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Rules and Regulations Federal Register

50561 

Vol. 77, No. 163 

Wednesday, August 22, 2012 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 59 

[Doc. No. AMS–LS–11–0049] 

RIN 0581–AD07 

Livestock Mandatory Reporting 

Program; Establishment of the 

Reporting Regulation for Wholesale 

Pork 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: On April 2, 2001, the U.S. 

Department of Agriculture (USDA), 

Agricultural Marketing Service (AMS) 

implemented the Livestock Mandatory 

Reporting (LMR) program as required by 

the Livestock Mandatory Reporting Act 

of 1999 (1999 Act). In October 2006, the 

LMR program was reauthorized by 

Congress through September 2010. On 

September 28, 2010, the Mandatory 

Price Reporting Act of 2010 (2010 

Reauthorization Act) reauthorized LMR 

for an additional 5 years and added a 

provision for mandatory reporting of 

wholesale pork cuts. The 2010 

Reauthorization Act directed the 

Secretary to engage in negotiated 

rulemaking to make required regulatory 

changes for mandatory wholesale pork 

reporting and establish a negotiated 

rulemaking committee to develop these 

changes. This final rule reflects the 

work of the USDA Wholesale Pork 

Reporting Negotiated Rulemaking 

Committee (Committee). 

DATES: Effective Date: This rule is 

effective on January 7, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Michael Lynch, Director; USDA, AMS, 

LS, LGMN Division; 1400 Independence 

Ave. SW., Room 2619–S; Washington, 

DC 20250; at (202) 720–6231; fax (202) 

690–3732, or email 

Michael.Lynch@ams.usda.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The 1999 Act was enacted into law on 

October 22, 1999 (Pub. L. 106–78) as an 

amendment to the Agricultural 

Marketing Act of 1946 (7 U.S.C. 1621– 

1627, 1635–1638d). The purpose of the 

1999 Act was to establish a program of 

information regarding the marketing of 

cattle, swine, lambs, and the products of 

such livestock that provides information 

that can be readily understood by 

producers; improves the price and 

supply reporting services of USDA; and 

encourages competition in the 

marketplace for livestock and livestock 

products. On December 1, 2000, AMS 

published the final rule to implement 

the LMR program as required by the 

1999 Act (65 FR 75464) with an 

effective date of January 30, 2001. This 

effective date was subsequently delayed 

until April 2, 2001 (66 FR 8151). 

The statutory authority for the 

program lapsed on September 30, 2005. 

At that time, AMS sent letters to all 

packers required to report under the 

1999 Act requesting they continue to 

submit information voluntarily. In 

October 2006, Congress passed the 

Livestock Mandatory Reporting 

Reauthorization (2006 Reauthorization 

Act) (Pub. L. 109–296). The 2006 

Reauthorization Act re-established the 

regulatory authority for the continued 

operation of the LMR program through 

September 30, 2010, and separated the 

reporting requirements for sows and 

boars from barrows and gilts, among 

other changes. On May 16, 2008, USDA 

published the final rule to re-establish 

and revise the LMR program (73 FR 

28606). The rule incorporated the swine 

reporting changes contained within the 

2006 Reauthorization Act, and 

enhanced the program’s overall 

effectiveness and efficiency based on 

AMS’ experience in the administration 

of the program. The LMR final rule 

became effective on July 15, 2008. 

The Food, Conservation, and Energy 

Act of 2008 (2008 Farm Bill) (Pub. L. 

110–234) directed the Secretary of 

Agriculture (Secretary) to conduct a 

study to determine advantages, 

drawbacks, and potential 

implementation issues associated with 

adopting mandatory wholesale pork 

reporting. The report from this study 

concluded that voluntary negotiated 

wholesale pork price reporting is thin, 

and becoming thinner. It also found 

some degree of support for moving to 

mandatory price reporting at every 

segment of the industry interviewed, 

and that the benefits likely would 

exceed the cost of moving from a 

voluntary to a mandatory reporting 

program for wholesale pork. The report 

was delivered to Congress on March 25, 

2010. A copy of the full report is 

available on the AMS Web site at 

http://www.ams.usda.gov/AMSv1.0/ 

marketnews by clicking on ‘‘Livestock, 

Meats, Grain, and Hay,’’ then ‘‘Livestock 

Mandatory Reporting.’’ 

On September 28, 2010, the 2010 

Reauthorization Act (Pub. L. 111–239), 

reauthorized LMR for an additional 5 

years and added a provision for 

mandatory reporting of wholesale pork 

cuts. The 2010 Reauthorization Act 

directed the Secretary to engage in 

negotiated rulemaking to make required 

regulatory changes for mandatory 

wholesale pork reporting and establish 

a negotiated rulemaking committee to 

develop these changes. The statute 

required that the committee include 

representatives from (i) organizations 

representing swine producers; (ii) 

organizations representing packers of 

pork, processors of pork, retailers of 

pork, and buyers of wholesale pork; (iii) 

the USDA; and (iv) interested parties 

that participate in swine or pork 

production. Further, the 2010 

Reauthorization Act stated that any 

negotiated rulemaking committee 

established by the Secretary would not 

be subject to the Federal Advisory 

Committee Act (5 U.S.C. Appendix 2). 

Purpose of Regulatory Action 

The objective of this rule is to 

improve the price and supply reporting 

services of AMS in order to encourage 

competition in the marketplace for 

wholesale pork products by increasing 

the amount of information available to 

participants. This is accomplished 

through the establishment of a program 

of information regarding the marketing 

of wholesale pork products as 

specifically directed by the 1999 Act, 

the 2010 Reauthorization Act, and these 

regulations, as described in detail in the 

background section. Further, a 

mandatory wholesale pork reporting 

program will address concerns relative 

to the asymmetric availability of market 


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50562 Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 

information. Previously, pork processors 

were not required by law to report 

wholesale pork cut prices. Rather, AMS 

collected information on daily sales and 

price information from pork processors 

on a voluntary basis. The 2008 Farm Bill 

directed the Secretary to conduct a 

study to determine advantages, 

drawbacks, and potential 

implementation issues associated with 

adopting mandatory wholesale pork 

reporting. The study found that 

wholesale pork price reporting is thin, 

and frequently results in missing or 

unreportable price quotes for 

subprimals. 

This final rule is issued in accordance 

with the Mandatory Price Reporting Act 

of 2010 (2010 Reauthorization Act) 

[Pub. L. 111–239], which reauthorized 

Livestock Mandatory Reporting for 5 

years and required the addition of 

wholesale pork through negotiated 

rulemaking. 

Summary of the Major Provisions of the 

Regulatory Action in Question 

This final rule requires packers to 

report wholesale pork sales to AMS. 

Specifically, the rule outlines what 

information packers will be required to 

submit to AMS, how the information 

should be submitted, and other program 

requirements. Packers will submit the 

price of each sale, quantity, and other 

characteristics (e.g., type of sale, item 

description, destination) that AMS will 

use to produce timely, meaningful 

market reports. 

The final rule is effective January 7, 

2013. The effective date for this final 

rule is the date on which packers are 

required to submit data. Data submitted 

after this date is subject to audit for 

compliance with the 1999 Act and 

subsequent regulations, including this 

final rule. 

During the 4-month period following 

the publication of the regulation, AMS 

will conduct an industry education and 

outreach program concerning the 

provisions and requirements of this 

rule. The Agency believes this period of 

time is adequate for packers to adapt to 

the wholesale pork reporting 

requirements. 

AMS plans to continue publishing 

voluntary wholesale pork reports for a 

period of 180 days after the effective 

date of this regulation. 

Costs and Benefits 

The benefits of this rule are diffuse 

and difficult to quantify; therefore, this 

analysis considers benefits only on a 

qualitative basis. The qualitative 

benefits derived from the literature are: 

1. The increased number of firms 

reporting prices to AMS under the 

mandatory program will provide a more 

complete data set, leading to increased 

price transparency and more efficient 

price discovery; 

2. Allows AMS more opportunity to 

keep wholesale pork reporting current 

with industry marketing practices and 

product offerings; and, 

3. Provides information to industry 

participants that cannot afford to 

purchase data, including small pork 

processing operations, small 

wholesalers and retailers, and direct and 

niche marketing operations. 

The major cost of complying with this 

rule involves the information collection 

and reporting process. The regulatory 

objective of this rule is to increase the 

amount of information available to 

participants in the marketplace for 

wholesale pork and pork products by 

mandating reporting of market 

information by certain members of the 

industry. The Committee developed the 

rule to achieve this objective in the most 

cost-effective manner possible. To the 

extent practicable, the Committee drew 

upon current industry practices and 

reporting procedures for other 

commodities covered by LMR in order 

to minimize the burden to the industry. 

Annual industry costs are expected to 

be $95,770. These represent start-up 

costs associated with information 

technology enhancements, 

recordkeeping, and submission costs. 

The annual cost for each of the 56 

respondents is estimated to be $1,710. 

Total annual cost to the government is 

expected to be approximately $300,000. 

This is largely for salaries and benefits 

for personnel who will collect, review, 

assemble, and publish market reports on 

wholesale pork. Additional costs of 

approximately $325,000 will be 

incurred in the first year to 

accommodate information technology 

system development. A complete 

discussion of the cost and benefits can 

be found under the Executive Order 

12866 section. 

Negotiated Rulemaking Committee 

AMS convened a negotiated 

rulemaking committee to develop the 

regulatory language outlined in this rule 

as mandated by the 2010 

Reauthorization Act. The negotiated 

rulemaking process, which is authorized 

by the Negotiated Rulemaking Act of 

1996 (NRA) (5 U.S.C. 561–570), involves 

a committee composed of people 

representing interests that will be 

significantly affected by the rule, and 

the rulemaking agency developing the 

regulations. 

On November 24, 2010, AMS 

published a notice announcing its intent 

to convene a negotiated rulemaking 

committee (75 FR 71568). The notice 

sought public comment on the need for 

the committee and on its proposed 

membership, and provided others 

interested in being committee members 

the opportunity to submit nominations. 

AMS proposed a number of 

organizations for membership on the 

committee that represented those 

interests required to be included on 

such a committee by the 2010 

Reauthorization Act. 

Additionally, AMS solicited 

nominations from affected organizations 

who also wanted to be represented on 

the committee. In determining 

membership, AMS considered whether 

the interest represented by a member 

will be affected significantly by the final 

product of the committee and whether 

that interest was already adequately 

represented by other members. Under 

section 562(5) of the NRA, ‘‘interest’’ 

means ‘‘with respect to an issue or 

matter, multiple parties which have a 

similar point of view or which are likely 

to be affected in a similar manner.’’ In 

accordance with the NRA, committee 

membership was limited to a maximum 

of 25 members. 

