 

Russia 9.2 

Canada 9.0 

South Korea 6.4 

Australia 2.3 

China (Taiwan) 1.2 

Other 10.8 

Exhibit 2.5.3 Value of U.S. Pork and Byproduct Exports per Head of Total U.S. 

Slaughter, 1986-200834

Year Value of Pork Value of Byproducts Total 

1986 $1.05 $0.92 $1.97 

1987 $1.59 $1.10 $2.69 

1988 $2.84 $1.62 $4.46 

1989 $3.72 $1.35 $5.07 

1990 $3.84 $1.51 $5.35 

1991 $3.79 $1.71 $5.50 

1992 $4.76 $1.66 $6.42 

1993 $5.20 $1.61 $6.81 

1994 $5.73 $1.80 $7.53 

1995 $8.79 $1.83 $10.62 

1996 $11.02 $1.82 $12.84 

1997 $11.36 $2.46 $13.82 

1998 $10.17 $2.13 $12.30 

1999 $10.86 $1.83 $12.69 

2000 $12.34 $2.00 $14.34 

2001 $14.17 $2.23 $16.40 

2002 $13.42 $2.02 $15.44 

2003 $13.80 $2.38 $16.18 

2004 $18.15 $3.38 $21.53 

2005 $22.01 $3.43 $25.44 

2006 $23.97 $3.38 $27.35 

2007 $25.21 $3.68 $28.89 

2008 $35.35 $6.59 $41.94 

                                                           

33 USDA, ERS (Hog Trade, 2009)

34 Grimes and Plain (2009c). 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

30 | Page

Exhibit 2.5.4 Annual Fresh, Chilled, and Frozen Pork Exports, by Destination, 1989-

200835

Exhibit 2.5.5 Annual Frozen Pork Exports, by Destination, 1989-200836

                                                           

35 USDA, FAS (GATS, 2009), does not include offal, variety meat, or carcasses. 36 USDA, FAS (GATS, 2009), does not include offal, variety meat, or carcasses.

0

200

400

600

800

1,000

1,200

1,400

1,600

000 Metric Tons

Canada

Mexico

Rest of World

0

100

200

300

400

500

600

700

800

000 Metric Tons

Canada

Mexico

Rest of World
WHOLESALE PORK PRICE REPORTING ANALYSIS 

31 | Page

Exhibit 2.5.6 Annual Prepared, Preserved Pork Exports, by Destination, 1989-200837

Exhibit 2.5.7 Annual Fresh/Chilled Pork Cut Exports, by Destination, 1989-200838

                                                           

37 USDA, FAS (GATS, 2009), does not include offal, variety meat, or carcasses. 38 USDA, FAS (GATS, 2009), does not include offal, variety meat, or carcasses.

0

10

20

30

40

50

60

000 Metric Tons

Canada

Mexico

Rest of World

0

50

100

150

200

250

300

350

000 Metric Tons

Canada

Mexico

Rest of World
WHOLESALE PORK PRICE REPORTING ANALYSIS 

32 | Page

CHAPTER 3: VOLUNTARY WHOLESALE PORK PRICE 

REPORTING 

3.1 OVERVIEW 

The United States Department of Agriculture Agricultural Marketing Service (AMS) is 

responsible for public price reporting in the wholesale pork market. Currently, wholesale 

pork price reporting is completed by AMS market reporters from the Des Moines, IA USDA 

offices. AMS marker reports gather information daily about wholesale pork market trade to 

develop market news reports. AMS reports are subsequently posted on public AMS 

websites. For instance, the ‘USDA NATIONAL CARLOT PORK REPORT’ is built from this 

information.39 

The process AMS follows in wholesale pork price reporting is multi-faceted. Here, we 

provide simply an overview of this process to provide a context of current practices. The 

AMS Reporters Handbook (LGMN Instruction No. 933-10) contains additional details on the 

specific procedures AMS follows. 

The data gathering process primarily reflects information being collected via phone 

conversations between AMS market reporters, hog processors, and pork buyers. 

Participation by pork sellers and buyers in these conversations is entirely voluntary. This 

information gathering process results in AMS possessing a range of variables on the 

wholesale pork market, principally including prices and quantities traded on specific pork 

products (e.g., 23-27 lb hams). 

In addition to publishing information on individual pork products, AMS calculates values for 

six major pork primals (Loin, Butt, Picnic, Sparerib, Ham, Belly)40 that are released in daily 

AMS reports. Moreover, AMS calculates a Pork Carcass Cutout from primal prices that is 

designed to reflect the value of a 53-54% lean, 200 lb hog carcass.41 The Pork Carcass 

Cutout estimate is intended to provide industry participants with a publically available 

indicator of overall supply and demand conditions in the wholesale pork market. More 

narrowly, by releasing information on specific pork primals and sub-primal products, AMS 

market news reports aim to provide specific supply and demand information on select 

components of the hog carcass being traded in the wholesale pork market. 

The current AMS wholesale pork price reporting system is focused on capturing information 

from negotiated cash market. Transactions eligible for reporting must have trade occur 

within 10 days for retail products (e.g., loins, picnics, butts, and ribs) and seven days for 

processed products (e.g., ham and bellies). Any transaction scheduled to physically occur 

beyond these 10- and seven-day windows is reported by AMS in an out-front report 

(NW_LS449).. Moreover, to be eligible for reporting, AMS has minimum load requirements 

                                                           

39 This report is available at http://www.ams.usda.gov/mnreports/nw_ls500.txt.

40 AMS also calculates values for a Primal Jowl, Hind Feet, Neck Bones, Tails, Front Feet, and Cut Loss that 

alter, albeit slightly, the ultimate calculated Composite Cutout Value.

41 For more information see “USDA Estimated Composite Pork Carcass Cutout – An Overview.” Available at: 

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRD3484991.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

33 | Page

that must be met before a price is publicly released. Minimum load requirements range from 

0.125 loads (5,000 lbs) for cushion picnics to 1.5 loads (60,000 lbs) for bone-in loins. The 

use of different minimum load requirements across products reflects variation in the volume 

of pork products in the industry as well as the proportion of trade that may be eligible for 

AMS reporting. Furthermore, transactions occurring within a given business entity (say from 

a hog packer to ham processor owned by the packer), often referred to as inter-firm or intrafirm transactions, are ineligible for AMS reporting. 

Currently, AMS reports wholesale pork prices on an FOB-Omaha basis. That is, AMS 

adjusts reported prices for transportation to standardize reports from nationally-dispersed 

transactions to reflect a common location. Furthermore, AMS precludes pork destined for 

export markets and pork trading in any form besides fresh (e.g., frozen, cured, case-ready) in 

their wholesale market reports. 

Given the voluntary nature of pork price reporting, AMS also attempts to confirm reported 

transactions by conversing with both parties of a reported transaction. The voluntary nature 

of current reporting alleviates AMS from concerns regarding confidentiality of industry 

participants in market news reports. That is not to imply that AMS discloses sources of 

pricing information, but rather they do not concern themselves with the number of firms 

reporting a single product price during a day for example. 

Currently, voluntary price reporting allows AMS reporters to adjust product attributes being 

tracked and specific products made eligible for market news reports without obtaining 

Congressional approval. For instance, as product specifications change (say weights of hams 

being traded), AMS has the ability to alter the market news reports it releases. 

Finally, it is important to note the breadth of wholesale pork price data use. Obvious uses 

include establishing a market sentiment for transacting fresh wholesale pork trade, as a base 

for formula pork trade, for establishing inter- and intra-company transfer prices, and for hog 

marketing contracts which are tied to the AMS pork cutout value. Other uses of the price 

information include Economic Research Service calculation of the farm-wholesale-retail 

price spread (Hahn, 2004), market intelligence gathering on processor margins (by hog 

producers, pork buyers, retailers, and consultants), for evaluation of policy recommendations 

(e.g., Muth et al., 2007), for structural change analysis (e.g., price-quantity relationship over 

time, Parcell, 2003; Parcell, Mintert, Plain, 2004), marketing margins (e.g., Marsh and 

Brester, 2004) or as an evaluation tool for risk management as in the case of the pork belly 

futures contract (e.g., Murphy, 2009).

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

34 | Page

3.2 AMS DATA ANALYSIS 

To determine how price reporting on individual products has changed over time, we analyzed 

daily AMS reported pork trade data from January 1, 2001 to October 23, 2009. In particular, 

we obtained historical daily wholesale pork market price and volume trade data from USDA 

AMS, similar to that currently provided in NW_LS500 reports.42

As shown in Exhibit 3.2.1 the majority (17 of 22 cuts) of the important pork cuts regularly 

tracked by AMS, had higher reported load (40,000 lbs) volumes over the 2001-2003 period 

than during the 2007-2009 period. Coupling this with the fact that U.S. pork production 

increased by about 20% from 2001 to 2009 (Exhibit 2.3.1) suggests that over time the AMS 

pork price reporting system is capturing a declining share of wholesale pork trade. Exhibits 

3.2.2 through 3.2.7 confirm this individually for different pork primals.43 Similarly, Exhibit 

3.2.8 demonstrates AMS reports reflect a declining share of wholesale pork trade at the 

carcass level. 

While analyzing average reported load volume is informative, it is also useful to consider 

volatility in reported load volume over time. The annual coefficient of variation (COV) in 

daily AMS reported load volume is reported in Exhibit 3.2.9. The COV of daily reported 

load volume is greater for 21 of the 22 wholesale pork products in the 2007-2009 period 

compared to the 2001-2003 period. For example, the coefficient of variation in daily 

reported volume for a bone-in 17 to 20 pound ham increased from 0.66% to 1.72% from 

2001-2003 to 2007-2009. Thus, average load volume reported has declined and variation in 

load count represented has increased over time. However, the key implication is that a 

smaller portion of wholesale pork trade is represented in daily AMS reports, and variation in 

how much trade is reported each day is increasing. 

Another assessment of daily transaction data at the product/cut level included an evaluation 

of how frequently AMS was unsuccessful in reporting a current day’s transaction. Prior to 

January 2006, AMS used subscripts to denote old transactions (i.e., an "a" denoted 

yesterday's value) in daily published price reports. That is, instead of having a missing price 

printed in the report, AMS filled in the blank with the most recently reported price from past 

reports. Beginning in January 2006, AMS discontinued the practice of filling in missing 

price data with previous prices and instead began leaving blanks in a daily report if no 

reportable trade was available. Exhibit 3.2.10 reflects this and summarizes the frequency for 

which a current day’s transaction was not available (i.e., frequency of non-reported trade 

days). For example, boneless picnic prices were reported by AMS on about half the days 

during 2001-2003. The patterns of change in non-reported trade days over the 2001-2009 

period varied notably across products. In particular, 12 of the 22 products experienced a 

higher frequency of non-reported trade days in the 2007-2009 period than the 2001-2003 

period. During 2007-2009, 10 of the 22 products have prices reported less than half of the 

time. During times of high market price volatility, as has been witnessed during 2007-2009, 

                                                           

42 A current example is available at: http://www.ams.usda.gov/mnreports/nw_ls500.txt.

43 The reported Exhibits here may differ from AMS estimates due to the denominator used. We use barrow and 

gilt production (carcass weight).
WHOLESALE PORK PRICE REPORTING ANALYSIS 

35 | Page

not having reported prices available for important pork products creates significant problems 

for those trying to negotiate trades. 

