Partners for Production Ag

2617 Northridge Parkway

Ames, IA 50010

(515) 268-8888

Mandatory Price Reporting: Perspective 

and Future

Steve R. Meyer, PhD

Economist
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•

Why did they ask Meyer to be last on this series . . . 

I have more grey hair than all the others!

I am one of the few left in the business who was in the room when 

the law was crafted – and it was a painful experience!

• I have been NPPC’s representative or consultant for all 

reauthorizations

• I have been very supportive of Market News through this process

• Mike ????, Jim Epstein, Mike Lynch, Jim Bernau, et al may disagree!

• Doesn’t mean I have agreed all the time but I have almost always stood 

with USDA in talks with producers and others

• The reason: USDA Market News has done an admirable job in running 

almost every aspect of MPR
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Why do we have MPR and what is it’s role?

1980s saw the end of public transactions with closure of last of the 

terminals and many country auctions – primarily due to growth of 

PRODUCERS

1990s gave rise to much skepticism/distrust of voluntary reporting

• Voluntary is voluntary – report what you want 

• Most producers did not realize how much experience and judgement USDA 

applied to report “the market”

• Crisis of 1998 was the final blow – “We want to KNOW the prices 

that everyone receives!”

• Federal government could not publish all prices gathered through MPR

• Weighted averages and ranges – and the ranges were (and are!) WIDE

• Later addition of price distributions shed light on the number of hogs by price
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Congress had very little to do with LMRA of 1999

This was really a GOOD thing – can you imagine Congressmen and 

Senators trying to write a livestock price reporting bill?

A long series of conference calls between packers (AMI), producers 

(NPPC) and Market News

• Neither AMI nor NPPC trusted the political appointees at USDA

• Led to an early decision to be VERY prescriptive – “tie their hands”

• Never popular with Market News personnel – would have prefered some 

leeway

• USDA’s ability to audit data has been critical – drives trust

• MPR has never been “price discovery” – it just reports the results of 

interactions that “discover” prices

• I think I was the one who coined the term “Mirror on the marketplace” – the 

role of MPR is to show us what is going on
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MPR through the years . . . 

5-year sunset has proven problematic at times but a valuable 

opportunity to improve the program

We got the pricing mechanisms amazingly right and the only major 

change (adding Negotiated Formula) has been a flop

• Immediate problem: Confidentiality criteria – USDA’s did not work 

at all for daily data.

• First substantive change was to include more sows – boars have 

never met and won’t ever meet confidentiality criteria

• BIG CHANGE – added pork in 2010 reauthorization

• This was a “deal killer” in original legislation negotiations

• Driven by consolidation at the retail/foodservice level

• MAJOR RESUILT: An estimated cutout value based on BROAD data
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Problems and future direction . . .

Biggest challenge is the decline in the number of negotiated trades

Negotiating hog prices is costly and time consuming and inexact

• MPR is a victim of its own success: Dependable, trusted data has led to 

more hogs being priced through formulas

• No easy solutions – Tragedy of the Commons that can be solve only by 

internalizing costs/benefits

• Initial lumping of swine and pork market formulas is now a problem

• Hardly any hogs priced off cutout in 1999 – and it was very correlated to 

spot

• NOT SO TODAY – and breaking these apart is a proposed change

• Broad-based cutout value is trusted enough to settle the Cutout 

Value contract
Partners for Production Ag

2617 Northridge Parkway

Ames, IA 50010

(515) 268-8888

Questions?