On January 26, 2011, AMS announced 

the establishment of the Wholesale Pork 

Reporting Negotiated Rulemaking 

Committee (Committee); responded to 

comments from the November 24, 2010, 

notice; identified the final list of 

members; and set forth the dates for the 

first meeting (76 FR 4554). The 

Committee members were: American 

Meat Institute; Chicago Mercantile 

Exchange; Food Marketing Institute; 

Grocery Manufacturers Association; 

Livestock Marketing Information Center; 

National Farmers Union; National 

Livestock Producers Association; 

National Meat Association; National 

Pork Producers Council; North 

American Meat Processors Association, 

American Association of Meat 

Processors, and Southeastern Meat 

Association (one combined 

representative for all three per 

organizations’ request); United Food 

and Commercial Workers Union; and 

USDA, Agricultural Marketing Service. 

On February 8–10, 2011, the 

Committee met in St. Louis, Missouri. 

Notably, during this meeting, the 

Committee members developed ground 

rules that addressed general rules of 

conduct, participation, and reiterated 

the Committee’s purpose. The ground 

rules also established that all decisions 

would be made by ‘‘consensus,’’ and 

defined ‘‘consensus’’ as unanimous 

concurrence among the Committee 

members. The Committee held second 

(76 FR 12887) and third (76 FR 23513) 

meetings in Arlington, Virginia; March 


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15–17, 2011, and May 10–11, 2011, 

respectively. All meetings were open to 

the public without advance registration. 

Members of the public were given 

opportunities to make statements during 

the meetings at the discretion of the 

Committee, and were able to file written 

statements with the Committee for its 

consideration. The language developed 

by the Committee served as the basis for 

the proposed rule (77 FR 16951) and the 

regulatory text outlined in this final 

rule. 

Reporting Requirements 

Pork processors, or packers, will be 

required to report sales of wholesale 

pork to AMS so that AMS may produce 

timely, meaningful market reports. 

These requirements are discussed in 

detail in the sections immediately 

following and represent the information 

on price, volume, and related 

characteristics of wholesale pork sales 

that packers will be required to submit 

under LMR. 

According to the LMR program (7 CFR 

part 59), a packer, for purposes of swine 

and wholesale pork reporting, is defined 

as any person engaged in the business 

of buying swine in commerce for the 

purposes of slaughter, of manufacturing 

or preparing meats or meat food 

products from swine for sale or 

shipment in commerce, or of marketing 

meats or meat food products from swine 

in an unmanufactured form acting as a 

wholesale broker, dealer, or distributor 

in commerce. For any calendar year, the 

term ‘‘packer’’ includes only federally 

inspected swine processing facilities 

that slaughtered an average of at least 

100,000 swine per year during the 

immediately preceding 5 calendar years 

and a person that slaughtered an average 

of at least 200,000 sows, boars, or 

combination thereof per year during the 

immediately preceding 5 calendar years. 

Additionally, in the case of a swine 

processing plant or person that did not 

slaughter swine during the immediately 

preceding 5 calendar years, it shall be 

considered a packer if the Secretary 

determines the processing plant or 

person should be considered a packer 

under this subpart after considering its 

capacity. 

For the ease of the reader, this section 

is organized to highlight major 

components of the rule. 

Definition of Wholesale Pork 

The term ‘‘wholesale pork’’ represents 

what is widely considered wholesale 

pork to packers, processors, retailers, 

and others in the supply chain. For 

example, items with commonly-added 

ingredients used to extend shelf life, 

such as a salt or sodium phosphate 

solution, are included in this definition, 

and, therefore, required to be reported. 

However, items that are flavored (e.g., 

teriyaki pork tenderloins, seasoned ribs, 

lemon pepper sirloin roasts) are not 

considered wholesale pork and are, 

therefore, excluded from LMR reporting 

requirements. For the purposes of this 

rule, offal (e.g., heart, kidney) is not 

considered wholesale pork; whereas 

processing floor variety meats that are 

normally harvested from the chilled 

carcass—such as neck bones, tails, 

skins, feet, hocks, jowls, and backfat— 

are considered wholesale pork and must 

be reported. 

Reporting Times 

Packers will be required to report 

twice a day (by 10:00 a.m. and 2:00 p.m. 

Central Time) for barrow and gilt 

product and once per day (by 2:00 p.m. 

Central Time) for sow and boar product. 

These reporting times are outlined in 

section 59.205, and are consistent with 

reporting times for other commodities 

covered under LMR. Separation of the 

reporting requirements for sow and boar 

product will minimize the reporting 

burden on sow and boar packers where 

possible and makes the information 

published for sow and boar products 

more meaningful to the industry. As a 

general rule, these plants slaughter 

fewer animals than their counterparts 

who primarily slaughter barrows and 

gilts, and would, therefore, have a lower 

number of reportable transactions. 

Further, publishing sow/boar product 

information twice daily would provide 

little benefit in terms of added market 

transparency, as prices in this sector of 

the market fluctuate less than in the 

barrow/gilt market. Many of the plants 

producing this type of product would be 

smaller in nature, and it would be 

unnecessarily burdensome to require 

twice daily reporting. 

Price Reporting Basis 

Packers will submit prices using two 

different reporting bases: Free-on-Board 

(F.O.B.) Omaha basis, which was used 

for the voluntary program; and F.O.B. 

Plant basis, which is used for mandatory 

reporting of boxed beef and lamb. This 

method is used to assuage concern 

within the industry that moving to a 

different reporting basis would cause 

unnecessary disruption in the 

marketplace. To ensure consistent and 

uniform methodology is used to obtain 

F.O.B. Omaha prices, AMS will provide 

freight information. While this 

information is not part of the regulation 

and will not be published in the Code 

of Federal Regulations, AMS received 

comments during the public comment 

period that its proposed methodology 

did not capture all the variables 

involved in determining the cost of 

transportation. In response, AMS will 

investigate alternative methods for 

deriving an F.O.B. Omaha price and will 

consult, as necessary, with industry 

stakeholders. AMS is currently engaged 

in this research in order to have 

resolution by the informational meeting 

with packers, which will be scheduled 

following the publication of in the final 

rule. AMS does not believe this 

approach will impede or hinder 

packers’ ability to adapt or develop 

information technology systems or 

otherwise prepare for mandatory 

wholesale pork reporting. 

As discussed in the proposed rule, 

AMS initially considered two options in 

developing this information to derive 

F.O.B. Omaha prices—a freight map 

with concentric zones that reflect 

different freight adjustments based on a 

shipping destination’s distance from 

Omaha and a per loaded mile freight 

rate. A zone map could prove to be 

difficult for reporting entities to comply 

with as it would not be practical to 

display every U.S. city, nor to expect 

reporting entities to know which cities 

belong in which zones. AMS believed a 

simpler option was to establish a per 

loaded mile freight rate that packers 

could apply. For example, to determine 

the F.O.B. Omaha price for a load of 

pork loins shipped to Phoenix, Arizona, 

the packer would figure the distance 

from Omaha to Phoenix and multiply 

that distance by the per loaded mile 

rate, which would then be divided by 

the total hundredweight of the product 

being shipped. This resulting freight 

expense would be deducted from the 

actual delivered price per 

hundredweight to reflect the F.O.B. 

Omaha price submitted to AMS. AMS 

also believed this method would be 

easier for reporting packers to comply 

with and document for audit purposes. 

It should be noted that regardless of the 

final method for determining freight, 

AMS will revisit this information on a 

quarterly basis to ensure it is up-to-date. 

Prices reported to AMS shall include 

any applicable brokerage fees, but 

should not include any direct, specific, 

and identifiable marketing costs (such 

as point of purchase material, marketing 

funds, accruals, rebates, and export 

costs). Removing these types of 

additional costs provides AMS a more 

homogeneous price for reporting 

purposes. Furthermore, costs for things 

such as accruals or rebates, if known at 

the time of transaction, should be 

removed from the price provided to 

AMS. The requirements for reporting 

prices of wholesale pork sales are 

outlined in section 59.205. 


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Product Characteristics 

Outlined below are items 

characteristic of a sale that will be 

reported to AMS. These items are 

discussed below appear in section 

59.205. 

Type of Sale. When packers report 

sales of wholesale pork to AMS, they 

will be identified using one of these 

three categories: Negotiated, forward, or 

formula marketing arrangement. A 

negotiated sale is one that represents 

what is considered the ‘‘spot’’ market, 

and, therefore, sets delivery parameters 

for both boxed product (within 14 days 

of the date of agreement) and combo 

product (within 10 days of the date of 

agreement). To ensure consistency with 

current industry practices, the day after 

the seller-buyer agreement will be 

considered ‘‘Day 1’’ for reporting 

delivery periods. 

The definition of a forward sale is 

designed to capture transactions that 

occur outside the traditional negotiated, 

or spot, window. Therefore, the 

definition for forward sale means an 

agreement for the sale of pork where the 

delivery is beyond the timeframe of a 

negotiated sale and means a sale by a 

packer selling wholesale pork to a buyer 

of wholesale pork under which the price 

is determined by seller-buyer 

interaction and agreement. 

The definition of a formula marketing 

arrangement bases the price paid not on 

seller-buyer interaction and agreement 

on a given day, but instead in reference 

to publicly available quoted prices. The 

definition of formula marketing 

arrangement was revised based on 

comments received to remove the 

requirement that this type of sale only 

covered product that had not already 

been produced. These definitions for the 

terms ‘‘Type of sale,’’ ‘‘Negotiated sale,’’ 

‘‘Forward sale,’’ and ‘‘Formula 

marketing agreement’’ appear in section 

59.200. 

Specifications. Packers will report a 

description of the specifications of each 

pork item being transacted (e.g., 

vacuum-packed 1⁄4 inch loins) to AMS. 

It will be the agency’s responsibility to 

group like products together for the 

purpose of publishing reports. The 

item’s specification will also contain 

weight ranges for the product. 

Characteristics that entities would be 

required to report are outlined in 

section 59.205(a)(1). 

Product Delivery Period. Packers will 

report the delivery period for negotiated 

pork trades in calendar days, as outlined 

in section 59.205(a)(1). This is 

consistent with other commodities 

reported under LMR, but is a change 

from the way transactions were reported 

under the voluntary system. 