In addition to examining daily AMS reported pork trade data, we assessed weekly reported 

data. In particular, we used daily reported data in our assessment of individual pork cuts 

while all analyses of pork primals and cutout reports was conducted using weekly reported 

data from January 1, 2001 to July 31, 2009. Exhibits 3.2.11 and 3.2.12 summarize the 

relative contribution of individual pork primals towards the total load counts included in 

AMS weekly reports. Comparing the 2001-2003 and 2007-2009 periods, Exhibit 3.2.11 

reveals that over time loins, butts, and ribs comprise an increasing portion of total reported 

loads. In contrast, picnics, hams, bellies, and trim are providing a diminishing share of total 

reported loads. This is consistent with the more general trend of more processed products 

(e.g., hams and bellies) making up less of the reported loads and retail products (e.g., loins, 

butts, and ribs) making up more of the load volume (proportionally) over time. Moreover, 

this is consistent with the notion that valued-added enhancements to products such as hams 

may be increasingly missed (less contribution in load counts) in the reported cutout values by 

AMS. 

In addition to assessing how primals are changing in their relative contributions to AMS 

reports, it is important to investigate if current contributions towards load counts are 

consistent with the value contribution each primal makes in AMS cutout calculations. By 

comparing Exhibit 3.2.12 and 3.2.13, we observe the contributions to load volumes by loins, 

butts, and ribs are over represented and picnics, hams, and bellies are underrepresented, 

relative to their cutout value contributions. That is, the current relative volume of pork trade 

captured by AMS is higher for loins, butts, and ribs and lower for picnics, hams, and bellies. 

This trend is particularly problematic for price discovery regarding pork cutouts. For 

instance, note that hams and bellies combine to currently represent over 40% of the total 

value in AMS cutout calculations. However, during the 2007-2009 period less than 24% of 

the total pork transactions captured by AMS came from ham and belly trades. 

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

36 | Page

Exhibit 3.2.1 Average Load Volume Reported in Daily AMS Wholesale Pork Trade, 

2001-October 200944

Pork Product 2001-2003 2004-2006 2007-2009 

 Loin, Bone-in, 1/4" Trim 21#/DN-LGT 7.24 5.43 5.23 

 Loin, Bone-in, 1/8" Trm/less 21#DN-LGT 5.10 2.17 3.58 

 Loin 1⁄4" Cntrcut, Bnls Strp-On, 10-11 Rib 5-11# 2.98 2.75 3.99 

 Loin 1⁄4" Cntrcut, Bnls Strp-Off, 10-11 Rib 5-11# 4.82 5.51 5.62 

 Loin, Bnls Sirloin .75-1.5# 1.60 0.99 1.21 

 Picnic, Bnls, Fresh 72% combo 3.41 1.56 0.73 

 Butt, 1⁄4" Trim 5-10# 9.64 7.13 9.76 

 Butt, 1⁄4" Trim Steak Ready 5-10# 3.80 1.00 0.80 

 Butt, 1/8" Trim Steak Ready 5-10# 3.16 2.04 2.88 

 Sparerib, 2/bag, 3 bags PCVAC 4.25/up#-MED 1.91 1.48 2.71 

 Ham, Bone-in, Trimmed 17-20#, Trim Spec 1 3.56 1.72 0.66 

 Ham, Bone-in, Trimmed 20-23#, Trim Spec 1 8.97 5.23 2.92 

 Ham, Bone-in, Trimmed 23-27#, Trim Spec 1 8.72 6.05 4.88 

 Ham, Bnls 94-96%, 4 Muscle Group 1.58 1.11 3.35 

 Ham, Bnls 94-96%, 5 Muscle Group 2.13 0.49 1.17 

 Belly, Sdls, Skin-on, Trimmed, 12-14# 2.59 0.52 1.26 

 Belly, Sdls, Skin-on, Trimmed, 14-16# 3.61 1.12 1.75 

 Belly, Sdls, Skin-on, Trimmed, 16-18# 2.55 0.93 0.81 

 Fresh 42% combo 4.54 2.97 1.83 

 Fresh 72% combo 7.54 4.25 4.89 

 Fresh, Skinned Jowls 0.96 0.07 0.03 

 Fresh Trim,Visual Trace of Lean, 12-16% combo 0.86 0.39 0.25 

Exhibit 3.2.2 Percentage of Weekly Pork Loin Production Captured Through 

Voluntary Price Reporting, 2001 – October 200945

                                                           

44 USDA, AMS data; Constructed by Tonsor; and table reflects daily trade data through October 23, 2009.

45 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).

0%

4%

8%

12%

16%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

37 | Page

Exhibit 3.2.3 Percentage of Weekly Pork Picnic Production Captured Through 

Voluntary Price Reporting, 2001 – October 200946

Exhibit 3.2.4 Percentage of Weekly Pork Rib Production Captured Through Voluntary 

Price Reporting, 2001 – October 200947

 

                                                           

46 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).

47 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).

0%

4%

8%

12%

16%

0%

4%

8%

12%

16%

20%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

38 | Page

Exhibit 3.2.5 Percent Weekly Pork Ham Production Captured Through Voluntary 

Price Reporting48

Exhibit 3.2.6 Percentage of Weekly Pork Belly Production Captured Through 

Voluntary Price Reporting, 2001 – October 200949

 

                                                           

48 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).

49USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).is.

0%

4%

8%

12%

16%

0%

4%

8%

12%

16%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

39 | Page

Exhibit 3.2.7 Percentage of Weekly Pork Butt Production Captured Through Voluntary 

Price Reporting, 2001 – October 200950

Exhibit 3.2.8 Percentage of Weekly Pork Total Loads Production Captured Through 

Voluntary Price Reporting, 2001 – October 200951

                                                           

50 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight); and vertical axis is 

scaled to 30% to capture all data points.

51 USDA, AMS data and LMIC; denominator is barrow and gilt production (carcass weight).

0%

5%

10%

15%

20%

25%

30%

0%

4%

8%

12%

16%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

40 | Page

Exhibit 3.2.9 Coefficient of Variation in Daily AMS Wholesale Pork Load Volumes, 

2001-October 200952

Product 2001-2003 2004-2006 2007-2009 

 Loin, Bone-in, 1/4" Trim 21#/DN-LGT 0.70 0.92 0.90 

 Loin, Bone-in, 1/8" Trm/less 21#DN-LGT 0.84 1.28 0.96 

 Loin 1/4" Cntrcut, Bnls Strp-On, 10-11 Rib 5-11# 0.98 1.05 0.86 

 Loin 1/4" Cntrcut, Bnls Strp-Off, 10-11 Rib 5-11# 1.16 1.40 1.18 

 Loin, Bnls Sirloin .75-1.5# 0.84 1.15 0.91 

 Picnic, Bnls, Fresh 72% combo 0.86 1.60 2.11 

 Butt, 1/4" Trim 5-10# 0.69 0.91 0.80 

 Butt, 1/4" Trim Steak Ready 5-10# 1.01 3.13 2.77 

 Butt, 1/8" Trim Steak Ready 5-10# 0.92 1.71 1.24 

 Sparerib, 2/bag, 3 bags PCVAC 4.25/up#-MED 0.81 1.10 0.92 

 Ham, Bone-in, Trimmed 17-20#, Trim Spec 1 0.66 1.27 1.72 

 Ham, Bone-in, Trimmed 20-23#, Trim Spec 1 0.78 1.04 1.11 

 Ham, Bone-in, Trimmed 23-27#, Trim Spec 1 0.73 0.97 1.13 

 Ham, Bnls 94-96%, 4 Muscle Group 1.45 2.61 1.78 

 Ham, Bnls 94-96%, 5 Muscle Group 1.01 2.60 2.70 

 Belly, Sdls, Skin-on, Trimmed, 12-14# 0.81 2.13 1.40 

 Belly, Sdls, Skin-on, Trimmed, 14-16# 0.80 1.54 1.24 

 Belly, Sdls, Skin-on, Trimmed, 16-18# 0.83 1.55 1.99 

 Fresh 42% combo 0.70 1.23 1.35 

 Fresh 72% combo 0.76 0.99 1.11 

 Fresh, Skinned Jowls 0.88 5.10 6.01 

 Fresh Trim,Visual Trace of Lean, 12-16% combo 1.09 2.06 2.51 

                                                           

52 USDA, AMS data; Constructed by Tonsor; and table reflects daily trade data through October 23, 2009.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

41 | Page

Exhibit 3.2.10 Frequency of Days When AMS did not Report a Wholesale Pork Price, 

Selected Products, 2001- October 200953

Product 2001-2003 2004-2006 2007-2009

 Loin, Bone-in, 1/4" Trim 21#/DN-LGT 18% 26% 19% 

 Loin, Bone-in, 1/8" Trm/less 21#DN-LGT 47% 52% 28% 

 Loin 1/4" Cntrcut, Bnls Strp-On, 10-11 Rib 5-11# 28% 22% 11% 

 Loin 1/4" Cntrcut, Bnls Strp-Off, 10-11 Rib 5-11# 40% 35% 28% 

 Loin, Bnls Sirloin .75-1.5# 26% 36% 17% 

 Picnic, Bnls, Fresh 72% combo 50% 64% 77% 

 Butt, 1/4" Trim 5-10# 11% 17% 7% 

 Butt, 1/4" Trim Steak Ready 5-10# 66% 81% 79% 

 Butt, 1/8" Trim Steak Ready 5-10# 76% 68% 46% 

 Sparerib, 2/bag, 3 bags PCVAC 4.25/up#-MED 33% 33% 16% 

 Ham, Bone-in, Trimmed 17-20#, Trim Spec 1 28% 50% 67% 

 Ham, Bone-in, Trimmed 20-23#, Trim Spec 1 11% 26% 36% 

 Ham, Bone-in, Trimmed 23-27#, Trim Spec 1 11% 22% 23% 

 Ham, Bnls 94-96%, 4 Muscle Group 92% 78% 58% 

 Ham, Bnls 94-96%, 5 Muscle Group 81% 82% 74% 

 Belly, Sdls, Skin-on, Trimmed, 12-14# 56% 81% 58% 

 Belly, Sdls, Skin-on, Trimmed, 14-16# 39% 65% 47% 

 Belly, Sdls, Skin-on, Trimmed, 16-18# 54% 69% 73% 

 Fresh 42% combo 21% 41% 53% 

 Fresh 72% combo 10% 26% 33% 

 Fresh, Skinned Jowls 87% 96% 97% 

 Fresh Trim,Visual Trace of Lean, 12-16% combo 96% 77% 82% 

Exhibit 3.2.11 Summary Statistics on Relative Contributions towards Total Load 

Counts, 2001-October 200954

Loin Butt Picnic Rib Ham Belly Trim 

2001-2003 24.8% 14.5% 7.9% 3.0% 26.0% 7.8% 16.1%

2004-2006 33.1% 15.5% 8.3% 3.9% 22.0% 4.3% 13.1%

2007-2009 35.1% 17.6% 6.6% 6.5% 18.4% 5.4% 10.5%

Exhibit 3.2.12 Summary of Statistics on Relative Contributions towards Total Load 

Counts, 2001 – October 200955

Loin Butt Picnic Rib Ham Belly Trim 

Average 30.8% 15.8% 7.6% 4.3% 22.3% 5.8% 13.4%

Std. Dev. 7.3% 4.7% 2.8% 2.7% 6.9% 3.5% 4.9%

Minimum 12.8% 5.1% 1.7% 0.0% 5.3% 0.0% 2.2%

Maximum 53.0% 37.8% 18.9% 16.3% 41.9% 20.5% 28.6%

                                                           

53 USDA, AMS data; Constructed by Tonsor; and table reflects daily trade data through October 23, 2009. 

Note: This table reflects AMS using subscripts to denote "old transactions" in the 2001-2005 period and blanks, 

or no reported values to denote days without current transactions during the 2006-2009 period.

