USDA 

..... 

Agricultural 

Marketing 

Service 

Livestock and Grain Stop 0252 - Room 2619-S 

Market News 1400 Independence Ave. SW 

Division Washington DC 20250100 

LGMN 1300 

November 26, 2012 

Page I of4 

Procedures for Calculating Wholesale Pork Prices on an F.O.B. Omaha Basis 

For Livestock Mandatory Reporting 

Purpose 

The purpose of this document is to outline the methodology and procedures for calculating prices on an 

F.O.B. Omaha basis in dollars/hundredweight for the reporting of sales of wholesale pork in accordance 

with the Livestock Mandatory Reporting (LMR) regulation (§59.205(d)). 

Background 

AMS researched various methods for developing transportation cost information for the purpose of 

calculating prices on an F.O.B. Omaha basis. After working closely with industry stakeholders and 

collaborating on ideas, the following solution was agreed to and accepted by the pork packing industry 

members. 

AMS will provide regional freight rate information for the continental U.S., Canada, and Mexico. AMS 

will utilize http://rateindex.transcore.com/ and http://www.truckloadrate.com/ as the information sources 

to calculate the regional per-loaded-mile freight rates from Omaha, Nebraska which will be updated on a 

quarterly basis. For delivery points close to Omaha, a minimum freight charge of$550.00/40,000 lbs, or 

$1.375/cwt, was established. 

AMS will notify all of the pork processing plants and companies covered by LMR of the updated freight 

rates on tbe last business day of each quarter. The LMR pork plants will have until the 15th of the 

following month to update these freight rates in their computer systems. Ln addition, AMS will publish 

the quarterly freight rates on their LMR Information page of the AMS web site, which can be found at: 

h.ttJ21fmarketnews.usda.gov/portal/lg. A map of North America will be provided to illustrate the most 

current freight rate data on a regional basis. 

To assist pork packing companies with calculating the mileage distances from Omaha to the buyers' 

delivery destinations, AMS developed a software utility in Excel which is based on U.S. postal zip codes. 

Users can enter the zip code of the delivery point, and the program will figure the mileage distance from 

the Omaha 681 08 zip code. 

Date Approved 

Date Revised 

11126112 Page 1 of4 Approved by4 WGS 
USDA 

~ 

Agricultural 

Marketing 

Service 

Livestock and Grain 

Market News 

Division 

Stop 0252 -Room 2619-S 

1400 Independence Ave. SW 

Washington DC 20250100 

LGMN 1300 

November 26. 20 12 

Page 2 of4 

Procedures and Calculations 

• Domestic Wholesale Pork Sales: 

In order to determine the freight expenses needed to calculate the F.O.B. Omaha price of 

domestic wholesale pork sales, AMS divided the continental U.S. into the following ten regions: 

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Date Approved 

Date Revised 

Washington, Oregon, California 

Utah, Arizona, Colorado, New Mexico, Nevada 

Idaho, Montana, Wyoming 

Pennsylvania, New Jersey, New York, Connecticut, Rhode Island, Massachusetts, 

Vermont, New Hampshire, Maine 

South Carolina, North Carolina, Virginia, West Virginia, Maryland, Delaware, District of 

Columbia 

Tennessee, Mississippi, Alabama, Georgia, Florida 

Michigan, Indiana, Ohio, Kentucky, Wisconsin, Illinois 

North Dakota, South Dakota, Minnesota 

Texas, Oklahoma, Louisiana, Arkansas 

Nebraska, Iowa, Kansas, Missouri 

11/26112 Page2 of4 
USDA Agricultural 

Marketing 

Service 

Livestock and Grain Stop 0252 - Room 2619-S 

Market News I 400 Independence Ave. SW 

·Division Washington DC 20250100 

LGMN 1300 

November 26, 2012 

Page 3 of4 

AMS will provide a freight rate value for each of these regions on a quarterly basis. The basic 

formula for arriving at an F.O.B. Omaha price is: 

Delivered Price-((Miles from Omaha*Regional Freight Rate)l40,000)* 100 = F.O.B. Omaha Price 

Date Approved 

Date Revised 

Step 1: Determine the distance in miles between Omaha, NE and the delivery 

destination. 

Step 2: Multiply the number of miles by the freight rate provided by AMS for the 

respective region. 

Step 3: If the value is greater than $550, divide the value by 40,000 and multiply by 100 

Step 4: Subtract freight value from the delivered price to arrive at the F.O.B. Omaha 

price. 

Example: 

Loins delivered to Yakima, Washington (98901) at $110.001cwt 

Regional freight rate is $2.06 per mile 

1,589 miles from Omaha 

$2.06 * 1,589 = $3,273.34 

($3,273.34 I 40,000) * 100 = $8.181cwt 

$110.00 - $ 8.18 = $1 01.82/cwt 

F.O.B. Omaha price to be reported to AMS = $1 01.821cwt for the loins 

If product is picked up at the plant by the buyer, calculate the mileage from Omaha, NE 

to the plant. Follow the same steps as above, but subtract freight per cwt from the F.O.B. 

plant price to obtain F.O.B. Omaha price. 

For transactions where the freight charges are less than the minimum of $550.00, then 

divide $550.00 by 40,000 and multiply by one hundred. Subtract that number from the 

delivered price, or the F.O.B. plant price for picked up product, to obtain F.O.B. Omaha 

price. 

Example: 

Loins delivered Ankeny, Iowa (50021) at $105.001cwt 

Regional freight rate is $3.26 per mile 

145 miles from Omaha 

$3.26 * 145 = $472.70. This value is less than $550.00; therefore, use $550.00 as 

the total freight value. 

($550.00 I 40,000) * 100 = $1.3751cwt 

$105.00 - $1.375 ==$103.63/cwt 

F.O.B. Omaha price to be reported to AMS = $103.631cwt for the loins. 

11/26112 Page 3 of4 Approved ~ WGS 
USDA Agricultural 

Marketing 

Service 

Livestock and Grain Stop 0252 - Room 2619-S 

Market News 1400 Independence Ave. SW 

Division Washington DC 20250100 

LGMN 1300 

November 26, 2012 

Page 4 of4 

• NAFT A Wholesale Pork Sales: 

The F.O.B. Omaha prices for wholesale pork sales destined for NAFTA countries (Canada and 

Mexico) should be calculated in the same method as domestic pork sales. For all product sales to 

be delivered into Mexico, the same regional freight rate as Texas should be applied. Pork sales to 

Canada should use the applicable freight rate for one of three regions in Canada: 

• British Columbia, Alberta, Saskatchewan, Yukop., Northwest Territories 

• Manitoba, Ontario, Nunavut 

• Quebec, New Brunswick, Nova Scotia 

• Overseas Wholesale Pork Sales: 

The method for calculating the F.O.B. price of pork sales to be shipped overseas, which includes 

sales to Alaska and Hawaii, may vary depending on whether the product is shipped to a U.S. 

destination for export or is delivered directly to an overseas destination. 

• For overseas sales of product to be delivered to aU. S. destination for export, the F.O.B. 

Omaha price should be calculated using the delivered price to that destination and the 

distance between that destination and Omaha. 

• For product delivered directly to an overseas location, the F.O.B. Omaha price should be 

calculated using the F.O.B. plant price and the distance between the shipping plant and 

Omaha. 

Please direct all questions and concerns to the AMS Livestock and Grain Market News office in Des 

Moines, Iowa at 515-284-4460 or mpr.Igmn@ams.usda.gov. 

Date Approved 

Date Revised 

11/26/12 Page4 of4 Approved by ~ WGS