Pork class. Packers will report the 

type of swine from which the product 

was derived from one of three 

categories: Barrow/gilt, sow, or boar. 

This is outlined in section 59.205(a)(1) 

and is accompanied by a definition for 

‘‘pork class’’ in section 59.200. 

Destination. Packers will report a 

product’s destination in one of three 

categories: Domestic, Export overseas, or 

North American Free Trade Agreement 

(NAFTA). 

Refrigeration. Packers will report a 

product’s refrigeration type as a means 

for distinguishing fresh product 

transactions that may be discounted or 

priced differently due to age of the 

product. Splitting the fresh category into 

two product age groups provides a 

means for identifying product that may 

be discounted due to potential shelf life 

limitations. For reporting purposes, 

‘‘Day 1’’ is considered the day after 

production. The form contained in 

Appendix A provides timeframes 

against which packers will report 

product refrigeration. 

Specialty Pork Products. Packers will 

be required to report specialty pork 

products in order to capture trade of 

wholesale pork that is produced or 

marketed under any specialty program, 

such as, but not limited to, geneticallyselected pork, certified programs, or 

specialty selection programs for quality 

or breed characteristics. A trademark 

brand on a product will not by itself 

make the product a specialty pork 

product, as outlined in section 59.200. 

General Provisions 

This rule amends the regulations 

issued in 7 CFR part 59, Livestock 

Mandatory Reporting, to incorporate 

wholesale pork into LMR. Subpart A of 

part 59, General Provisions, addresses 

requirements pertinent to all aspects of 

mandatory reporting. Some conforming 

changes are necessary to fully 

incorporate wholesale pork into Subpart 

A, and are largely administrative in 

nature. Most sections in Subpart A 

remain unchanged, but are discussed 

here to provide context for the reader. 

Section 59.10 details how packers 

will be required to report information 

and how reporting will be handled over 

weekends and holidays. The 

information will be reported to AMS by 

electronic means. Electronic reporting 

involves the transfer of data from a 

packer’s electronic recordkeeping 

system to a centrally located AMS 

electronic database. The packer is 

required to organize the information in 

an AMS-approved format before 

electronically transmitting the 

information to AMS. Once the required 

information has been entered into the 

AMS database, it will be aggregated and 

processed into various market reports 

which will be released according to the 

daily and weekly time schedule set forth 

in these regulations. Information 

regarding the specific characteristics of 

each reported sale must be supplied by 

lot without aggregation. No changes 

were made to section 59.10 to 

accommodate the additional 

requirement of reporting wholesale pork 

cuts. 

This rule requires the reporting of 

specific market information regarding 

the sales of wholesale pork products. 

Section 59.20 is amended by the 

addition of (f), Reporting Sales of 

Wholesale Pork. In addition to the 

aforementioned reporting requirements, 

packers will be required to maintain a 

record to indicate the time a unit of 

wholesale pork cuts was sold, as 

occurring either before 10 a.m. central 

time, between 10 a.m. and 2 p.m. central 

time, or after 2 p.m. central time. To 

allow packers time to collect, assemble, 

and submit the information to AMS by 

the prescribed deadlines, all covered 

transactions up to within one half hour 

of the specified reporting times are to be 

reported. 

Further, section 59.20 identifies the 

recordkeeping requirements imposed by 

the 1999 Act and regulations on 

reporting entities. Reporting packers are 

required to maintain and to make 

available the original contracts, 

agreements, receipts, and other records 

associated with any transaction relating 

to the purchase, sale, pricing, 

transportation, delivery, weighing, 

slaughter, or carcass characteristics of 

all livestock and livestock products. In 

addition, they are required to maintain 

such records or other information as is 

necessary or appropriate to verify the 

accuracy of the information required to 

be reported under these regulations. All 

of the above mentioned documentation 

must be maintained for at least 2 years 

and must be made available to 

employees or agents of USDA for 

routine compliance audits, as well as for 

investigations involving suspected 

noncompliance or potential violations. 

More information regarding compliance 

and review procedures can be found in 

the LMR Information section of the 

Livestock and Grain Market News Web 

site at http://marketnews.usda.gov/ 

portal/lg. 

Lastly, under Subpart A, section 59.30 

details the general definitions of terms 

used throughout the regulations and 

applicable to all subparts. Where 

definitions apply to only one reportable 

commodity, those are included in the 


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appropriate subpart. For example, 

definitions that pertain only to swine 

and swine products are contained in 

Subpart C. The majority of definitions in 

section 59.30 remain unchanged from 

those that were published in the 2008 

final rule. Changes to section 59.30 as a 

result of the addition of wholesale pork 

are found in the definitions for the 

terms ‘‘F.O.B.’’ and ‘‘Lot.’’ The change 

to F.O.B. is amended to require packers 

to report prices on both a plant and 

Omaha basis. The change to the term 

‘‘Lot’’ adds wholesale pork. There is 

also an administrative change to the 

definition of IMPS to update a Web site 

address and phone number. 

Other Provisions 

The 1999 Act set forth the 

requirements for maintaining 

confidentiality regarding the packer 

reporting of proprietary information and 

list the conditions under which Federal 

employees can release such information. 

While none of these provisions were 

amended by the 2010 Reauthorization 

Act or will be changed as a result of this 

rule, they are presented here for 

information. These administrative 

provisions also establish that the 

Secretary can make necessary 

adjustments in the information reported 

by packers and take action to verify the 

information reported, and directs the 

Secretary to report and publish reports 

by electronic means to the maximum 

extent practical. The 1999 Act provides 

for what constitutes violations of that 

Act, such as failure to report the 

required information on time or failure 

to report accurate information. 

The section on enforcement 

establishes a civil penalty of $10,000 for 

each violation and provides for the 

Secretary’s issuance of cease and desist 

orders. This section also provides for 

notice and hearing of violations before 

the Secretary, judicial review, and 

issuance of an injunction or restraining 

order. The fees section directs the 

Secretary to not charge or assess fees for 

the submission, reporting, receipt, 

availability, or access to published 

reports or information collected through 

this program. The section on 

recordkeeping requires each packer to 

make available to the Secretary on 

request for 2 years the original contracts, 

agreements, receipts, and other records 

associated with any transaction relating 

to the purchase, sale, pricing, 

transportation, delivery, weighing, 

slaughter, or carcass characteristics of 

all livestock and livestock products, as 

well as such records or other 

information that is necessary or 

appropriate to verify the accuracy of 

information required to be reported. 

Also, the 1999 Act provides that 

reporting entities will not be required to 

report new or additional information 

that they do not generally have available 

or maintain, or the provisions of which 

would be unduly burdensome. 

Committee Recommendations 

As noted in the proposed rule (77 FR 

16951), the Committee’s work focused 

on developing regulatory text to 

implement mandatory wholesale pork 

reporting under the LMR program. The 

Committee also developed several 

recommendations that, while outside 

their statutory purview, were discussed 

in the proposed rule and were further 

supported by some of the comments 

received by AMS during the comment 

period. For a complete discussion of 

these recommendations, see the 

‘‘Comments and Responses’’ section of 

this rule. 

OMB Control Numbers 

Subpart E of part 59 covers the OMB 

control number 0581–0186 assigned 

pursuant to the Paperwork Reduction 

Act of 1995 (PRA) (44 U.S.C. Chapter 

35) for the information collection 

requirements listed in Subparts B 

through D of part 59. All required 

information must be reported to AMS in 

a standardized format. The standardized 

form is embodied in the data collection 

form that is contained in Appendix A 

and described in Appendix B at the end 

of this document. 

For reporting wholesale pork 

information, swine packers will utilize 

one form (Appendix A). This additional 

reporting requirement does not impact 

the reporting requirement that packers 

may have for other reportable 

commodities, such as swine. 

Appendices 

The final section of this document 

contains two appendices. These 

appendices will not appear in the Code 

of Federal Regulations. Appendix B 

describes the form that will be used by 

those required to report information 

under this program. The actual form is 

contained in Appendix A. 

Comments and Responses 

AMS received nine comments in 

response to the proposed rule (77 FR 

16951). In general, commenters were 

supportive of the proposal, bringing 

wholesale pork under LMR, and of the 

negotiated rulemaking process. Many of 

the comments dealt with issues outside 

the scope of the proposed regulation, 

such as development of reports, 

transition period, and training sessions. 

Definitions 

Two commenters stated that the 

definition of ‘‘Specialty pork product’’ 

should be amended to clarify that the 

examples identified in the definition of 

what constitutes a specialty pork 

product are not limiting or all inclusive. 

AMS agrees with this comment and 

believes the changes proposed do not 

contradict, only clarify, the work of the 

Committee. Accordingly, AMS has 

amended the definition of specialty 

pork product as it appears in this rule. 

One commenter suggested AMS 

amend the definition of ‘‘Formula 

marketing arrangement’’ because the 

inclusion of the phrase ‘‘executed in 

advance of manufacture’’ would exclude 

formula-priced product whose sale is 

agreed upon following manufacture. 

AMS agrees with this comment and 

believes the changes proposed do not 

contradict, only clarify, the work of the 

Committee. Accordingly, AMS has 

amended the definition of formula 

marketing arrangement as it appears in 

this rule. 

Costs of Compliance With the Rule 

One commenter asked that AMS 

provide technical support personnel 

that packers can easily access as a 

means of reducing start-up costs. As 

outlined in the preamble of the 

proposed rule and in this final rule, 

AMS recognizes there are costs 

associated with complying with this 

new requirement of LMR. Further, AMS 

understands the differences that exist 

among companies, information 

technology (IT) systems, and business 

structure. While AMS does not have the 

resources to dedicate an IT specialist to 

this transition, it will make every effort 

to provide IT support when needed by 

packers. In regards to testing of the 

information technology systems, AMS 

understands that affected entities (i.e., 

packers) will not effectively be able to 

make enhancements to their reporting 

systems until the requirements are 

known; that is, until the final rule is 

published. AMS will work with packers 

to ensure that an appropriate amount of 

time is allowed for development and 

testing of systems necessary to submit 

the required data. Another commenter 

suggested that AMS’ estimates for initial 

start-up costs and annual submission 

costs were too low; however, the 

commenter did not provide additional 

information. 

Transition Period 

Three commenters asserted that the 6- 

month transition period during which 

both mandatory and voluntary reports 

will be published side-by-side is 


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50566 Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 

insufficient and suggested instead a 12- 

month transition period. Commenters 

suggested that a 6-month period would 

not allow for observance of the seasonal 

differences that may exist, and, 

subsequently, would not provide market 

participants with enough information to 

adjust price formulas properly. While 

these comments do not pertain to the 

regulation, but rather to AMS’ 

implementation of the mandatory 

wholesale pork reporting program, AMS 

will take these suggestions into account. 