54 Constructed by Tonsor; and table reflects daily trade data through October 23, 2009.

55 Constructed by Tonsor; and table reflects daily trade data through October 23, 2009.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

42 | Page

Exhibit 3.2.13 Relative Contributions Towards Composite Cutout Value56 

Loin Butt Picnic Rib Ham Belly Other* 

25.3% 10.3% 11.1% 4.5% 25.0% 16.0% 7.7% 

* Other includes Jowl, Hind Feet, Neck Bones, Tails, Front Feet, and Cut Loss 

3.3 SUMMARY 

The United States Department of Agriculture Agricultural Marketing Service (AMS) is 

responsible for public price reporting in the wholesale pork market. Currently, wholesale 

pork price reporting is completed by AMS market reporters who gather information about 

wholesale pork market trade to develop market news reports. The current procedures 

followed by AMS include multiple requirements and specific details defining what types of 

transactions in the wholesale pork market are eligible for reporting. This chapter has 

provided an overview of these requirements. 

This chapter also discusses multiple data analyses conducted in assessing trends and possible 

issues with data resulting from the current AMS wholesale pork price reporting system. 

Since 2001, the analysis shows AMS reports are 1) capturing a declining share of total 

wholesale pork trade, 2) characterized by average load volumes represented in reports which 

are increasingly volatile, and 3) comprised disproportionally by larger volumes of retail 

products (e.g., loins, butts, and ribs) than processed products (e.g., hams & bellies) relative to 

their cutout value contributions. Each of these issues raises concerns regarding how 

representative current AMS market news reports are of actual wholesale pork market 

transactions. 

                                                           

56 For more information see “USDA Estimated Composite Pork Carcass Cutout – An Overview.” Available at: 

http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRD3484991.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

43 | Page

CHAPTER 4: MANDATORY PRICE REPORTING 

4.1 OVERVIEW OF MANDATORY PRICE REPORTING 

One alternative to consider for wholesale pork price reporting is to adopt mandatory price 

reporting similar to what is done now with wholesale boxed beef. The Livestock Mandatory 

Reporting Act of 1999 mandated reporting of prices for live cattle, boxed beef, swine 

(barrows and gilts and sows and boars), and lamb by all qualifying packers for each 

transaction. The Act did not include mandatory reporting for wholesale pork. Mandatory 

price reporting was enacted by AMS on April 2, 2001. For swine, qualifying packers 

included those slaughter plants that processed on average at least 100,000 head annually 

during the preceding five calendar years. 

September 30, 2005 the statutory authority of the 1999 Act expired. In October of 2006 the 

1999 Act was reauthorized until September 30, 2010. In the October 2006 reauthorization, 

which had its final rule published in the May 16, 2008 Federal Register, modifications were 

made to swine purchase reporting. Under the Reauthorization Act, swine processors required 

to report hog purchases were amended to also include, in addition to the previously noted 

100,000 head clause, any packing firm that slaughtered at least 200,000 sows and/or boars on 

average during the preceding five years. This clause added packers to reporting requirements 

that had several plants too small to fit under the 100,000 clause, but collectively represented 

at least 200,000 sows and boar slaughter. 

Mandatory price reporting for wholesale pork could take on a variety of forms, but if 

adopted, things learned from current mandatory price reporting systems are certainly 

valuable. This chapter summarizes aspects of mandatory price reporting and provides 

information relevant for consideration of a mandatory price reporting system in pork 

wholesale markets. However, the most valuable outcome of this research project was a clear 

message that simply mandating wholesale pork price reporting is unlikely to address many of 

the most important limitations and concerns with current wholesale pork price reporting. The 

main point here is that mandatory wholesale pork pricing needs to be considered within a 

much broader framework of overall challenges and needs for enhanced wholesale pork price 

reporting. Chapter 5 contains specific discussion of these additional considerations. 

4.2. REVIEW OF SELECTED MANDATORY PRICE REPORTING LITERATURE 

The economics literature contains many articles discussing issues of price discovery and 

determination, assessing the value of public information to market participants, and 

examining impacts of mandatory price reporting systems in commodity markets. This short 

literature review highlights this work to a) provide context for the general discussion of price 

discovery and information value in the wholesale pork market and b) note the range of 

potential impacts mandating wholesale pork price reporting could have. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

44 | Page

Price Discovery vs. Price Determination 

Any discussion involving the accuracy or representativeness of commodity price markets 

must contain a clear distinction between price discovery and price determination (Tomek and 

Robinson, 2003). Price levels are determined by the interaction of market demand and 

supply. Accordingly, as market demand and supply change, equilibrium prices adjust. 

Conversely, price discovery reflects the span of individual transactions that occur in a 

market. 

Price discovery is inherently imprecise because neither buying nor selling parties ever have 

complete and precise information on all factors influencing demand and supply. This 

imprecision can develop as a result of no access to this information as well as the fact that 

collecting such information is costly. Schroeder and Mintert (1999) depict this by explaining 

how imperfect information leads to a range of individual transaction prices occurring around 

the market prevailing price. Stated differently, supply and demand factors determine market 

price and incomplete information leads individual transactions in a market to deviate from 

the market price. As uncertainty increases among market participants regarding actual 

supply and demand characteristics, the deviations between individual transaction prices and 

market prices will increase. Accordingly, the extent of these deviations can be evaluated to 

assess the effectiveness of price discovery in a given market (Devine and Marion, 1979; 

Stigler, 1961). 

In the context of evaluating wholesale pork price reporting systems, this difference between 

price discovery and determination must also be noted. In particular, the role of a public price 

reporting system is first and foremost to aid price discovery. As noted above, this differs 

from improving the price determination process to aid one party or another. This 

clarification must be cleanly made in any discussion assessing the current AMS system or 

any future system of wholesale pork price reporting. 

Value of Public Market Information 

Easily accessible and accurate market information can serve two functions (Perry et al., 

2005). Market information may speed up the process for identifying prices equating demand 

and supply, as better information about prices paid in similar transactions leads to faster 

convergence of market-clearing prices. Moreover, accurate, reliable market information 

reduces risk and pricing errors, or pricing inaccuracy. Secondly, easily accessible and 

accurate market price information provides important market signals, such as value 

differences, regional price differences, and quantities available to buyers and sellers, which 

guide subsequent production decisions, giving producers incentives to produce what buyers 

want. 

The ability of any market to function efficiently with respect to pricing depends in large part 

on the information available to market participants. Grossman and Stiglitz (1980) note that 

prices cannot perfectly reflect all available information, since search costs of obtaining 

information are costly. Furthermore, an increase in the quality of information or a reduction 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

45 | Page

in the cost of obtaining this information will increase the informational content of prices and 

hence their value to market participants. 

Devine and Marion (1979) found that disseminating accurate retail price information reduced 

price dispersion among items at competing grocery stores and reduced the average price level 

in the market. Irwin (1996) found public situation and outlook information leads to increased 

social welfare by increasing the speed of convergence to equilibrium. 

As noted by Carter and Galopin (1993), in agricultural markets, government reports 

traditionally have been the main source of market information. While market alternatives to 

government reporting exist, these alternatives may not have the same informational content 

as government reports. Moreover, there is evidence that government reports impact hog 

markets. For instance, Colling, Irwin, and Zulauf (1997) found that nearby pork belly and 

live hog futures prices responded significantly to the U.S. Department of Agriculture's "Cold 

Storage Report." Colling and Irwin (1990) note that USDA's "Hogs and Pigs Reports" 

impact live hog futures market. 

Mandatory Price Reporting 

The preceding paragraphs highlight multiple articles suggesting the value of publically 

available information to agricultural markets. It is hardly surprising then that as marketing 

practices in U.S. livestock markets have evolved increasingly away from spot, cash market 

transactions that some market participants have suggested mandating collection and release 

of price transaction data. This desire ultimately resulted in the Livestock Mandatory 

Reporting (LMR) Act of 1999, which requires major meatpackers to report all transactions 

covering hog, cattle, and lamb purchases and commitments to the USDA. In research 

preceding and following this Act, the broader effects of mandatory price reporting (MPR) 

have been evaluated, including issues such as possible market power impacts (Njoroge et al., 

2007), livestock producer perceptions (e.g., Grunewald, Schroeder, and Ward, 2004), impacts 

on live cattle market integration (e.g., Pendell and Schroeder, 2006), and basic benefits that 

MPR may provide. 

One frequently made assertion is that under voluntary reporting systems, market participants 

may be selective in what and when they report. This issue was investigated by Koontz 

(1999) in a comparison of cattle feeding closeout information and voluntarily reported AMS 

prices between 1986 and 1993. Results indicate that selective reporting characterized the 

examined market. Koontz notes that this may be used to support arguments for mandatory 

price reporting but warns of several issues with implementing a mandatory system. 

Another notion in discussions comparing voluntary and mandatory price systems is the 

representativeness of prices captured in a voluntary system. Two analyses have examined 

this issue by evaluating how different levels of information provision impact variance of 

prices. In an experiment utilizing Oklahoma State University's Fed Cattle Market Simulator, 

Anderson et al. (1998) found that reducing information available to market participants 

increased price variance and decreased market efficiency. This suggests that by providing 

additional information, possibly through imposing MPR, the variance of market prices may 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

46 | Page

be reduced and hence market efficiency enhanced. Conversely, in another experimental 

study, Nelson and Turner (1995) found no impacts on price variance when market 

participants were provided with less information. Anderson et al. (1998) carefully note that 

looking only at price-level impacts, it is impossible to determine which sector of an industry 

stands to gain or lose the most from changes in available market information. Accordingly, 

the authors suggest rather than focusing on who stands to gain or lose from reduced public 

information, the impacts on price variance should be focused on, as this influences the 

competitiveness of an entire industry. 

Grunewald, Schroeder, and Ward (2004) provide the only known evaluation of livestock 

producer sentiments regarding mandatory price reporting. In particular, they surveyed cattle 

feeders to assess their opinions regarding MPR. Producers were largely disappointed with 

what MPR accomplished. The authors attribute this finding to likely unrealistic expectations 

of cattle feeders. In the context of wholesale pork price reporting, this study would suggest 

that pork producers supporting a switch from voluntary to mandatory price reporting of pork 

transactions may too be disappointed. 

Another obvious question to assess is what the impacts are in situations where mandatory 

price reporting has been adopted. Njoroge et al. (2007) assessed the social welfare impacts 

of MPR taking account of market structure impacts. They conclude that even if additional 

information provided by MPR leads to market collusion, it can still enhance overall social 

welfare. This is consistent with the Anderson et al. (1998) that reducing price variance in a 

market can increase the competiveness of an entire industry and yet have different impacts on 

individual industry segments. Devine and Marion (1979) found that increasing market 

information resulted in market shares of grocery stores altering such that the four-firm 

concentration ratio increased. The authors accordingly note that over the longer term similar 

change in market structure may be more important than immediate impacts on price 

discovery under the current market structure. 

