Livestock Mandatory Reporting Act of 1999

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The Livestock Mandatory Reporting Act of 1999 (Title IX of the FY2000 USDA appropriations act (P.L. 106-78)) requires large packers and importers to report to USDA the details of all transactions involving purchases of livestock and imported boxed lamb cuts, and the details of all transactions involving domestic and export sales of boxed beef cuts, sales of domestic and imported boxed lamb cuts, and sales of lamb carcasses. Additional provisions impose, in turn, new data reporting requirements on USDA, including more frequent price reports along with new monthly information on retail prices for meat and poultry products.

Data reporting is the process of collecting and submitting data which gives rise to accurate analyses of the facts on the ground; inaccurate data reporting can lead to vastly uninformed decision-making based on erroneous evidence. When data is not reported, the problem is known as underreporting; the opposite problem leads to false positives.

In the past, meat packers and processors were not required to report the prices they paid for the animals or the terms of sale. Rather, daily sales and price information was collected by the Agricultural Marketing Service from companies on a voluntary basis. AMS reporters also attended auctions to collect price information.

The Agricultural Marketing Service (AMS) is an agency within the United States Department of Agriculture, and has programs in five commodity areas: cotton and tobacco; dairy; fruit and vegetable; livestock and seed; and poultry. These programs provide testing, standardization, grading and market news services for those commodities, and oversee marketing agreements and orders, administer research and promotion programs, and purchase commodities for federal food programs. The AMS enforces certain federal laws such as the Perishable Agricultural Commodities Act and the Federal Seed Act. The AMS budget is $1.2 billion. It is headquartered in the Jamie L. Whitten Building in Washington, D.C.

However, as more and more animals were sold under formula pricing, other contract, or captive supply arrangements, the open cash markets became less helpful as benchmarks. On the argument that such arrangements also enabled packers to more easily conceal potential anti-competitive practices, Congress passed the Act, requiring large packers and importers to report prices and other transaction details to the Agricultural Marketing Service.

Captive supply is a term for that part of the supply that is not owned by a company but is used by the company to maximize its own profits often at the unknowing expense of those who actually own those supplies. This is usually a characteristic of a market that is dominated by one firm or a few firms and implicit collusion between those firms. Often captive supply is called a beneficial market agreement by those controlling the supply but the actions of those controlling that supply reveal otherwise. Captive supply is used to subvert the natural forces of market price determination to accrue more economic benefits to those who control it. It circumvents the typically price-moderating market force of supply and demand by artificially restricting the supply. Example: American Bar Association Over Legal Industry.

Policy issues include the ability of USDA to effectively implement the mandatory program, which had a 5-year authorization that expired October 22, 2004, and whether mandatory reporting is more or less helpful to producers than the longstanding voluntary reporting system.

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References

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