As described in the proposed rule, 

AMS plans to transition from a 

voluntary program to a mandatory 

program by publishing ‘‘dual’’ reports 

for 6 months. That is, for a period of 

time, AMS will publish reports 

reflecting information collected under a 

voluntary reporting system and reports 

reflecting information collected under a 

mandatory reporting system for 

wholesale pork. If AMS determines that 

the information collected under a 

voluntary program becomes of little 

utility before the 6-month mark, or if 

sufficient AMS resources are not 

available, it will cease collecting and 

publishing this information. On the 

contrary, if at the end of the 6-month 

period any problems still exist with the 

collection or publication of data, or if 

the cessation of dual reports would 

unnecessarily cause market disruption, 

AMS will consult with the industry to 

determine an appropriate course of 

action. In that instance, AMS would 

consider extending the dual reporting 

period until a full 12-month period has 

occurred. Further, during the transition 

period, AMS intends to publish reports 

reflecting information collected under 

the mandatory program on a delay and 

will consider the Committee’s 

recommendation regarding the 

appropriate time to release such reports. 

Freight Calculations 

Three commenters stated their belief 

that the freight calculation methodology 

proposed by AMS is too simplistic. 

Commenters suggested that there are 

associated costs with loading product 

that may not be included if a simple 

‘‘per mile’’ freight cost is used. 

Commenters believed this would result 

in F.O.B. Omaha prices that are higher 

than they should be, and that the agency 

should consider issues involving lessthan-truckload (LTL) freight rates. While 

these comments do not pertain to the 

regulation, but rather to AMS’ 

implementation of the mandatory 

wholesale pork reporting program, AMS 

will take these suggestions into account. 

AMS plans to discuss the freight 

calculation with stakeholders, with the 

goal of having the final methodology 

determined for the planned workshops. 

Additional discussion is provided in the 

Reporting Requirements section of this 

document. 

Reporting of Products 

Two commenters requested that AMS 

keep the reporting of pork skins 

destined for domestic, North American 

Free Trade Agreement (NAFTA), and 

overseas markets separate and distinct. 

While these comments do not pertain to 

the regulation, but rather to AMS’ 

implementation of the mandatory 

wholesale pork reporting program, AMS 

will take these suggestions into account. 

Further, AMS is unable to determine if 

confidentiality issues will arise 

regarding these products until 

information is submitted under the new 

program. The 1999 Act requires USDA 

to publish mandatory data on livestock 

and meat price trends, contracting 

arrangements, and supply and demand 

conditions in a manner that protects the 

identity of reporting entities and 

preserves the confidentiality of 

proprietary transactions. AMS’ 

guidelines, which are commonly 

referred to as the ‘‘3/70/20 rule’’ 

requires the following three conditions 

be met for publication of information: 

(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. 

Training and Outreach 

One commenter suggested that AMS 

conduct training sessions for packers 

who will be required to submit 

wholesale pork prices under LMR. AMS 

agrees with this comment and has 

allotted $20,000 in funds for this type of 

activity, as outlined in the Executive 

Order 12866 and Executive Order 13563 

sections of the proposed rule (77 FR 

16951) and this rule. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, Civil Justice 

Reform. This rule is not intended to 

have retroactive effect. Section 259 of 

the 1999 Act prohibits States or political 

subdivisions of a State to impose any 

requirement that is in addition to, or 

inconsistent with, any requirement of 

the 1999 Act with respect to the 

submission or reporting of information, 

or the publication of such information, 

on the prices and quantities of livestock 

or livestock products. In addition, the 

2010 Reauthorization Act does not 

restrict or modify the authority of the 

Secretary to administer or enforce the 

Packers and Stockyards Act of 1921 (7 

U.S.C. 181–229); administer, enforce, or 

collect voluntary reports under the 1999 

Act, the 2006 Reauthorization Act, or 

any other law; or access documentary 

evidence as provided under sections 9 

and 10 of the Federal Trade Commission 

Act (15 U.S.C. 41–58). There are no 

administrative procedures that must be 

exhausted prior to any judicial 

challenge to the provisions of this rule. 

Civil Rights Review 

AMS has considered the potential 

civil rights implications of this rule on 

minorities, women, or persons with 

disabilities to ensure that no person or 

group shall be discriminated against on 

the basis of race, color, national origin, 

gender, religion, age, disability, sexual 

orientation, marital or family status, 

political beliefs, parental status, or 

protected genetic information. This 

review included persons that are 

employees of the entities that are subject 

to this regulation. This rule does not 

require affected entities to relocate or 

alter their operations in ways that could 

adversely affect such persons or groups. 

Further, this rule would not deny any 

persons or groups the benefits of the 

program or subject any persons or 

groups to discrimination. 

Executive Order 13132 

This rule has been reviewed under 

Executive Order 13132, Federalism. 

This Order directs agencies to construe, 

in regulations and otherwise, a Federal 

statute to preempt State law only when 

the statute contains an express 

preemption provision. This rule is 

required by the 1999 Act. Section 259 of 

the 1999 Act, Federal preemption, 

states, ‘‘In order to achieve the goals, 

purposes, and objectives of this title on 

a nationwide basis and to avoid 

potentially conflicting State laws that 

could impede the goals, purposes, or 

objectives of this title, no State or 

political subdivision of a State may 

impose a requirement that is in addition 

to, or inconsistent with, any 

requirement of this subtitle with respect 

to the submission or reporting of 

information, or the publication of such 

information, on the prices and 

quantities of livestock or livestock 

products.’’ 

Prior to the passage of the 1999 Act, 

several States enacted legislation 

mandating, to various degrees, the 

reporting of market information on 

transactions of cattle, swine, and lambs 

conducted within that particular State. 


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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 50567 

1 ‘‘The Sveriges Riksbank Prize in Economic 

Sciences in Memory of Alfred Nobel 2001.’’ 

Nobelprize.org. 7 Sep 2011 available at http:// 

www.nobelprize.org/nobel_prizes/economics/ 

laureates/2001/. 

2Stiglitz, J.E. ‘‘The Contributions of the 

Economics of Information to Twentieth Century 

Economics.’’ 2000. The Quarterly Journal of 

Economics 115(November):1441–1478. 

However, since the national LMR 

program was implemented on April 2, 

2001, these State programs are no longer 

in effect. Therefore, there are no 

Federalism implications associated with 

this rulemaking. 

Executive Order 13175 

This rule has been reviewed in 

accordance with the requirements of 

Executive Order 13175, Consultation 

and Coordination with Indian Tribal 

Governments. The review reveals that 

this regulation will not have substantial 

and direct effects on Tribal governments 

and will not have significant Tribal 

implications. 

Executive Order 12866 and Executive 

Order 13563 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives, and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated ‘‘not significant’’ 

under section 3(f) of Executive Order 

12866, and, therefore, has not been 

reviewed by the Office of Management 

and Budget (OMB). The proposed rule 

(77 FR 16951), however, was designated 

significant; and, therefore, AMS 

prepared a cost-benefit analysis for the 

proposed rule, and it was reviewed by 

OMB. For the final rule, AMS has 

prepared a cost-benefit analysis 

notwithstanding this rule’s nonsignificant designation. 

Regulations must be designed in the 

most cost-effective manner possible to 

obtain the regulatory objective while 

imposing the least burden on society. 

This rule would amend the LMR 

regulations to implement mandatory 

wholesale pork reporting and was 

developed by the Committee, 

comprising organizations representing 

pork packers, processors, retailers, and 

buyers of wholesale pork; swine 

producers; USDA; and other interested 

parties. 

Since all of the entities who will be 

required to report wholesale pork sales 

already report information under LMR 

regarding their swine purchases, costs to 

reporting another commodity are 

expected to be minimal. A complete 

analysis of the number of affected 

entities and the required volume of 

reporting is discussed under the 

Paperwork Reduction Act (PRA) section 

following this section. 

Alternatives to the rule’s language 

were thoroughly discussed during the 

course of the negotiated rulemaking 

meetings, and the consensus language 

reflects the best efforts of all 

participating parties to ensure the 

successful implementation of wholesale 

pork reporting. 

Until the promulgation of this rule, 

pork processors were not required by 

law to report wholesale pork cut prices. 

Rather, AMS collected information on 

daily sales and price information from 

pork processors on a voluntary basis. 

The 2008 Farm Bill directed the 

Secretary to conduct a study to 

determine advantages, drawbacks, and 

potential implementation issues 

associated with adopting mandatory 

wholesale pork reporting. The study 

found that voluntary wholesale pork 

price reporting is thin, and frequently 

results in missing or unreportable price 

quotes for subprimals. The number of 

missing data has increased over time. 

In addition, changes in the way pork 

is traded in recent years have led to 

inconsistencies in industry practices 

and current AMS guidelines for defining 

reportable trades. The study found that 

more pork is being: (1) Traded in forms 

that are either not reported or not 

reportable (e.g., enhanced product, case 

ready product, branded product, or 

frozen product); (2) 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, (3) 

destined for export markets which are 

excluded from AMS pork price reports 

for the negotiated cash guidelines used 

by AMS. 

As a result of thin pork price 

reporting, industry participants had 

raised concerns about potential selective 

price reporting in the voluntary 

program. These concerns have reduced 

the perceived value of published price 

reports to the industry. The study found 

support for mandatory price reporting 

throughout the industry, and concluded 

that the benefits likely would exceed the 

cost of moving from a voluntary to a 

mandatory reporting program for 

wholesale pork. 

The benefits of this rule are diffuse 

and difficult to quantify; therefore, this 

analysis considers benefits only on a 

qualitative basis. A complete discussion 

of the benefits is found in the summary 

of benefits section. The major cost of 

complying with this rule involves the 

information collection and reporting 

process. The information collection and 

reporting process is explained in the 

Summary of Costs section and is 

referenced in section 59.10(f), Reporting 

Methods. A complete discussion of the 

cost analysis can be found in the 

summary of costs section. 

Summary of Benefits. Government 

intervention in a market is conducted 

because the free market has tendencies 

to fail whenever certain criteria hold. 

Market failures occur in cases such as 

public goods, externalities, and 

asymmetric and/or missing information 

problems appear. Agricultural markets 

in particular are subject to information 

asymmetry, with both large and small 

operators in every aspect of the value 

chain, ranging from multinational 

corporations to part-time operators. 