Two studies have directly examined impacts of MPR in U.S. livestock markets. Pendell and 

Schroeder (2006) evaluated the impact of MPR on five regional fed cattle markets. MPR 

increased integration of these markets, though markets were integrated prior to MPR. That 

is, following enactment of MPR, fed cattle markets prices moved more closely together. The 

authors provide a couple possible explanations for this finding. The information content of 

price information or the associated trust of market participants may have improved with 

MPR. This is consistent with the notion of Tomek (1980) that the amount or quality of 

information in a public report may not be equal for all transactions (or sources). In an 

analysis of the U.S. lamb market, Marsh and McDonnell (2006) found the switch to MPR in 

lamb markets to have reduced lamb carcass price risk. Future work evaluating the impacts 

on wholesale beef market integration before and after the imposition of MRP would be 

particularly informative in this analysis of wholesale pork price reporting; unfortunately we 

are unaware of a published analysis that is available at this time. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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4.3 WELFARE ASSESSMENT 

Welfare Effects of price reporting have been previously examined (see Albaek, Mollgaard, 

and Overagaard, 1997 and Spence, 1978) and applied to the livestock industry by Njoroge, 

Yiannaka, Giannakas, and Azzam, 2007 (denoted by NYGA (2007) from here forward), with 

application to the beef industry in relation to livestock mandatory price reporting. NYGA 

(2007) pointed to the fact that while there is a risk reduction mechanism attached to 

increasing market liquidity, there is also a collusive opportunity. The risk reduction 

component relates to the reduction in uncertainty from access to more information. 

Anderson et al. (1998) and Bastian, Koontz, and Menkhaus (2001) each showed, through 

simulated trading, the reduction in price variance with the provision of greater information.57

Njoroge (2003) noted that prior to implementation of mandatory price reporting, packers 

have divergent priors with respect to meat prices. Whereas after implementation of 

mandatory price reporting, packers may have convergent posteriors with respect to updating 

their prior after factoring in the publicly available information. Njorge argued that it is 

easier for firms to monitor each other’s deviations from a (indirect) collusive agreement.58 

Azam and Salvador (2004) expressed the same concern with mandatory livestock price 

reporting. 

NYGA (2007) analyzed the mixed welfare effects with both the risk effect dominating the 

collusive effect and vice versa. They concluded that even in the presence of collusive 

behavior the net welfare effects are positive, i.e., the positive benefits of risk reduction 

outweigh any negative effects from collusive behavior. 

For convenience only, the situation of the risk effect dominating the collusive effect is shown 

as Exhibit 4.3.1 Figures (A) and (B), which shows the derivation of total economic surplus. 

Figure (A) shows consumer surplus, producer surplus, and hog processor profits. Figure (B) 

captures the collusive behavior effect and total economic surplus. Figures (A) and (B) 

capture increased price transparency, change in hog procurement levels (Q), change in 

livestock price (W), and change in consumer price (P). Variable Cu represents the cost of 

uncertainty. ME and AE represent the marginal and average expenditures by the packer, 

inclusive of uncertainty. Note, SL is the supply of livestock. 

Increased price transparency leads to a clockwise movement of both the ME and AE curves 

(to ME’’ and AE’). Note that ME’’ in Figure (A) is leftward of ME’ in Figure (B) because of 

the collusive effect. In summary, the number of animals procured increases (Q to Q’), 

consumer prices drop (P to P’), and packer costs for procuring livestock drop (W + Cu to W + 

                                                           

57 Armstrong (1985), Armstrong and Brodie (1999), and Armstrong, Brodie, and McIntryre (1987) report on the 

firm level value of an increase in price validity, i.e, through an increase in forecasting accuracy. Armstrong 

(1985) noted that increased forecasting accuracy allows for better decision making related to strategic planning, 

plant operations, and a reduction in transaction costs (i.e., easier to arrive at decisions). 58 Njoroge (2003) used the term ‘tacitly’ to explain this collusive agreement. In simplified terms this refers to 

the ability for each firm to monitor the other’s price movement by observing the publically available 

information (in aggregate). Thus, in theory a firm would not want to be the first to adjust prices (based on their 

internal projections) until the market is observed to move, i.e., no one firm wishes to set a non-advantageous 

market price.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

48 | Page

Cu’). Total economic surplus is denoted by the grey shaded area in Figure (B). The grey 

area indicates a positive net gain to society through mandatory price reporting. From Figure 

(A) a producer surplus increase is represented by the area W’fgW, a consumer surplus 

increase is represented by the area PabP’, and a increase in packer profits is represented by 

cbe(W+ Cu’)(W+ Cu)d-PacP’. 

4.4 SUMMARY 

This chapter summarizes aspects of mandatory price reporting and provides information 

relevant for consideration of a mandatory price reporting system in pork wholesale markets. 

The take-home point of this chapter is that mandatory wholesale pork pricing needs to be 

considered as a potential component of a larger framework of strategies and options for 

improving wholesale pork price reporting. That is, ceteris paribus, simply mandating 

wholesale pork price reporting is unlikely to address many of the most important limitations 

and concerns with current wholesale pork price reporting. Accordingly, Chapter 5 picks this 

issue up and discusses these possible adjustments. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

 Exhibit 4.3.1 Graphical Depiction of Economic Surplus and Welfare Benefits from Adoption of MandatoAccounting for Increased Price Transparency and Potential for Packer Collusive Behavior (recreated from 2007) 

(A) (B) 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

50 | Page

CHAPTER 5: ASSESSMENT OF REPORTING PROCEDURES 

As noted in 1.3., we utilized a series of phone interviews, face-to-face discussions, and 

industry written surveys to collect a comprehensive set of insights and suggestions from 

entities largely comprising the hog-pork industry. The findings of this exercise regarding 

industry sentiment involving the current wholesale pork price reporting system and possible 

methods for improving the system are highlighted in 5.1 and 5.2, respectively, and 

summarized in Exhibit 5.2.6. 

5.1 INDUSTRY PERSPECTIVES - CURRENT WHOLESALE PORK PRICE 

REPORTING 

Perhaps the most common sentiment of industry stakeholders we conversed with is that the 

current wholesale pork price reporting system is not representative of overall supply and 

demand conditions in the marketplace. For instance, when asked about current USDA 

market news pork price reporting, 82%, 80%, and 70% of pork buyer survey respondents 

disagreed that daily individual cut prices, daily primal prices, and daily cutout prices are 

representative of trade, respectively (Exhibit 5.2.1).59 This discontent with current price 

reporting is associated with several wholesale pork market characteristics routinely noted as 

challenges in any attempt at price reporting: 

 Heavy dependence on formula priced transactions based upon a diminishing 

negotiated market, 

 Ever increasing heterogeneity in products including specifications, enhancements, 

and case ready attributes, 

 High frequency of intra-company transfers, packer-to-packer transfer and other 

transactions not considered “negotiated cash” trades, 

 The timing of industry pork trade has changed over time with an increasing share 

occurring at points more than two weeks into the future, 

 Changing prominence of export market importance in pork trade 

The net effect of changing pork market characteristics is that a low proportion of pork trade 

is even eligible for AMS reporting. Surveyed pork buyers indicated that less than one-fourth 

of their purchases are negotiated cash trades for delivery 0-10 days forward (Exhibit 5.2.5).60 

As noted in 4.2, a drawback of voluntary price reporting systems is the possibility of 

selective reporting. In our discussions, many industry representatives voiced concerns about 

selective reporting in current wholesale pork price reporting. For instance, several 

discussions revealed a perception that if an entity has 10 transactions that may meet current 

AMS qualifications to be included in their market news reports, only eight would actually be 

reported to AMS. These eight transactions may be actual transactions and be reported 

accurately, but the fact that not all 10 transactions are reported may be problematic. This 

                                                           

59 Only 30% of survey respondents, about one-half of those interviewed through phone conference calls, 

indicated instances where their firm confirmed trades with USDA. Note, those responding to the survey or 

interviewed answered questions to the best of their knowledge. Others within their firm may have been 

involved with confirming trades. 60 See Lawrence et al. (2007) transaction details they found.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

51 | Page

concern is further exacerbated by the industry’s heavy use of top-side pricing in formula pork 

trade that makes it more sensitive to partial reporting than an industry solely utilizing 

weighted-average based formulas. While these concerns with selective reporting are 

important, one must also carefully note several industry participants expressed views that 

rather than selective reporting being the core issue, the critical issue driving low reported 

trade volumes is that pork trades routinely do not fit AMS reporting eligibility requirements. 

The industry also revealed concern with how AMS currently calculates published prices. In 

particular, several examples were shared suggesting that on a given day both bone-in and 

boneless ham reported prices may increase, but the reported ham cutout value could 

decrease. While this seems counterintuitive, this may be possible in cases of large changes in 

relative reported load volumes between bone-in and boneless hams that collectively influence 

a volume weighted average ham primal calculation. 

Given noted concerns, a relevant question to ask is if current AMS wholesale pork price 

reports are being utilized? Overwhelmingly, industry representatives indicated routinely 

using AMS pork market news reports. Evidence of this is summarized in Exhibit 5.1.2 

showing over 70% of pork buyer survey respondents indicated regular use of daily cutout, 

primal, and individual cut values. Many industry participants noted substantial use of AMS 

prices on particular pork cuts as a base in formula trades comprising a larger portion of total 

pork trade. However, in each discussion of formula trades based upon AMS prices, industry 

indicated that when a particular price is not reported (indicating AMS did not have a current 

day, reportable transaction), the most recently reported price is used in the transaction. 

Moreover, this was noted as a common event and for such formula derived prices to remain 

static because a more recent price has not been reported from AMS. 

Additional value and use of AMS prices was noted as some pork industry members utilize 

AMS prices to set internal prices within their company. While this reiterates the importance 

of AMS prices to industry, it also notes the caution necessary in any consideration of 

including inter-firm transactions in AMS price reporting systems. Moreover, the pork 

industry uses AMS price reports to gauge their firm’s performance. For instance it was noted 

as a common practice to have performance of individual staff (management and sales 

personnel) compared to market news released by AMS. 

Use of AMS prices was also emphasized when discussing industry practices of smaller 

market participants. In particular, some smaller industry players utilize AMS price reports 

because they lack the internal data analysis capabilities of larger entities. Similarly, a couple 

phone interviews indicated smaller hog packers and pork buyers are more likely to negotiate 

directly from AMS price reports as they lack the necessary trade volume to negotiate through 

other channels. Combined, these points suggests that the relative value of AMS price 

information on a per head basis is likely larger for smaller hog packers and pork buyers. 

 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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5.2 INDUSTRY PERSPECTIVES - POSSIBLE IMPROVEMENTS TO 

WHOLESALE PORK PRICE REPORTING 

Given the discussion in 5.1, it is hardly surprising that nearly all dialogue with industry 

included suggestions for improving pork price reporting. Among these suggestions, those 

with the most frequently noted support include: 

 Add pork destined for Canada or Mexico, 

 Extend the window by about one more week for product included the negotiated time 

window, 

 Add pumped and other enhanced products for which acceptable conversions can be made 

by AMS 

Similarly, there was a general consensus that the following exclusions from future pork price 

reporting should remain in place: 

 Export pork destined for countries besides Canada and Mexico, 

 Case-ready products, 

 All inter- or intra-firm transactions, 

The issue of including export destined pork in AMS pork price reporting system generated a 

range of comments from industry. Some of the industry's large volume players indicated that 

up to 30% of their products are export destined and that capturing that volume should be 

considered by AMS. In particular, there was more support than contention with the notion of 

including pork destined for Canada or Mexico into AMS reports (Exhibit 5.2.1). In general, 

industry indicated that these transactions are similar to those occurring in domestic markets 

and their inclusion would be valid. Conversely, there was hesitation against including pork 

destined for non-North American markets in domestic prices reports as product 

specifications, shipping transaction costs, international trade disputes, etc. are larger issues 

with these markets. 