Agricultural markets are also 

characterized by a large degree of 

uncertainty and missing information. 

In 2001, George Akerloff, Michael 

Spence, and Joseph Stiglitz 1 won the 

Nobel Prize in Economics for their 

seminal work on the Economics of 

Information, establishing it as a field 

within economics. Their combined 

works showed that: (1) Even small gaps 

in information can cause a misallocation 

of resources; (2) attempts to gather 

information by market participants 

generally incur costs that may not be 

recouped; (3) participants may turn to 

the use of nonmarket ‘‘signaling’’ to 

gather information, rather than the price 

mechanism; (4) attempts to obtain 

information by the participants may 

themselves cause sufficient levels of 

distortion in the markets, even with 

small information costs; and, (5) the 

existence of other market failures can 

alter the individual’s valuation of the 

benefits and costs of information.2 Each 

of these situations can lead to either a 

failure to attain an efficient equilibrium, 

or may lead to multiple equilibriums, 

both of which reduce economic welfare. 

Failure to achieve an equilibrium 

outcome can result in the failure of 

supply and demand to intersect at an 

equilibrium point, with persistent 

surpluses or shortages in the market. 

The wholesale pork reporting study 

mandated by Congress found evidence 

consistent with Akerloff, et al., and 

indicates that mandatory price reporting 

will improve information in the 

wholesale pork market. Following the 

results of Akerloff, et al. cited above, 

this report found that: (1) The wholesale 


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50568 Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 

3Ward, C.E. and T.C. Schroeder. ‘‘Understanding 

Livestock Pricing Issues.’’ Oklahoma Cooperative 

Extension Fact Sheet, AGEC–551 August 2009. 

4Ward, C.E. ‘‘Captive Supply Trends since 

Mandatory Price Reporting.’’ Oklahoma Cooperative 

Extension Fact Sheet F–597, November 2004a. 

Ward, C.E. ‘‘Captive Supply Price Relationships and 

Impacts.’’ Oklahoma Cooperative Extension Fact 

Sheet F–598, November 2004b. 

5Perry, J., J. McDonald, K. Nelson, W. Hahn, C. 

Arnade, and G. Plato. 2005. ‘‘Did the Mandatory 

Requirement Aid the Market? Impact of the 

Livestock Mandatory Reporting Act.’’ United States 

Department of Agriculture, Economic Research 

Service, LDP–M–135–01. 

6 Koontz, S.R. ‘‘Impacts of Mandatory Price 

Reporting on the Relationship Between Fed Cattle 

Prices and the USDA Boxed Beef Cutout Value.’’ 

2007. Working Paper, Department of Agricultural 

and Resource Economics, Colorado State 

University. 

7Lee Y., Ward C.E. and Brorsen, B.W. 2011. 

‘‘Cash Market Importance in Price Discovery for Fed 

Cattles and Hogs.’’ Division of Agricultural Science 

and Natural Resources, Oklahoma Agricultural 

Experiment Station, Oklahoma State University. 

pork reporting information under the 

voluntary program is thin, getting 

thinner, and does not properly reflect 

changes in the pork market in recent 

years. Mandatory reporting would 

improve this situation by increasing the 

number of reporting firms, including 

sow/boar meat in the reporting, 

responding to changes in the marketing 

of pork and pork products, and reducing 

the number of missing price quotes, 

particularly for subprimals; (2) Data 

users will have improved information 

without incurring additional costs such 

as private market analyses and data 

subscriptions, which may be too costly 

for small producers, small packers, 

small processors, and other data users; 

(3) Mandatory price reporting will lead 

to increased transparency in prices and 

more efficient price discovery. In 

addition, price data will be more 

consistent with current trade practices, 

providing more clear-cut market 

information, and less need for 

‘‘signaling’’; (4) Mandatory wholesale 

pork price reporting will reduce 

concerns the industry now has about 

selective price reporting, which can 

potentially distort market information; 

and (5) Mandatory wholesale pork price 

reporting will benefit small market 

participants to a greater extent than 

larger participants, who are likely to 

have more information available to them 

than the smaller participants, although 

larger firms with more staff may have 

greater ability to analyze the data than 

small firms. The report concluded that 

mandatory wholesale pork reporting 

would reduce the inequities in market 

information and create a more 

competitive environment. 

These findings indicate that 

mandatory price reporting will be an 

improvement over the current voluntary 

program, and that market efficiency as 

well as overall economic welfare will be 

increased by implementing the 

mandatory price reporting program for 

pork and pork products. Research on 

existing mandatory livestock price 

reporting also supports this conclusion. 

Early research on problems associated 

with pricing in livestock markets often 

considered the distinction between 

price determination and price 

discovery, and the resulting issues faced 

by livestock producers in a particular 

market. Ward and Schroeder (2009) 3

describe the difference between price 

determination and price discovery by 

noting that price determination is the 

interaction of supply and demand 

factors in a broad market situation to 

determine the general price level. Price 

discovery is the process whereby buyers 

and sellers interact in a specific market 

at a specific time to ascertain the value 

of a commodity in that market at that 

time. Price discovery involves the 

consideration of multiple factors, 

including market structure, futures 

prices and risk management options. 

However, the first consideration in price 

discovery is typically the general market 

price level, i.e. price determination is 

the starting point for price discovery. 

The importance of price reporting by 

AMS is that it provides data that gives 

market participants knowledge of the 

general price levels of a commodity, as 

well as insight into the overall 

conditions in that market. This 

information assists participants in more 

effectively discovering prices in their 

specific market. 

Research on livestock mandatory 

pricing has demonstrated that 

mandatory pricing does increase 

transparency and improves the 

efficiency of the price discovery 

process. Ward (2004a and b) 4 found that 

mandatory price reporting increased 

information, showing mandatory reports 

significantly improved the amount, 

type, and timeliness of data related to 

captive supplies, and increasing 

transparency. USDA’s Economic 

Research Service (ERS) (Perry, 

MacDonald, Nelson, Hahn, Arnade and 

Plato, 2005) 5 extended Ward’s work, 

yielding similar results. ERS also found 

that prices were twice as volatile under 

the mandatory system than under the 

voluntary system. The reason was 

thought to be the filtering or interpretive 

role of market reporters under voluntary 

reporting relative to the reduced 

filtering role with mandatory reporting. 

Koontz (2007) 6 studied the vertical 

relationship between the national fed 

cattle price and boxed beef cutout 

values using a standard price 

transmission model. He found boxed 

beef cutout values had both a greater 

and quicker impact on fed cattle than 

before the mandatory program. 

However, he also detected more 

uncertainty. This supports earlier 

research indicating both increased 

transparency and increased volatility 

associated with mandatory reporting. In 

addition, Lee, Ward and Brorsen 

(2011) 7 examined the role of cash prices 

in price discovery for fed cattle and 

hogs as cash market share fell over the 

years of 2001–2010. They found that the 

cash market remains important for price 

discovery, although thinning of the cash 

market has had a negative impact on the 

process. 

As the wholesale pork study 

indicated, there are some market 

participants who are likely to benefit 

more than others. Niche and direct 

marketing producers are likely to benefit 

from improved data, as they are less 

likely to be able to have other means of 

price determination available to them, 

primarily due to cost. These producers 

account for a small but growing segment 

of U.S. agriculture. 

In summary, research on existing 

livestock mandatory price reporting has 

demonstrated that it has improved 

transparency issues in livestock 

markets, enabling more efficient and 

effective price discovery in these 

markets, although there has been 

increased variability in reported prices, 

largely due to the change in approach 

from voluntary to mandatory. This 

improved transparency and increased 

efficiency is consistent with economic 

theory of information. The wholesale 

pork reporting study mandated by 

Congress shows evidence that 

mandatory reporting will have a similar 

impact on the wholesale pork market. 

For the economic analysis of the rule, 

AMS was unable to determine a 

quantitative assessment of the benefits 

due to limitations on existing research 

and the disparate nature of the benefits 

to be achieved. The qualitative benefits 

derived from the literature and are: 

• The increased number of firms 

reporting prices to AMS under the 

mandatory program will provide a more 

complete data set, leading to increased 

price transparency and more efficient 

price discovery; 

• Allows AMS more opportunity to 

keep wholesale pork reporting current 

with industry marketing practices and 

product offerings; and 

• Provides information to industry 

participants that cannot afford to 

purchase data, including small pork 

processing operations, small 


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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 50569 

8http://www.bls.gov/oes/current/oes_nat.htm#00- 

0000. 

wholesalers and retailers, and direct and 

niche marketing operations. 

Summary of Costs. The regulatory 

objective of this rule is to increase the 

amount of information available to 

participants in the marketplace for 

wholesale pork and pork products by 

mandating reporting of market 

information by certain members of the 

industry. The rule was developed in the 

most cost-effective manner possible, 

and, to the extent practicable, draws 

upon current industry practices and 

reporting procedures for other 

commodities covered by LMR in order 

to minimize the burden to the industry. 

The least cost reporting method to 

accomplish the objectives of the rule 

continues to be the transfer of electronic 

data from the reporting entity to AMS, 

as is the current practice with 

mandatory price reporting for other 

covered commodities. Electronic data 

transmission of information is 

accomplished using an interface with an 

existing electronic recordkeeping 

system. Packers will provide for the 

translation of the information from their 

existing electronic recordkeeping 

system into the required AMS 

standardized format. Once 

accomplished, the information will be 

electronically transmitted to AMS 

where it will be automatically loaded 

into an AMS database. We estimated 

that the creation of this interface by inhouse computer personnel will require 

an industry average of 15 hours per 

respondent. Further, we estimated the 

cost per hour for labor to average $49.30 

(Bureau of Labor Statistics),8 for a total 

cost, on average, of $740. Those 

companies not having in-house 

computer personnel will incur such 

costs as are necessary to bring in outside 

computer programmers to accomplish 

the task. 

INITIAL ELECTRONIC STARTUP COST

PER RESPONDENT

Hours to develop interface ....... 15 

Labor cost per hour .................. × $49.30 

Total cost per respondent ..... $739.50 

Startup Cost Prorated over 3 Year Life 

of Program: 

$739.50 / 3 = $246.50 annual cost per 

respondent 

Additionally, AMS estimated the 

annual cost per respondent for the 

storage of the electronic data files which 

were submitted to AMS in compliance 

with the reporting provisions of this 

rule to be $116.10 (5 hours for 

recordkeeping at $23.22). 