Exhibit 5.2.3 indicates when asked about the most appropriate time window to consider as 

the “negotiated cash” market, pork buyer survey respondents most frequently indicate 0-21 

days forward as the preferred window width. In fact, for each primal, 20% or less 

respondents most frequently indicate 0-7 or 0-10 days forward as the preferred window 

width. More generally, our discussions with industry suggested a general desire to increase 

the window to either a 0-17 day or 0-21 day width. 

Given the recent experience of the beef industry in switching from voluntary to mandatory 

price reporting and the fact many pork industry players are also participants in the beef 

industry, each discussion of improving wholesale pork price reporting includes comments on 

the possible implementation of a mandatory system. It is important to note that in most of 

these discussions, industry sentiment was that most practical and valuable adjustments could 

be made to improve price reporting in either a mandatory price reporting system or an 

adjusted system that remains voluntary. This is a critical point highlighting one of this 

study’s main findings: simply mandating pork price reporting will not likely remedy issues 

with the current price reporting system. Rather adjustments in what is included and eligible 

for price reporting must be carefully considered and implemented. That is, simply mandating 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

53 | Page

a price reporting system will not change core market characteristics or definitions of eligible 

transactions. For instance, under the current price reporting system package deals, where one 

product is a loss leader under agreement of premiums on other products, are not captured. 

However, simply mandating price reporting would not address this issue without specific 

attention to “unbundling” such transactions. 

 

While most industry participants do not believe simply mandating the current price reporting 

system will resolve the concerns, we also fielded multiple comments such as “mandatory 

price reporting worked for beef price discovery, why not for pork?” and "nothing else has 

worked, why not try mandatory?” Moreover, when asked about mandating pork price 

reporting, 90%, and 80% of pork buyer survey respondents supported mandatory pork price 

reporting for packers that already are mandated to report barrow and gilt prices and sow 

prices, respectively (Exhibit 5.2.1). Accordingly, while the industry generally does not think 

a mandatory system without additional adjustments in procedures is sufficient, there is 

support particularly from pork buyers to implement a mandatory system. 

It was noted that a switch to mandatory price reporting has the potential of providing larger 

packers and meat buyers with relatively more information as they possess an advantage in 

their capacity to analyze resulting data. This is noteworthy as a commonly stated argument 

of those in favor of mandating pork price reporting is to improve information for hog 

producers. However, if packers and meat buyers possess an advantage in data analytic 

abilities, even without exerting any potential market power, the possible provision of 

additional information to the pork industry may enhance the welfare of non-producers more 

than producers. 

Industry interviews also suggest pork packers with experience in the beef packing sector will 

likely have an advantage in implementing a possible mandatory price reporting system. The 

intellectual learning curve associated with beef will be invaluable in the pork industry and the 

marginal costs of “data dumps” are likely lower due to prior investments. 

A concern with implementing a mandatory wholesale pork price reporting system is the 

impact a 3/70/20 confidentiality clause, similar to that characterizing mandatory beef price 

reporting, would have on the frequency of eligible transactions for reporting. Most industry 

personnel suggested that the exact impacts (i.e. exclusion of select products from AMS 

reporting) cannot be assessed until full “data dumps” of all eligible industry transactions are 

made and a thorough data analysis is conducted. However, most discussions indicated that 

the frequency of 3/70/20 being binding would be likely low and that the “net gain” of volume 

in a mandatory price reporting system would probably be positive. In the event 

confidentiality clauses routinely prohibited reporting on some products, the industry was 

generally supportive of using a multi-day rolling average (similar to lamb reporting). 

Currently, for voluntary price reporting, AMS reports wholesale pork prices on an FOBOmaha basis. That is, AMS adjusts reported FOB packing plant prices for transportation to 

standardize prices from nationally-dispersed transactions to reflect a common location. This 

practice differs from that of mandatory beef price reporting where FOB packing plant prices 

are reported. This difference is noteworthy as the beef industry has packing plants largely 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

54 | Page

residing in a common geographic region while the pork industry has packing plants both in 

the Midwest and Eastern Seaboard, where location differences are highly associated with 

ownership differences (see Exhibit 2.3.1.2). Accordingly, an FOB plant approach in 

wholesale pork price reporting may unintentionally reveal more specific information about a 

particular entity. This is one of a few examples where simply "implementing procedures 

similar to beef mandatory price reporting" warrants careful thought. 

Pork industry representatives expressed some concern with the transportation discrepancy 

between pork packers, relative to Eastern Seaboard Markets. But in general, industry 

representatives supported wholesale pork price reporting using an FOB packing plant basis 

rather than the currently used FOB Omaha basis. 

Exhibit 5.2.1 Summary of Survey Pork Buyer Perceptions and Preferences61

Agree Neutral Disagree

Daily individual cut prices are representative of trade 9% 9% 82% 

Daily primal prices are representative of trade 20% 0% 80% 

Daily cutout prices are representative of trade 30% 0% 70% 

Trade volume represented in pork price reports is adequate 0% 10% 90% 

We favor continued voluntary as opposed to mandatory pork price 

reporting 

0% 0% 100% 

We favor mandatory pork price reporting for packers that already are 

mandated to report barrow and gilt prices 

90% 10% 0% 

We favor mandatory pork price reporting for packers that already are 

mandated to report sow prices 

80% 10% 10% 

Canada and Mexico pork export prices should be incorporated into 

pork price reports 

70% 10% 20% 

Rest of World (other than Canada and Mexico) pork export prices 

should be incorporated into pork price reports 

50% 20% 30% 

Value-added pork products should be incorporated into pork price 

reports 

60% 30% 10% 

There is value in having access to domestic transaction volume 

information, even without any price information 

33% 22% 44% 

There is value in having access to export transaction volume 

information, even without any price information 

44% 44% 11% 

USDA should reduce truck load volume requirements for pork price 

reporting 

10% 60% 30% 

USDA should increase truck load volume requirements for pork price 

reporting 

10% 50% 40% 

USDA should report formula price transactions 56% 11% 33% 

USDA should report sow meat negotiated cash transactions 70% 10% 20% 

                                                           

61 Number of observations is equal to eleven. However, the number of observations must be considered relative 

to the population and size of the industry. We will not provide an estimate of the % of pork purchases 

represented by survey respondents due to confidentiality.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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Exhibit 5.2.2 USDA Market News Pork Price Reported Values do you Regularly Use? 

(Percent Indicated Yes) 62

Exhibit 5.2.3 For the Following Primal, or Cuts from that Primal, What is the Most 

Appropriate Time Window to Consider as the “Negotiated Cash” Market? 63 

 0-7 days 

forward 

0-10 days 

forward 

0-14 days 

forward 

0-21 days 

forward 

0-28 days 

forward 

Loin 10% 10% 20% 60% 0% 

Butt 10% 10% 20% 60% 0% 

Picnic 10% 10% 20% 60% 0% 

Rib 10% 10% 20% 50% 10% 

Ham 10% 10% 20% 40% 20% 

Bellies 10% 0% 20% 50% 20% 

                                                           

62 Number of observations is equal to eleven. However, the number of observations must be considered relative 

to the population and size of the industry. We will not provide an estimate of the % of pork purchases 

represented by survey respondents due to confidentiality.

63 Number of observations is equal to eleven. However, the number of observations must be considered relative 

to the population and size of the industry. We will not provide an estimate of the % of pork purchases 

represented by survey respondents due to confidentiality.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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Exhibit 5.2.4 For the Following Primal, or Cuts from that Primal, What Percentage of 

Your Operations’ Purchases are Typically Value Added or Enhanced? 6465

Exhibit 5.2.5 For the Following Primal, or Cuts from that Primal, What Percentage of 

Your Operations’ Purchases are Priced Using the Negotiated Cash Market? 

                                                           

64 Number of observations is equal to eleven. However, the number of observations must be considered relative 

to the population and size of the industry. We will not provide an estimate of the % of pork purchases 

represented by survey respondents due to confidentiality. 

65 Percentage computed as percentage of respondents. A question was also asked relative to pre-cooked. 

Respondents only answered for Ham and Belly, most respondents answered similarly between pre-cooked and 

cured/smoked. Thus, the pre-cooked category was dropped. 

Loin Butt Picnic Rib Ham Bellies

Fresh 100% 100% 100% 59% 86% 60%

Pre-cooked 0.00% 1.25% 0.00% 2.00% 77.60% 66.33%

Cured or 

smoked 2% 2% 7% 4% 94% 99%

0%

20%

40%

60%

80%

100%

0%

5%

10%

15%

20%

25%
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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Exhibit 5.2.6 Summary of Industry Sentiment Related to Mandatory Pork Price 

Reporting 

Topic Summary 

General feeling Pork Buyers - Supportive / Pork Packers - Willing 

Confidentiality requirement Likely not an issue; multi-day rolling average 

would be acceptable 

Intra- and Inter-company transfers Exclude from reports 

Price location (FOB plant) FOB Plant is fine, be consistent with beef MPR 

Delivery period for negotiated prices Extend period to 0-17 or 0-21 days 

Forward pricing Capture, report separately up to 90 days out 

Enhanced/pumped/value added Capture, if there is transparency of conversions 

Destination (export) Include North America, exclude everything else 

Volume requirements Keep current load minimums 

5.3 INCREASING PRICE REPORTING FREQUENCY

This section is provided to list various methods for analyzing liquidity issues and potential 

steps for increasing liquidity. The alternatives range from “what-if” of capturing adequate 

trade volume, implications related to altering price reporting specifications, and 

methodologies for capturing additional trade through product conversion, e.g., hedonic 

modeling. 

5.3.1 ANALYZING MARKET LIQUIDITY 

The concept of market price transparency has been tied to the quantity of trades that are used 

to derive market price, or price range, for a given market. The use of the term “thin market” 

is used to describe markets for which reliability of a supply and demand determined price is 

questioned due to an insufficient number of transactions. (Hayenga et al., 1979, Tomek, 

1980, and Nelson and Turner, 1995). 

The concern over a thin market is limited to a market trade where there is concern that the 

quantity of reported market transactions is sufficiently small relative to the broader regional 

or national market size, such that the reported market price is not reflective of general market 

price levels or price changes. 

Tomek (1980) suggested the use of a common statistical measure, Chebychev’s inequality, as 

a non-stochastic measure of reliability of an existing price series. Chebychev’s inequality 

allows for the calculation of a desired number of observations to obtain a given level of 

expected price reliability. This computed number of observations, which represents the 

expected number of observations from Chebychev’s inequality, can then be compared to the 

actual quantity of trade reported to assess the sufficiency, or insufficiency, of the transactions 

currently deriving reported AMS market prices. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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As Chebychev’s inequality is a basic statistical measure, from which countless other 

statistical tests are derived, the simplicity yet power of Chebychev’s inequality is appealing.66

Chebychev’s inequality is the statistical measure used to arrive at the reliability of an 

estimate. For example, the margin of error reported for presidential approval ratings may be 

based on Chebychev’s inequality. Chebychev’s inequality allows for the computation of the 

probability of an event occurring, given an acceptable margin of error and variability in the 

desired data. The inequality can be re-arranged to arrive at the desired margin of error or 

optimal number of observations. 