In this rule, information collection 

requirements include submission of the 

required information on a daily basis in 

the standard format provided in the 

Wholesale Pork Daily Report (LS–89). A 

copy of this report is included in the 

Appendices at the end of this rule. 

There are expected to be a total of 56 

respondents (34 commodity pork 

processors, 12 sow and boar meat 

processors, and 10 processors of all 

types of meat). Plants that slaughter 

both commodity pork (from barrows and 

gilts), and sow/boar meat will file one 

combined report so that the maximum 

number of reports per day is two. 

ANNUAL SUBMISSION COSTS PER RESPONDENT

Type of product Number of 

respondents 

Cost per 

respondent Total cost 

Commodity Pork .......................................................................................................................... 34 $1,509.30 $51,316.20 

Sow/Boar Meat ............................................................................................................................ 12 754.65 9,055.80 

Combination Meat Types ............................................................................................................. 10 1,509.30 15,093.00 

Total Annual Submission Costs ........................................................................................... 56 ........................ 75,465.00 

By dividing total submission costs of 

$75,465.00 over the total number of 

respondents (56) yield an average 

submission cost of $1,347.59 on an 

annual basis. This value can be used to 

estimate the total cost burden to the 

industry, which is determined to be 

$95,770.64 per year. 

ANNUAL INDUSTRY COSTS

Cost per 

respondent 

Number of 

respondents 

Total cost 

to industry 

Start-up Costs .............................................................................................................................. $246.50 56 $13,804.00 

Recordkeeping/ ............................................................................................................................ 116.10 56 6,501.60 

Average Submission Costs ......................................................................................................... 1,347.59 56 75,465.04 

Total Annual Costs ............................................................................................................... 1,710.19 56 95,770.64 

In 2010, federally inspected pork 

production was 22.274 billion pounds. 

Assuming this level of production, the 

cost of this final rule to the private 

sector is $4.30 per million pounds 

($95,770.64/22.274 billion pounds). 

In addition to these costs to packers 

for submitting information, AMS will 

reallocate staff, issue regulations, and 

set up an electronic database to capture 

data and develop reports. The 3 staff 

years required to administer and 

produce mandatory price reports 

include reporters and auditors. Salaryrelated costs in each year are estimated 

at $271,000. Other costs include 

approximately $20,000 for travel/ 

transportation, training, and outreach; 

$5,000 for miscellaneous costs such as 

printing, training, office supplies, and 

equipment; and $325,000 in the first 

year for a computer systems contract to 

develop the database required to 

manage the data. 

The mandatory price reporting 

program would cost AMS $621,161 in 

the first year of implementation, and 

subsequent year costs are estimated to 

be $296,161. Therefore, the costs would 

be roughly $404,500 per year. 


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50570 Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 

TOTAL ANNUAL COST TO GOVERNMENT

Cost type First year 

costs 

Following 

years’ costs 

Average 

cost/year 

Salaries ........................................................................................................................................ $271,160.82 $271,160.82 $271,160.82 

System Development Contract .................................................................................................... 325,000.00 ........................ 108,333.33 

Travel (20 trips @$1,000/trip) ...................................................................................................... 20,000.00 20,000.00 20,000.00 

Miscellaneous .............................................................................................................................. 5,000.00 5,000.00 5,000.00 

Total Costs ........................................................................................................................... 621,160.82 296,160.82 404,494.15 

Adding the costs to industry, together 

with the costs to government, yields the 

total cost to society associated with this 

regulation. Because benefits could not 

be quantified, comparison of costs with 

benefits is not possible. However, total 

costs, shown annually, over the life of 

the rule, and discounted over the life of 

the rule have been calculated. These 

figures show that this rule does not meet 

the threshold for an economically 

significant rule ($100 million). 

TOTAL COSTS OF REGULATION

Annual Costs ........................ $5,000,277.52 

Total Costs over 3 Years ..... 1,500,832.56 

Discounted Costs over 3 

Years (3% rate) ................. 1,457,543.39 

Discounted Costs over 3 

Years (7% rate) ................. 1,404,788.36 

Regulatory Flexibility Act 

This rule has been reviewed under the 

requirements of the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601– 

612). The purpose of the RFA is to 

consider the economic impact of a rule 

on small business entities. Alternatives, 

which would accomplish the objectives 

of the rule without unduly burdening 

small entities or erecting barriers that 

would restrict their ability to compete in 

the marketplace, were evaluated by the 

Committee. Moreover, the requirements 

contained in this rule were negotiated 

with members of the industry, some of 

whom represented small and mid-size 

firms. 

Regulatory action should be 

appropriate to the scale of the 

businesses subject to the action. The 

collection of information is necessary 

for the proper performance of the 

functions of AMS concerning the 

mandatory reporting of livestock 

information. The 1999 Act requires 

AMS to collect and publish livestock 

market information. The required 

information is only available directly 

from those entities required to report 

under the 1999 Act and by these 

regulations and exists nowhere else. 

Therefore, this rule does not duplicate 

market information reasonably 

accessible to USDA. 

For any calendar year, any federally 

inspected swine plant which 

slaughtered an average of 100,000 head 

of swine a year for the immediately 

preceding 5 calendar years, and any 

packing firm that slaughtered at least 

200,000 sows and/or boars on average 

during the preceding 5 years, are 

required to report information. 

Additionally, any swine plant that did 

not slaughter swine during the 

immediately preceding 5 calendar years 

is required to report if the Secretary 

determines that the plant should be 

considered a packer based on the 

capacity of the processing plant. This 

accounts for approximately 56 out of 

611 swine plants or 9.2 percent of all 

federally inspected swine plants. Fully 

90.8 percent of all swine plants in the 

U.S. are exempted by this rule from 

reporting information. 

Accordingly, we also have prepared 

this final regulatory flexibility analysis. 

The RFA compares the size of meat 

packing plants to the North American 

Industry Classification System (NAICS) 

to determine the percentage of small 

businesses within the meat packing 

industry. Under these size standards, 

meat packing companies with 500 or 

less employees are considered small 

business entities. 

Objectives and Legal Basis. The 

objective of this rule is to improve the 

price and supply reporting services of 

AMS in order to encourage competition 

in the marketplace for wholesale pork 

products by increasing the amount of 

information available to participants. 

This is accomplished through the 

establishment of a program of 

information regarding the marketing of 

wholesale pork products as specifically 

directed by the 1999 Act, the 2010 

Reauthorization Act, and these 

regulations, as described in detail in the 

background section. 

Estimated Number of Small 

Businesses. This rule provides for the 

mandatory reporting of market 

information by pork wholesalers who, 

for any calendar year, have slaughtered 

100,000 head of swine during the 

immediately preceding 5 calendar years, 

or any packing firm that has slaughtered 

at least 200,000 sows and/or boars on 

average during the preceding 5 years. 

Processing plants that have not 

slaughtered livestock during the 

immediately preceding 5 calendar years 

are also required to report if the 

Secretary determines that the plants 

should be considered packers based on 

their capacity. 

The NAICS size standard classifies a 

small business in the meat packing 

industry as a company with less than 

500 employees. Although it is common 

in the red meat industry for larger 

companies to own several plants, some 

of which may employ less than 500 

people, those companies with a total 

slaughter plant employment at all 

locations of less than 500 are considered 

to be small businesses for the purposes 

of this rule even though individual 

plants are mandated to report as 

provided by the 1999 Act, 2010 

Reauthorization Act, and this 

regulation. 

Approximately 36 individual pork 

packing companies representing a total 

of 56 individual plants are required to 

report information to AMS. Based on 

the NAICS size standard, 24 of these 36 

pork packing companies are considered 

small businesses, representing 27 

individual plants that are required to 

report. The figure of 56 plants required 

to report represents 9.2 percent of the 

swine plants in the United States. The 

remaining 90.8 percent of swine plants, 

nearly all estimated to qualify as small 

business, are exempt from mandatory 

reporting. 

AMS estimates the total annual 

burden on each swine packing entity to 

be, on average, $1,710.19, including 

$1,347.59 for annual costs associated 

with electronically submitting data, 

$246.50 for annual share of initial 

startup costs of $739.50, and $116.10 for 

the storage and maintenance of 

electronic files that were submitted to 

AMS. 

Projected Recordkeeping. Each packer 

required to report information to the 

Secretary must maintain such records as 

are necessary to verify the accuracy of 


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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 50571 

the information provided to AMS. This 

includes information regarding price, 

volume, weight, cut, and other factors 

necessary to adequately describe each 

transaction. These records are already 

kept by the industry. Reporting packers 

are required by these regulations to 

maintain and to make available the 

original contracts, agreements, receipts, 

and other records associated with any 

transaction relating to the purchase, 

sale, pricing, transportation, delivery, or 

weighing of all transactions. Reporting 

packers are also required to maintain 

copies of the information provided to 

AMS. All of the above-mentioned 

paperwork must be kept for at least 2 

years. Packers are not required to report 

any other new or additional information 

that they do not generally have available 

or maintain. Further, they are not 

required to keep any information that 

would prove unduly burdensome to 

maintain. The paperwork burden that is 

imposed on the packers is further 

discussed in the section entitled 

‘‘Paperwork Reduction Act’’ that 

follows. In addition, we have not 

identified any relevant Federal rules 

that are currently in effect that 

duplicate, overlap, or conflict with this 

rule. 

Professional skills required for 

recordkeeping under this rule are not 

different than those already employed 

by the reporting entities. Reporting will 

be accomplished using computers or 

similar electronic means. AMS believes 

the skills needed to maintain such 

systems are already in place in those 

small businesses affected by this rule. 

This rule as directed by the 2010 

Reauthorization Act requires pork 

packing plants of a certain size to report 

information to the Secretary at 

prescribed times throughout the day and 

week. These regulations already exempt 

many small businesses by the 

establishment of daily slaughter and 

processing capacity thresholds. Based 

on figures published by the National 

Agricultural Statistics Service (NASS), 

there were 611 federally inspected 

swine slaughter plants operating in the 

United States at the end of 2010. AMS 

estimates that approximately 56 swine 

plants are required to report 

information, representing 9.2 percent of 

all federally inspected swine plants. 

Therefore, fully 90.8 percent of all 

swine plants are not required to report. 

The impact of the costs of the rule to 

industry was also analyzed by plant 

capacity, measured in terms of number 

of head slaughtered. Industry cost by 

firm size, as measured in number of 

head slaughtered, is shown in the 

following table. Firms that slaughter 

fewer than 100,000 per year are exempt 

from the rule. These data do not 

distinguish between barrow/gilt 

slaughter and sow/boar slaughter, so all 

firms are assumed to report on barrows/ 

gilts. 