For the current analysis the desire lies with determining the number of observations 

necessary to yield a certain level of confidence with reported price data. A couple of 

assumptions must be made. First, the probability of the price series reliability must be set. 

Second, the size of the margin of error must be established. Price variability is derived from 

historical data. 

In this study, a Chebychev’s inequality analysis was applied to each primal cut, wholesale 

pork cutout, and the live hog price using data on week-to-week price changes and associated 

load volumes. Therefore, the margin of error factor refers to the acceptable level of week-toweek price changes. Arbitrarily, the probability of reliability was set at 90%. Steps taken in 

the analysis include (see Exhibit 5.3.2): 

1) The average weekly load count was computed for each year. 

2) The variation in week-to-week AMS reported prices was computed for each year. 

3) The probability of reliance was set at 90%. 

4) The value of the desired margin of error was set to four separate levels ($0.25, $0.50, 

$0.75, and $1 per pound) for each primal and four separate levels ($0.05, $0.10, $0.25, 

and $0.50 per pound) for the wholesale cutout and live hog price.67

 

                                                           

66 Chebeychev’s inequality can be expressed as: ܲሺെܿ ൑ ݔ ௡െܯ൑ܿሻ ൒1െ ఙమ

௡௖మ, where P is probability 

operator, X and M represents the mean and deviation from the mean, c represents the desired margin of error, σ2

is the variance of the data series, and n is the number of observations. Rearranging Chebychev’s inequality, the 

approximate optimal number of observations ݊ ൎ ఙ೙

మ

ሺଵି௉ሻ௖మ for a given probability (P), known variance (σ2

) and 

desired margin of error (c).

58 The live hog price was included in the analysis to provide an approximation of difference between prices 

collected through mandatory price reporting versus primal and wholesale cut prices collected through voluntary 

price reporting.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

59 | Page

Observations from analysis using Chebychev’s inequality:

a) Week-to-week price variation has increased over time for each pork primal 

price series 

• Loin: Price variation inconsistency is partially offset by the relative large load count 

• Butt: The inconsistency of the price variation is unknown, but troublesome 

• Picnic: Price variation has held relatively constant over time 

• Rib: Significant price variation reflects product heterogeneity and small trade 

• Ham: Price variation has increased 3x over the past eight years 

• Bellies: Significant price variation reflects product heterogeneity and small trade 

b) Average weekly load counts vary by pork primal 

c) For the live hog price series, considerable reliability persists in the price data 

over time 

• Avg. weekly head count is approximately 3.5 to 4x that required 

d) For the pork carcass cutout, an additional 4x the current average weekly load count 

would decrease the margin of error by over 50%, for a desired predictability level of 

90% 

• The pork cutout represents approximately 5% to 6% of total cutout trade 

e) For primal trade, considerable additional trade must be captured to add significant 

reliability 

• Loin: 2x to 3x current load count is needed to add sufficient reliability 

• Butt: 4x to 5x current load count is needed to add sufficient reliability 

• Picnic: 8x to 10x current load count is needed to add sufficient reliability 

• Rib: 15x to 18x current load count is needed to add sufficient reliability 

• Ham: 5x to 7x current load count is needed to add sufficient reliability 

• Bellies: 20x to 24x current load count is needed to add sufficient reliability 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 5.3.1.1 Summary of Statistically Inferred Load Counts Based on Chosen Level of Accuracy 

Primal 

Average Weekly 

Load Count 

Average Variance of Weekto-Week Price Difference Estimated Loads from Chebychev's (P = 0

$0.25 $0.50 $0

Loin

2001 95 $12.56 2,010 502 22002 100 $8.88 1,420 355 2003 100 $19.09 3,054 763 32004 112 $20.30 3,248 812 32005 104 $10.88 1,741 435 2006 97 $9.65 1,544 386 2007 118 $10.16 1,625 406 2008 125 $14.54 2,326 581 22009 153 $12.94 2,070 517 2

Butt

2001 56 $22.50 3,600 900 42002 60 $14.70 2,352 588 22003 56 $22.58 3,613 903 42004 59 $19.16 3,065 766 32005 45 $4.69 751 188 2006 43 $6.73 1,076 269 2007 59 $6.21 993 248 2008 63 $15.07 2,412 603 22009 81 $18.32 2,931 733 3
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 5.3.1.1(cont) Summary of Statistically Inferred Load Counts Based on Level of Accuracy 

Primal 

Average Weekly 

Load Count 

Average Variance of Weekto-Week Price Difference Estimated Loads from Chebychev's (P = 

$0.25 $0.50 $0

Picnic

2001 33 $3.40 544 136 2002 31 $2.47 440 110 2003 28 $4.12 491 123 2004 28 $3.06 639 160 2005 23 $4.24 499 125 2006 27 $4.68 760 190 2007 23 $3.23 673 168 2008 23 $6.36 713 178 2009 29 $7.54 1,230 307 

Rib

2001 9 $27.53 4,406 1,101 42002 13 $33.70 5,393 1,348 52003 13 $17.07 2,732 683 32004 9 $32.37 5,178 1,295 52005 12 $21.78 3,485 871 32006 15 $24.21 3,873 968 42007 20 $22.40 3,584 896 32008 23 $25.64 4,102 1,025 42009 33 $21.51 3,442 860 3
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 5.3.1.1(cont) Summary of Statistically Inferred Load Counts Based on Level of Accuracy 

Primal 

Average Weekly 

Load Count 

Average Variance of Weekto-Week Price Difference Estimated Loads from Chebychev's (P = 

$0.25 $0.50 $0

Ham

2001 100 $8.56 1,370 342 2002 106 $6.17 987 247 2003 100 $7.48 1,198 299 2004 85 $13.57 2,171 543 22005 64 $6.47 1,035 259 2006 63 $12.18 1,949 487 22007 70 $10.80 1,728 432 2008 68 $24.41 3,905 976 42009 63 $28.00 4,479 1,120 4

Bellies

2001 45 $22.95 3,672 918 42002 29 $28.48 4,557 1,139 52003 20 $16.33 2,613 653 22004 11 $17.98 2,877 719 32005 13 $24.70 3,953 988 42006 16 $17.45 2,792 698 32007 18 $12.41 1,985 496 22008 20 $23.32 3,731 933 42009 24 $16.76 2,682 671 2
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 5.3.1.1(cont) Summary of Statistically Inferred Load Counts Based on Level of Accuracy 

Primal 

Average Weekly 

Load Count 

Average Variance of Weekto-Week Price Difference Estimated Loads from Chebychev's (P = 

$0.05 $0.10 $0

Carcass

2001 410 $3.72 14,878 3,719 52002 408 $3.72 14,868 3,717 52003 366 $4.27 17,078 4,269 62004 343 $5.41 21,644 5,411 82005 306 $4.15 16,620 4,155 62006 301 $4.79 19,142 4,786 72007 344 $3.80 15,216 3,804 62008 362 $7.96 31,828 7,957 1,22009 422 $6.80 27,204 6,801 1,0

Live Hog Avg. Weekly Head Count Avg. Weekly Head Coun

2001 168,708 $4.60 18,395 4,599 72002 172,152 $8.87 35,494 8,873 1,42003 172,714 $5.17 20,671 5,168 2004 142,615 $10.06 40,239 10,060 1,62005 150,701 $8.29 33,167 8,292 1,32006 123,724 $8.41 33,623 8,406 1,32007 117,937 $5.83 23,302 5,825 92008 138,202 $10.13 40,513 10,128 1,62009 121,431 $8.04 32,176 8,044 1,2

Notes: Variance of price is across 52-week year. Load refers to 40,000 lbs. Data interpretation is that the inferred load observed loads required to allow one to infer that 90% of the time the week-to-week price movement, for the respective p

range of the previous week price level +/- the stated level of c. As the level of c decreases, the number of observations inc

confidence in the estimate. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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5.3.2 EXPORTS 

Discussions with industry representatives pointed to the potential to include product trade 

between U.S. and Mexico and U.S. and Canada in price reporting to increase liquidity. 

Views were mixed as whether this “North American” trade report should replace a domestic 

price or be a standalone price report. An analysis of the likely increase in loads resulting 

from capturing Canada and Mexico trade under voluntary and mandatory price reporting was 

conducted (Exhibit 5.3.2.1). U.S. exports to Canada and Mexico represented slightly over 

23% of total US pork exports in 2008. Of the three-year average 535,161 MT exported, 

approximately 290,000 MT is pork meat. Approximately, 46% of the total export volume is 

fresh product (not frozen, prepared, or preserved). As noted in 2.7, Mexico trade is 

dominated by ham, belly and sausage trade. For Canada, the export categories are more 

diverse. 

The final column of Exhibit 5.3.2.1 provides a scenario under voluntary price reporting 

which additional loads could be captured by adding “North American” trade to AMS reports. 

The five percent level of total pork exports is in line with the percentage of total U.S. pork 

production now captured under voluntary price reporting. The applicable value is the 

voluntary column value of 1,474 loads, which would represent a five to six percent increase 

relative to total loads now reported under voluntary price reporting. Relative to total U.S. 

pork production, the simulated inclusion of pork exports to Canada and Mexico would 

account for approximately 0.20% to 0.25% of additional fresh pork trade—small, by any 

measure. 

Exhibit 5.3.2.1 Assessment of Expected Pounds of Pork Captured through “North 

American” Trade Added to Reports 

Country Total Pork 

Exportsa

% of World 

Total 

Pork Meat 

Exportsb

% Freshc Voluntaryd

 Mexico 382,603 14.4% 183,000 18% 1,054 

 Canada 152,559 9.0% 107,000 28% 420 

 MX & CN 535,161 23.4% 290,000 46% 1,474 

a. Total pork trade, 3-year average (metric ton) 

b. Pork meat trade, 3-year average, variety meat not included (metric ton) 

c. Relative to total country/region trade 

d. Carlot loads, assume 5% of trade would qualify under current rules

5.3.3 PRODUCT FORM, ENHANCED PRODUCT, AND VALUE ADDED 

The issue of product heterogeneity triggered several discussions regarding the ability of 

alternative price reporting systems to take data from a set of heterogeneous product 

transactions and “back out” estimates of base values for more commodity products. The 

general sentiment to such an approach was varied. Some of the industry’s more 

quantitatively advanced participants saw notable value in this approach and believed it could 

be feasibly accomplished by USDA. Conversely, several industry folks thought that the 

conversions that this process would lead to could cause more harm than good and that USDA 

should avoid any such attempts. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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Branded Product Offerings 

Capturing value added product trade would potentially enable for increased liquidity, 

however, application of the 3/70/20 confidentiality rule would likely eliminate branded 

product trade from being reportable.68 Packers are heavily involved with own branding or 

branding through co-packing. 

A study commissioned by the National Pork Producers Association reported 77% of fresh 

pork is now branded. Parcell and Schroeder (2007) showed the percentage of retail product 

branded (Exhibit 5.3.3.1) was much lower. 