The data show that on a per head 

basis, the costs of this rule range from 

0.033 cents per head slaughtered for the 

largest firms to approximately one cent 

per head for the smallest plants affected 

by the rule. On average, the cost burden 

is 0.084 cents per head slaughtered. 

Roughly 30 plants, or 4.5 percent of all 

plants in the industry, have costs that 

exceed this value. With an average hog 

carcass price of $87.90 for the year to 

date, and an average weight of 205 

pounds per carcass, the price paid per 

head is roughly $180. The additional 

cost of one cent per head, the largest 

expected cost for plants impacted by the 

rule, does not appear to represent a 

significant cost increase. 

In the table below, showing data for 

2010, 91.2 percent of all plants (or 557 

of 611 plants) would not have been 

expected to incur any reporting costs. 

All the costs would have been borne by 

the largest 8.8 percent of plants. Because 

the data in this table do not differentiate 

between sow/boar and barrow & gilt 

plants, these figures are approximates of 

the actual values, but illustrate the 

expected distributional impacts of the 

rule. 

HOGS, NUMBER OF FEDERALLY INSPECTED PLANTS, HEAD SLAUGHTERED, TOTAL COST, AND COST/HEAD BY SIZE GROUP

UNITED STATES: 2010 * 

Number head Number of 

plants 

Thousand 

head Total cost Cost/head 

1–999 ............................................................................................................... 385 117.6 $0.00 $0.00000 

1,000–9,999 ..................................................................................................... 116 328.4 0.00 0.00000 

10,000–99,999 ................................................................................................. 56 2,163.0 0.00 0.00000 

100,000–249,999 ............................................................................................. 14 2,235.8 23,942.66 0.01071 

250,000–499,999 ............................................................................................. 8 2,799.8 13,681.52 0.00489 

500,000–999,999 ............................................................................................. 5 3,346.7 8,550.95 0.00255 

1,000,000–1,999,999 ....................................................................................... 3 4,850.5 5,130.57 0.00106 

2,000,000–2,999,999 ....................................................................................... 11 26,862.7 18,812.09 0.00070 

3,000,000–3,999,999 ....................................................................................... 1 3,862.4 1,710.19 0.00044 

4,000,000+ ....................................................................................................... 12 62,747.8 20,522.28 0.00033 

Total .......................................................................................................... 611 109,314.7 92,340.26 0.00084 

* Source: U.S. Department of Agriculture, National Agricultural Statistics Service, ‘‘Livestock Slaughter: 2010 Annual Summary,’’ April 2011. 

In summary, the RFA analysis showed 

that of the 56 firms facilities that are 

required to report, 27 (just under half) 

qualify as being owned by small 

businesses. These 27 facilities are 

owned by 24 of the 36 companies 

subject to the rule. However, given the 

capital intensive nature of the industry, 

a more appropriate approach to the RFA 

analysis may be the number of head 

slaughtered by company. This approach 

was recognized by Congress in the 

original LMR legislation, by placing a 

100,000 head minimum slaughter 

requirement on firms which report. 

Using that standard, fewer than 10 

percent of all firms in the industry are 

affected by this regulation. In addition, 

the increased cost of the rule represents 

at most roughly 0.006 percent the 

current hog carcass value ($0.01/ 

$180.00). Based on this analysis, AMS 

determined that the rule would not have 

a significant economic impact on a 

substantial number of small entities. 

Paperwork Reduction Act 

In accordance with 5 CFR part 1320, 

we include the description of the 

reporting and recordkeeping 

requirements and an estimate of the 

annual burden on packers required to 

report information under this rule. The 

OMB reference number assigned to this 

collection is 0581–0279. AMS plans to 

submit to OMB a request to merge this 

collection into the currently approved 

collection, ‘‘Livestock Mandatory 


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50572 Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 

Reporting Act of 1999,’’ OMB number 

0581–0186. The reporting requirement 

timeline is fully discussed under 

Supplementary Information. 

The information collection and 

recordkeeping requirements in this 

regulation are essential to establishing 

and implementing a mandatory program 

of livestock and livestock products 

reporting. Based on the information 

available, AMS estimates that there are 

34 commodity pork packer plants, 12 

sow/boar meat packer plants, and 10 

packer plants processing both 

commodity pork and sow/boar meat that 

are required to report market 

information under this rule. These 

companies have similar recordkeeping 

systems and business operation 

practices and conduct their operations 

in a similar manner. AMS believes that 

all of the information required under 

this rule can be collected from existing 

materials and systems and that these 

materials and systems can be adapted to 

satisfy the new requirements. 

The PRA also requires AMS to 

measure the recordkeeping burden. 

Under this rule, each packer required to 

report must maintain and make 

available upon request for 2 years, such 

records as are necessary to verify the 

accuracy of the information required to 

be reported. These records include 

original contracts, agreements, receipts, 

and other records associated with any 

transaction relating to the purchase, 

sale, pricing, transportation, delivery, 

weighing, slaughter, or carcass 

characteristics of all livestock. Under 

this rule, the electronic data files which 

the packers are required to utilize when 

submitting information to AMS will 

have to be maintained as these files 

provide the best record of compliance. 

Therefore, the recordkeeping burden 

includes the amount of time needed to 

store and maintain records. AMS 

estimates that, since records of original 

contracts, agreements, receipts, and 

other records associated with any 

transaction relating to the purchase, 

sale, pricing, transportation, delivery, 

and weighing of wholesale pork 

products are stored and maintained as a 

matter of normal business practice by 

these companies for a period in excess 

of 2 years, additional annual costs will 

nominal. AMS estimates the annual cost 

per respondent for the storage of the 

electronic data files which were 

submitted to AMS in compliance with 

the reporting provisions of this rule to 

be $116.10. This estimate includes the 

cost per respondent to maintain such 

records which is estimated to average 5 

hours per year at $23.22 per hour. 

In this rule, information collection 

requirements have been designed to 

minimize disruption to the normal 

business practices of the affected 

entities. The requirements include the 

submission of the required information 

on a daily basis in the standard format 

provided in the form included in the 

Appendices section. This form requires 

the minimal amount of information 

necessary to properly describe each 

reportable transaction, as required 

under this rule. 

1. Wholesale Pork Daily Report: Form 

LS–89 

Estimate of Burden: Public reporting 

burden for collection of information is 

estimated to be 0.125 hours per 

electronically submitted response. 

Respondents: Packer processing 

plants required to report information on 

wholesale pork sales to the Secretary. 

Estimated Number of Respondents: 34 

commodity pork plants, 12 sow/boar 

meat plants and 10 combination 

commodity pork/sow/boar meat plants. 

Estimated Number of Responses per 

Respondent: 520 per year for 

commodity pork (2 per day for 260 

days); 260 per year for sow/boar meat (1 

per day for 260 days); and 520 per year 

(2 per day) for combination commodity 

pork/sow/boar meat. 

Estimated Total Annual Burden on 

Respondents: 3,250 hours. 

With 260 reporting days per year, 

commodity pork processors, and 

processors which produce a 

combination of commodity pork/sow/ 

boar meat, will submit a total of 520 

responses per year, and sow/boar meat 

processors will submit a total of 260 

responses per year. This includes 5 

hours for recordkeeping annually, for 

each of the 56 respondents (total 

recordkeeping hours of 280). 

BREAKDOWN OF ESTIMATED DATA SUBMISSION COST BURDEN

Item Reporting 

days Responses Total responses 

I. Number of Responses per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 260 × 2 daily = 520 

Sow/Boar Meat ............................................................................................................. 260 × 1 daily = 260 

At 0.125 hours per submission, 

commodity pork/combination 

processors will require 65.0 hours of 

reporting time, while sow/boar meat 

processors will require 32.5 hours of 

reporting time. 

Item Submissions/ 

year 

Hours/ 

submission 

Total hours/ 

year 

II. Number of Submission Hours per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 520 × .125 = 65.00 

Sow/Boar Meat ............................................................................................................. 260 × .125 = 32.50 

Total annual submission costs for 

commodity pork and combination pork 

processors is expected to be $1,509.30 

with a clerical cost of $23.22 per hour, 

including benefits. Annual costs for sow 

meat processors will equal $754.65. 


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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 50573 

Item Total hours/ 

year 

Cost/ 

hour 

Total $’s/ 

year 

III. Total Submission Cost per Respondent per Year 

Commodity Pork/Combination ...................................................................................... 65.00 × $23.22 = $1,509.30 

Sow/Boar Meat ............................................................................................................. 32.50 × 23.22 = 754.65 

A total of 44 respondents are expected 

to report commodity pork/combination 

wholesale data, while 12 sow/boar meat 

respondents are anticipated. Ten of the 

respondents will report on both types of 

product. In all, 56 different respondents 

will be reporting, incurring total annual 

submission costs of about $75,465.00. 

Item Total $’s/ 

year 

Number of 

respondents Total cost 

IV. Total Yearly Submission Cost for All Respondents 

Commodity Pork/Combination ...................................................................................... $1,509.30 × 44 = $66,409.20 

Sow/Boar Meat ............................................................................................................. 754.65 × 12 = 9,055.80 

Total ....................................................................................................................... ........................ .... ........................ .... 75,465.00 

Estimated Total Annual Burden on 

Respondents: $95,770.64 including 

$75,465.00 for annual costs associated 

with electronically submitted responses 

(3,250 annual hours (58.036 annual 

hours per 56 respondents) @ $23.22 per 

hour, for a total of $1,347.59 per 

respondent), initial electronic data 

transfer setup costs of $13,804.00 

($739.50 prorated over 3 years = $246.50 

per 56 respondents), and $6,501.60 

($116.10 per 56 respondents) for the 

storage and maintenance of electronic 

files that were submitted to AMS. 

List of Subjects in 7 CFR Part 59 

Cattle, Hogs, Sheep, Livestock, Lamb. 

For the reasons set forth in the 

preamble, Title 7, Chapter I, part 59 is 

amended to read as follows: 

PART 59—LIVESTOCK MANDATORY 

REPORTING 

■ 1. The authority citation for part 59 

continues to read as follows: 

Authority: 7 U.S.C 1635–1636i. 

■ 2. Section 59.20 is amended by adding 

paragraph (f) to read as follows: 

§ 59.20 Recordkeeping. 

* * * * * 

(f) Reporting sales of wholesale pork. 