Exhibit 5.3.3.1 Branding of Pork Cuts for Retail Purchase69

Primal No. of observations % of product category 

Chop 10,775 24 

Rib 4,205 31 

Roast 3,701 27 

Ham 9,994 53 

Steak 1,124 19 

Product Form 

Product form has evolved in the pork meat industry. Parcell and Schroeder (2007) show that 

for nearly 30,000 retail pork products purchased, 89% were fresh, five percent frozen, and six 

percent cooked (see Exhibit 5.3.3.2). The trend since the Parcell and Schroeder (2007) study 

has been toward more cooked product (see Exhibit 5.2.4) and more frozen product (e.g. as 

explained in Section 2.4). There seems to be a need to account for industry changes related 

to product form in order to capture a greater portion of trade for certain sub-primal products. 

Exhibit 5.3.3.2 Composition of Pork Cut Product Form for Purchase70

Store Type % of purchases 

Fresh 89 

Frozen 5 

Cooked 6 

Moving Day Average 

Survey respondents were split evenly over applying a multi-day moving average to overcome 

the issue of unreportable trades due to the 3/70/20 confidentiality rule.71 Conversations with 

industry representatives revealed concern with rolling between weeks and over holidays with 

a multi-day moving average.72

                                                           

68 A parallel example for beef is that under mandatory price reporting for wholesale beef “Angus” beef trade is 

not captured due to the binding 3/70/20 confidentiality rule.

69 Parcell and Schroeder (2007) 70 Parcell and Schroeder (2007). Values represent % across all cuts, so % for primal cuts is masked. 71 A 5-day rolling average is used for boxed lamb.

72 This concern lies with industry practices related to the weekly pricing day for pork.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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5.3.4 HEDONIC ANALYSIS PRIMER73

A hedonic model decomposes the price of a product into component prices for each of the 

products’ characteristics, thereby providing an estimate of the value of each characteristic 

independent of the products’ other characteristics. Hedonic analysis is often carried out for 

consumer goods to enable decision makers (industry, consumers, policy makers, managers) 

to distinguish value across each component of the good. The hedonic model framework 

allows for generalities in the price-characteristic relationship to be determined regardless of 

an individual observation. 

Assume two hams of identical size and trim. The value of cooked ham is greater than the 

value of a green ham. Now assume two hams differ in trim and that one ham is hickory 

smoked and the other ham is only cooked. Because there are multiple characteristics 

impacted, trim and flavor smoked, it is more difficult to determine whether, or which, 

characteristic has value or which characteristic may erode value. Hedonic models are 

particularly effective when the question of more/less value is indeterminate because of 

multiple differences in characteristics across products. A hedonic model can be easily reestimated on an ongoing basis to reflect up-to-date price-characteristic relationships. 

The relationship between product price and product characteristics is determined by 

statistically analyzing the price-characteristic relationship within a large amount of data. The 

more data, the greater reliability one can place on the estimated price-characteristic 

relationship. Furthermore, as with a large amount of data, the ability to capture a large 

number of characteristic differences (either in the presence of a characteristic, like solution 

added, or the level of characteristic, like five percent solution added versus seven percent 

solution added) relative to price difference yields a high level of reliability. In addition, 

hedonic models allow for capturing relationships between price and what are known as 

credence attributes. Examples of credence attributes are brand name and label attributes like 

100% Organic. And, hedonic models allow for capturing relationships between price and 

market factors. Examples of market factors include time of sale, location of sale, days 

between sale and delivery, and sale quantity. 

The hedonic model framework is easily applied to generate quality adjusted prices in order to 

provide for a series of prices that reflect a similar product, even though the observed products 

may be different. The Bureau of Labor Statistics commonly uses the hedonic model 

framework to generate time-wise quality adjusted prices that account for product variability 

over time. For example, a computer today is different from a computer two, five, or more 

years ago. 

A simplified example of the hedonic model framework, applied to the primal pork Loin, 

follows is shown in Exhibit 5.3.4.1. 

                                                           

73 See Parcell and Schroeder 2007 for a discussion of hedonic model literature and hedonic model applications.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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Exhibit 5.3.4.1 Example Hedonic Model Applied to Data for Bone-In Loins74

 Price Trim Vacpack Gas Pak Location Branded Moisture Export Load 

A B C D E F G H I 

1 $93 1/8” Yes East CompanyA 3% Mexico 1 

2 $92 1/8” Yes East CompanyA 3% 0.5 

3 $90 1/8” Yes West CompanyB 7% 3 

4 $89 1/8” Yes West CompanyB 1% 1 

5 $90 1/8” Yes MidWest 0% 0.5 

6 $92 1/8” Yes MidWest 0% 1 

7 $93 1/8” Yes MidWest CompanyA 5% Mexico 1 

8 $91 1/8” Yes MidWest CompanyB 5% 1 

 Price Trim Vacpack Gas Pak Location Branded Moisture Export Load Adjusted Price 

 A B C D E F G H I J 

1 $93 $1.95 -$0.50 +$0.60 -$3.00 $92

2 $92 $1.95 -$0.50 +$0.60 -$1.65 $92

3 $90 $1.95 -$0.10 +$1.40 $93

4 $89 $1.95 -$0.10 +$0.20 $91

5 $91 -$1.65 $89

6 $92 $92

7 $93 -$0.50 +$1.00 -$3.00 $91

8 $91 -$0.10 +$1.00 $92

                                                           

74 Notes: Price is $/cwt, location refers to plant location, branded refers to product branded by hog processor for 

company A or company B, Export refers to destination of product, and load refers to carlot (40,000 lb) load.

•The statistical nature of the hedonic model allows for the evaluation of the relationship between a change in price 

(column A) associated with a simultaneous change in a set of characteristics (columns C, D, F, G, H, and I). 

•While a subset of example data is shown, optimally a large number of observations would populate the data set 

and could include many more quality, credence, or market attributes. 

•The base product of interest is a 1/8” bone-in Loin, VacPack, FOB the plant, non-braded, 0% moisture enhanced, 

sold domestically as a full carlot load. 

o For example, data row 6 fits the base product description so no adjustment is needed for the price ($92). 

o While we have included “location” we make no adjustment for location because we assume the price is 

quoted as FOB the plant. 

o Various methods can be applied for determining how to derive variable specification to explain price. For 

example, here it is assumed 1⁄2 carlot loads (rows 2 and 5, column I) should be accounted for but multiple 

carlot loads (row 3, column I) need not be accounted for. 

The statistical analysis results yields the relationship: 

Bone-in Loin Price = $90/cwt. -$1.95/cwt. x (presence of gas pak characteristic) + $0.50/cwt. x (product co-packed 

for company A) + $0.10/cwt. x (product co-packed for company B) - $0.20/cwt. x (percentage points moisture 

added) + $3/cwt. x (if product is destined for Mexico) + $1.65/cwt x (if the product is 0.50 carlot load) 

We can then apply the average premium/discount, the opposite of the estimated sign is used to arrive back at a 

characteristic adjusted price. 

The price on record now becomes the characteristic adjusted price specified in column J above. For this example, the 

average premium/discount for each characteristic, other than the brand variables (confidentiality issue), can be 

publically reported as long as the 3/70/20 confidentiality rule is not binding for a particular characteristic. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

68 | Page

CHAPTER 6: COSTS AND BENEFITS OF MANDATORY 

WHOLESALE PORK PRICE REPORTING 

6.1 SWINE PROCESSOR COMPLIANCE COST 

Industry response to inquiries related to cost of compliance for mandatory pork price 

reporting was mixed. Some respondents, like firms now complying with mandatory box beef 

price reporting, felt the cost of compliance would be small to negligible. Other respondents, 

such as smaller sow and boar packers felt the cost of compliance would be a burden to their 

business operations. 

 

If the metrics for contributing to live barrow and gilt and live sow and boar mandatory price 

reporting were applied for pork meat mandatory price reporting, then each participating 

packer would have prior knowledge of the process used to contribute data into a centralized 

AMS reporting system. 

Assessing the exact compliance cost, by size of processor, is difficult because there was no 

consistent feedback from industry participants relative to compliance costs. Thus, an average 

packer cost assessment is undertaken. Furthermore, the compliance costs reported by AMS 

in the Federal Register/Vol. 73, No.96/Friday, May 16, 2008/Rules and Regulations is 

followed for the current compliance cost assessment. 

Compliance costs are decomposed into startup/maintenance cost (Exhibit 6.1.1), record 

keeping cost (Exhibit 6.1.2), and data submission cost (Exhibit 6.1.3).75 All hourly employee 

costs, reported in the Federal Registrar, were adjusted for inflation. Labor hours reflect 

values reported in the Federal Registrar. The assumption of reporting both A.M. and P.M. 

reports was made and that firms report 260 days/year. 

The total industry compliance cost was computed, as was a cost for only capturing barrow 

and gilt packing plants. Note, for the current analysis the values report the marginal cost of 

establishing and maintaining a wholesale pork data base and submission of information, i.e., 

our analysis treats this report as an addition to an existing system.76 

An industry compliance cost of $218,000 was computed, and a barrow & gilt industry 

compliance cost of $151,000 was computed. 

                                                           

75 We assumed that the submission time requirement for wholesale pork prices was similar to boxed beef ( AMS 

report LS-126) so 0.125/hrs/submission was used.

76 The value reported in the federal registrar for swine firms reflected the compliance costs of three separate 

swine reports, whereas for our analysis we consider compliance costs for only one report.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 6.1.1 Electronic Submission Development and Annual System Maintenance Cost per Respondent7

Hours to develop and maintain interface 

Employee compensation cost per hour  Total annual cost per respondent 

Exhibit 6.1.2 Annual Recordkeeping Cost per Respondent78

Labor Hours per year 

Labor cost per hour  Sub-Total labor cost per year Electronic Storage Cost Total record keeping cost 

Exhibit 6.1.3 Number of Submission Hours per Respondent per year79

Type Submissions/Year Hours/Submission Total Hours/year cost/hour To

Wholesale Pork 520 x 0.125 = 65 

 Total Cost $ 22.41 = 

77 Values taken from the Livestock Mandatory Reporting, Federal Register, 2008. Values have been adjusted for inflation.78 Values taken from the Livestock Mandatory Reporting, Federal Register, 2008. Values have been adjusted for inflation.79 Values taken from the Livestock Mandatory Reporting, Federal Register, 2008. Values have been adjusted for inflation.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

Exhibit 6.1.4 Annual Cost Burden to Respondents (All Processors)80

 Cost per respondent Number of Respondents Total  Startup/Maintenance $706 x 52 =  Record Keeping $2,020 x 52 =  Data Submission $1,457 x 52 = Total 

Exhibit 6.1.5 Annual Cost Burden to Respondents (Barrow and Gilt Processors only)81

 Cost per respondent Number of Respondents Total 

 Startup/Maintenance $ 706 x 36 =  Record Keeping $ 2,020 x 36 =  Data Submission $ 1,457 x 36 = Total 

80 Values taken from the Livestock Mandatory Reporting, Federal Register, 2008. Values have been adjusted for inflation.81 Values taken from the Livestock Mandatory Reporting, Federal Register, 2008. Values have been adjusted for inflation.
WHOLESALE PORK PRICE REPORTING ANALYSIS 

71 | Page

6.2 OTHER POTENTIAL DRAWBACKS 

In addition to compliance costs, other potential drawbacks to mandatory wholesale pork price 

reporting include potential price information losses that could occur and the potential for 

price transparency to increase opportunities for collusive behavior. These are specifically 

labeled potential drawbacks because they may or may not materialize. 