A record of a sale of wholesale pork by 

a packer shall evidence whether the sale 

occurred: 

(1) Before 10:00 a.m. central time; 

(2) Between 10:00 a.m. and 2:00 p.m. 

central time; or 

(3) After 2:00 p.m. central time. 

■ 3. Section 59.30 is amended by: 

■ A. Revising the definition of ‘‘F.O.B.’’. 

■ B. Revising the last two sentences in 

the definition of ‘‘Institutional Meat 

Purchase Specifications’’. 

■ C. Revising paragraph (3) of the 

definition of ‘‘Lot’’. 

The revisions read as follows: 

§ 59.30 Definitions. 

* * * * * 

F.O.B. The term ‘‘F.O.B.’’ means free 

on board, regardless of the mode of 

transportation, at the point of direct 

shipment by the seller to the buyer (e.g., 

F.O.B. Plant, F.O.B. Feedlot) or from a 

common basis point to the buyer (e.g., 

F.O.B. Omaha). 

Institutional Meat Purchase 

Specifications. * * * Phone (202) 260– 

8295 or Fax (202) 720–1112. Copies may 

also be obtained over the Internet at 

http://www.ams.usda.gov/AMSv1.0/

LivestockStandardizationIMPS. 

* * * * * 

Lot. * * * 

(3) When used in reference to boxed 

beef, wholesale pork, and lamb, the term 

‘lot’ means a group of one or more boxes 

of beef, wholesale pork, or lamb items 

sharing cutting and trimming 

specifications and comprising a single 

transaction between a buyer and seller. 

* * * * * 

■ 4. Section 59.200 is amended by: 

■ A. Adding, in alphabetical order, a 

definition for ‘‘Formula marketing 

arrangement’’. 

■ B. Adding, in alphabetical order, a 

definition for ‘‘Forward sale’’. 

■ C. Adding, in alphabetical order, a 

definition for ‘‘Negotiated sale’’. 

■ D. Adding, in alphabetical order, a 

definition for ‘‘Pork class’’. 

■ E. Adding, in alphabetical order, a 

definition for ‘‘Specialty pork product’’. 

■ F. Adding, in alphabetical order, a 

definition for ‘‘Type of sale’’. 

■ G. Adding, in alphabetical order, a 

definition for ‘‘Variety meats’’. 

■ H. Adding, in alphabetical order, a 

definition for ‘‘Wholesale pork’’. 

The additions read as follows: 

§ 59.200 Definitions. 

* * * * * 

Formula marketing arrangement. 

When used in reference to wholesale 

pork, the term ‘formula marketing 

arrangement’ means an agreement for 

the sale of pork under which the price 

is established in reference to publiclyavailable quoted prices. 

* * * * * 

Forward sale. When used in reference 

to wholesale pork, the term ‘forward 

sale’ means an agreement for the sale of 

pork where the delivery is beyond the 

timeframe of a ‘‘negotiated sale’’ and 

means a sale by a packer selling 

wholesale pork to a buyer of wholesale 

pork under which the price is 

determined by seller-buyer interaction 

and agreement. 

* * * * * 

Negotiated sale. The term ‘negotiated 

sale’ means a sale by a packer selling 

wholesale pork to a buyer of wholesale 

pork under which the price is 

determined by seller-buyer interaction 

and agreement, and scheduled for 

delivery not later than 14 days for boxed 

product and 10 days for combo product 

after the date of agreement. The day 

after the seller-buyer agreement shall be 

considered day one for reporting 

delivery periods. 

* * * * * 

Pork class. The term ‘‘pork class’’ 

means the following types of swine 

purchased for slaughter: 

(1) Barrow/gilt; 

(2) Sow; 

(3) Boar. 

* * * * * 


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Specialty pork product. The term 

‘specialty pork product’ means 

wholesale pork produced and marketed 

under any specialty program such as, 

but not limited to, genetically-selected 

pork, certified programs, or specialty 

selection programs for quality or breed 

characteristics. 

* * * * * 

Type of sale. The term ‘‘type of sale’’ 

with respect to wholesale pork means a 

negotiated sale, forward sale, or formula 

marketing arrangement. 

Variety meats. The term ‘variety 

meats’ with respect to wholesale pork 

means cut/processing floor items, such 

as neck bones, tails, skins, feet, hocks, 

jowls, and backfat. 

Wholesale pork. The term ‘wholesale 

pork’ means fresh and frozen primals, 

sub-primals, cuts fabricated from subprimals, pork trimmings, pork for 

processing, and variety meats 

(excluding portion-control cuts, cuts 

flavored above and beyond normal 

added ingredients that are used to 

enhance products, cured, smoked, 

cooked, and tray packed products). 

When referring to wholesale pork, 

added ingredients are used to enhance 

the product’s performance (e.g. 

tenderness, juiciness) through adding a 

solution or emulsion via an injection or 

immersion process. The ingredients 

shall be limited to water, salt, sodium 

phosphate, antimicrobials, or any other 

similar combination of foresaid or 

similar ingredients and in accordance 

with established USDA regulations. 

■ 5. Adding a new § 59.205 to read as 

follows: 

§ 59.205 Mandatory reporting of wholesale 

pork sales. 

(a) Daily reporting. The corporate 

officers or officially designated 

representatives of each packer 

processing plant shall report to the 

Secretary at least twice each reporting 

day for barrows and gilts (once by 10 

a.m. central time, and once by 2 p.m. 

central time) and once each reporting 

day for sows and boars (by 2 p.m. 

central time) the following information 

on total pork sales established on that 

day inclusive since the last reporting as 

described in § 59.10(b): 

(1) The price for each wholesale pork 

sale, as defined herein, quoted in dollars 

per hundredweight on an F.O.B. Plant 

and an F.O.B. Omaha basis as outlined 

in § 59.205(d). The price shall include 

brokerage fees, if applicable. All direct, 

specific, and identifiable marketing 

costs (such as point of purchase 

material, marketing funds, accruals, 

rebates, and export costs) shall be 

deducted from the net price if 

applicable and known at the time of 

sale; 

(2) The quantity for each pork sale, 

quoted by number of pounds sold; and 

(3) The information regarding the 

characteristics of each sale is as follows: 

(i) The type of sale; 

(ii) Pork item description; 

(iii) Pork item product code; 

(iv) The product delivery period, in 

calendar days; 

(v) The pork class (barrow/gilt, sow, 

boar); 

(vi) Destination (Domestic, Export/ 

Overseas, NAFTA); 

(vii) Type of Refrigeration (Fresh, 

Frozen, age range of fresh product); and 

(viii) Specialty pork product, if 

applicable 

(b) Publication. The Secretary shall 

make available to the public the 

information obtained under paragraph 

(a) of this section not less frequently 

than twice each reporting day for gilt 

and barrow product and once each 

reporting day for sow and boar product. 

(c) The Secretary shall obtain product 

specifications upon request. 

(d) The Secretary shall provide freight 

information for the purpose of 

calculating prices on an F.O.B. Omaha 

basis. The Secretary shall provide this 

information periodically, but not less 

than quarterly. 

Dated: August 15, 2012. 

David R. Shipman, 

Administrator, Agricultural Marketing 

Service. 

Note: The following Appendices will not 

appear in the Code of Federal Regulations. 

Appendix A—Swine Mandatory 

Reporting Form 

The following form referenced in Subpart 

C of part 59 would be used by persons 

required to report electronically transmitted 

mandatory market information on domestic 

sales of boxed beef to AMS. 

Swine. 

LS–89—Wholesale Pork Daily Report 

Appendix B—Mandatory Reporting 

Guideline 

The following mandatory reporting form 

guidelines will be used by persons required 

to report electronically transmitted 

mandatory market information to AMS. 

The first 10 fields of each mandatory 

reporting form provide the following 

information: Identification number (plant 

establishment number ID number), company 

name (name of parent company), plant street 

address (street address for plant), plant city 

(city where plant is located), plant state (state 

where plant is located), plant zip code (zip 

code where plant is located), contact name 

(the name of the corporate representative 

contact at the plant), phone number (full 

phone number for the plant including area 

code), reporting date (date the information is 

due to be submitted (mm/dd/yyyy),and 

reporting time (the submission time 

corresponding to the 10:00 a.m. and the 2:00 

p.m. reporting requirements). 

(a) Wholesale Pork Mandatory Reporting 

Forms 

(1) LS–89—Wholesale Pork Daily Report. 

For lots comprising multiple items, provide 

information for each item in a separate record 

identified with the same lot identification or 

purchase order number. 

(i) Lot identification or purchase order 

number (11). Enter code used to identify the 

lot to the packer. 

(ii) Destination (12). Enter ‘1’, domestic, for 

product shipped within the 50 States; ‘2’, 

exported, for product shipped overseas; and 

‘3’, exported, for product shipped NAFTA 

(Canada or Mexico). 

(iii) Sales type code (13). Enter the code 

corresponding to the sale type of the lot of 

wholesale pork. 

(iv) Delivery period code (14). Enter the 

code corresponding to the delivery time 

period of the lot of wholesale pork. 

(v) Refrigeration (15). Enter ‘1’ if the 

product is sold in 0–6 days fresh, combo; ‘2’ 

if the product is sold 7 or more days fresh, 

combo; ‘3’ if the product is sold 0–10 days 

fresh, boxed; ‘4’ if the product is sold 11 or 

more days fresh, boxed; and ‘5’ if the product 

is sold in a frozen condition. 

(vi) Class code (16). Enter ‘1’ if the product 

was derived from barrows/gilts, ‘2’ for sows, 

‘3’ for boar, and ‘4’ for mixed. 

(vii) Pork item product code (17). Enter the 

company product code for item sold. 

(viii) Pork item—Description (18). Enter 

the pork item name. 

(ix) Total product weight (19). Enter the 

total weight of the wholesale pork cuts in the 

lot in pounds. 

(xii) F.O.B. Plant Price (20). Enter the price 

received for each wholesale pork cut in the 

lot in dollars per one hundred pounds, FOB 

Plant basis. 

(xiii) F.O.B. Omaha Price (21). Enter the 

price received for each wholesale pork cut in 

the lot in dollars per one hundred pounds, 

FOB Omaha basis. 

BILLING CODE 3410–02–P 


wreier-aviles on DSK7SPTVN1PROD with RULES
Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 / Rules and Regulations 50575 

[FR Doc. 2012–20443 Filed 8–21–12; 8:45 am] 

BILLING CODE 3410–02–C 


wreier-aviles on DSK7SPTVN1PROD with RULESER22AU12.026</GPH>