Potential information losses associated with switching from voluntary to mandatory 

wholesale pork price reporting could occur from a couple of different facets. Under 

mandatory price reporting, AMS would adopt similar procedures they use for boxed beef 

reporting. That is, they would likely adopt the 3/70/20 confidentiality guideline for deciding 

what individual product prices are eligible to report or not report on a daily basis. Whether 

and how often the 3/70/20 rule would be binding and would preclude AMS from reporting a 

particular product price cannot be determined without an actual data test to see how often it 

would be binding. 

There is a clear tradeoff with respect to wholesale pork price reporting relative to the 

confidentiality clause in that the more disaggregated and more unique detailed product 

specifications for which prices are reported individually, the greater the chances the 3/70/20 

guidelines would be binding. On the other hand, more aggregated combining of dissimilar 

products into a single broadly defined product price quote is potentially of less value to 

market participants for discerning market signals. There is no way to determine without 

testing actual mandatory sample data, the optimal balance of product aggregation to report 

versus the impact of confidentiality binding constraints. 

Another information loss that would potentially occur through mandatory price reporting is 

the on-going exchange of market sentiment that AMS wholesale pork price reporters now 

share back and forth with industry traders. That is, as price quotes arrive, the market reporter 

often shares this information with pork sellers and buyers as new price information is being 

provided in relatively informal dialogue. Presumably, much of this informal discussion and 

information sharing in somewhat real-time basis would largely end because the reporter 

would not have such information in an evolving way during the day until the formal price 

report is released. If such information is important to traders, they may search for other ways 

to collect such information such as through private information service vendors. We cannot 

quantify the value of this potential information timing loss. 

Increased price transparency has been highlighted as having potential to enable price 

manipulation through collusive behavior by concentrated pork buyers or sellers. Tacit 

collusion is illegal, but with increased price transparency, collusion can be much more subtle. 

Collusion can more easily happen over time with repeated transactions, and presence of clear 

industry leaders, as are present in wholesale pork markets. With increased price transparency 

firms may start to make reasonable estimates of price offers or bids of major rival firms and 

may even send signals through bidding behavior or announcements of strategy to other 

buyers or sellers. Wachenheim and DeVuyst (2001) provide detailed discussion of this 

potential for collusive behavior under livestock mandatory price reporting. A classic study by 

Albaek, Mollgaard, and Overgaard (1997) in the Danish concrete industry concluded that 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

72 | Page

publication of firm-specific transactions prices for ready-mixed concrete in Denmark, 

reduced the price competition among oligopolistic concrete producers and lead to increased 

prices. To date we know of no study that has demonstrated price collusion in wholesale beef 

markets following mandatory price reporting enactment in 2001. Thus, the validity of this 

concern is untested. 

6.3 SOCIETAL BENEFITS 

Quantification of benefits associated with mandating wholesale pork price reporting could 

arise from improved price information and transparency which potentially provides many 

societal benefits. A classic study on the value of price information is Stigler’s 1961 

“Economics of Information.” He argues that “ascertainment of market price” (p. 213) is one 

the most important dimensions of economic information. 

Bloomfield and O’Hara (1999) conducted a set of economic experiments in laboratory 

settings to test several theories about market transparency. Their conclusions include that 

trade disclosure results in more rapid convergence of bid and ask prices to the true 

equilibrium. This suggests with enhanced price reporting, prices for wholesale pork 

transactions will be more informed and be more likely to represent true supply and demand 

conditions. Having more reliable price information as mandatory price reporting would 

presumably provide would increase transparency by having fewer non-quotes. More 

frequently available price quotes add to market efficiency. 

Price discovery is a time consuming activity and because small operations (both pork sellers 

and buyers) have access to less private information, they rely more heavily on public 

information. As such, if mandatory price reporting results in more price quotes available, it 

would likely benefit smaller firms more than large firms, many of whom have considerable 

private information about their own wholesale pork transactions. However, a caveat is that 

larger firms also have a comparative advantage for data analysis and more intensive data 

availability favors those better suited for analysis. 

Overall, increasing pricing efficiency through lower costs of price discovery, less dispersion 

in prices for similar quality products, more rapid conversion to equilibrium prices, and more 

trust in public reported prices should benefit both hog producers and pork consumers. 

However, quantifying these benefits is beyond the scope of this study. Change from 

voluntary to mandatory wholesale pork price reporting in and of itself would likely result in a 

relatively modest increase in price transparency. That said, since a lot of wholesale pork is 

formula priced, increased convergence of prices to equilibrium has a direct effect on both 

future cash and all formula trade. 

6.4 SUMMARY 

Concerns about public wholesale pork market price reports released by the United States 

Department of Agriculture Agricultural Marketing Service (AMS) have lead to increasing 

discontent among industry participants with the pricing information available in conducting 

business in the wholesale pork market. As a result of these concerns, industry participants 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

73 | Page

have suggested a range of adjustments to AMS wholesale pork price reporting procedures. 

The purpose of this research report was to summarize industry sentiment regarding current 

price reporting, identify possible methods for improving the sentiment, and to assess 

economic tradeoffs of moving from the current voluntary wholesale pork price reporting to a 

mandatory price reporting system. 

In summary, multiple adjustments to the current wholesale pork price reporting system are 

worthy of consideration. While individual sentiments varied through the industry, there is 

relatively little resistance to the notion of mandating price reporting of wholesale pork 

transactions. However, nearly every discussion with industry personnel highlighted views 

that simply mandating the current price reporting system will not be sufficient to alleviate 

current concerns. Rather, additional adjustments must be considered whether wholesale pork 

price reporting remains voluntary or switches to mandatory status. In particular, adjustments 

suggested for consideration include: adding pork destined for Canada or Mexico to domestic 

price reports, extending the window by about one more week for which transactions are 

considered “negotiated,” and adding pumped and other enhanced products for which 

acceptable conversions can be made by AMS to the list of eligible products. 

While this project report summarizes the current sentiment of wholesale pork market 

participants and discusses multiple methods by which price reporting may be improved, 

several issues remain. For instance specific estimates are needed such as the proportion of 

trade that may be impacted by implementing confidentiality rules that come with mandatory 

price reporting (e.g., “3/70/20 rule”) and the volume of additional industry trade that would 

be captured under alternative price reporting requirements (e.g., exact impacts of extending 

the negotiated window width). Unfortunately, estimates on these types of issues will remain 

largely unobtainable until changes are made to the price reporting system and ex post 

analyses can be conducted. Accordingly, the best available information is industry sentiment 

and perceptions on these issues, which are highlighted in this report. 

Over time, the distribution of net benefits to hog producers, hog packers, and pork buyers of 

adjusting the wholesale pork price reporting system along with the relative value of market 

information captured in current price reporting schemes must be routinely evaluated to assess 

if the reporting system in place is meeting its intended goals. Accordingly, this project is far 

from resolving the issue of wholesale pork price reporting. Rather, this report aims to 

enhance ongoing discussions on the subject to further ensure an improved system can be 

identified, developed, and implemented to best serve the U.S. wholesale pork marketplace. 
WHOLESALE PORK PRICE REPORTING ANALYSIS 

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CHAPTER 7: REFERENCES 

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Armstrong, J.S. and R.J. Brodie. 1999. “Forecasting for Marketing.” In Quantitative Methods in 

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Grimes, G. 2009. University of Missouri, Columbia, MO. Personal Interview. August 5. 

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Sale Practices: Lessons Learned from the Grain Inspection, Packers, and Stockyards 

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Parcell, J, J. Mintert, and R. Plain. 2004. “An Empirical Investigation of Live-Hog Demand.” 

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Parcell, J. 2003. “An Empirical Analysis of the Demand for Wholesale Pork Primals: 

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28(2, August):335-348. 
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Parcell, J. and T.C. Schroeder. 2007. “Hedonic Retail Beef and Pork Product Prices.” Journal of 

Agricultural and Applied Economics 39(1, April):29-46. 

Pendell, D.L. and T.C. Schroeder. 2006. “Impact of Mandatory Price Reporting of Fed Cattle 

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Composite Pork Carcass Cutout—An Overview.” Unpublished document. Available at: 

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Meat Purchase Specifications: Fresh Pork.” June. 

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Meat Purchase Specifications: Sausage.” November. 

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United States Department of Agriculture, Grain Inspection, Packers, and Stockyards 

Administration. 2007. Livestock and Meat Marketing Study. Available at: 

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Wachenheim, C.J. and E.A. DeVuyst. 2001. “Strategic Response to Mandatory Reporting 

Legislation in the U.S. Livestock and Meat Industries: Are Collusive Opportunities 

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Additional Publications: Value of Public Information and Mandatory Price Reporting 

Azzam, A. 2003. “Market Transparency and Market Structure: The Livestock Mandatory 

Reporting Act of 1999.” American Journal of Agricultural Economics 85:387-395. 

Boynton, R.D. and J.M. Perloff. 1982. “The Short- and Long-Run Effects of the Vector Grocery 

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Caspers, J. 2000. “Potential Benefits of Mandatory Price Reporting.” Presented at Agriculture 

Outlook Forum, Washington DC, February 25. 

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Efficiency in Agricultural and Food Marketing, Iowa State University Press. 

Schroeder, T., J. Mintert, and E. Berg. 2004. “Valuing Market Hogs: Information and Pricing 

Issues” Kansas State University Research and Extension Service. MF-2644. January. 

Schroeder, T.C. and J. Mintert. 1999. “Market Hog Price Discovery: Barriers and 

Opportunities.” National Pork Summit: The New Reality. December, Kansas City, 

Missouri. Available at: 

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pdf. 

Wachenheim, C.J. 2009. “The Livestock Mandatory Reporting Act of 1999.” Unpublished paper, 

October. Available at: http:// 

www.silvaculler.com.ar/library01/Wachenheim%20Paper.pdf 

 
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APPENDICES 

 
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APPENDIX A: SURVEY INSTRUMENT82

RE: USDA/AMS Wholesale Pork Price reporting project: Survey Completion Request 

Good afternoon NAME, 

You may recall recently visiting with me (Glynn Tonsor), Ted Schroeder (Kansas State Univ.), 

and/or Joe Parcell (Univ. of Missouri) in recent weeks regarding the project we are conducting 

for USDA. In particular, our project is assessing a range of issues regarding the wholesale pork 

price reporting system. I’m following up with this email to request your assistance in our effort 

to capture the thoughts and views of industry participants on a range of issues in this project. In 

particular, I’d like you to complete a short survey we believe will take about 15 minutes, which 

can be accessed at: 

http://www.surveymonkey.com/s.aspx?sm=qJ6PhIlmltFhhlvRggVIFA_3d_3d 

You will recall from prior discussions that all responses will be kept in confidence and that only 

aggregated results will be used in our project report. Moreover, if you would prefer to complete 

this survey in hard-copy form, you are welcome to do that as well by completing a copy you 

already have, printing it from this link, and/or emailing me for a copy to be mailed to you. As 

we have previously noted, we sincerely value and need your input to help us best assess and 

summarize industry views in our project. 

If you have any questions or concerns, please don’t hesitate to contact me. Otherwise, I want to 

thank you again for you time in completing this survey. 

                                                           

82 Producer associations and hog packers were provided similar, but slightly different surveys to better reflect their 

respective situations. Appendix A only presents the pork buyer survey, but these other two survey formats are 

available from the authors. 
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