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Farm Press Release

For immediate release -- April 17, 2000
Contact Bob Brammer (515-281-6699) or Steve Moline (515-281-6634)

Attorney General Miller Comment on Proposed USDA Livestock Reporting Rules

DES MOINES. Iowa Attorney General Tom Miller sent a letter April 17 to the U.S. Department of Agriculture submitting a formal Comment on USDA's proposed rules to implement the Livestock Mandatory Reporting Act of 1999.

For example, Attorney General Miller stated that the new data should be reported on a state and regional level, and not on the national level alone. Because the market for slaughter hogs is in most cases a local market, the proposal to report data only on a national level actually decreases the accuracy of the present regional reporting system, the Comment argues.

For more information on the Attorney General's Comment on the proposed rules, please contact Asst. Attorney General Steve Moline of the Farm Division at 515-281-6634.

The full text of the Comment follows.

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April 17, 2000

John E. VanDyke
Chief, Livestock & Grain Market News Branch
Docket No. LS-99-18
United States Department of Agriculture
1400 Independence Avenue, SW, Room 2619-S
Washington, D.C. 20250-0252

Re: Livestock Mandatory Reporting; Proposed Rule, Federal

Register, Vol. 65, No. 53, pages 14651-14691, Docket No. LS-99-18

Dear Mr. VanDyke:

The Iowa Attorney General's Office submits these comments on the proposed rules implementing the "Livestock Reporting Act of 1999", as published in the Federal Register, vol. 65, No. 53, pages 14651-14691.

Over the last decade, the participants in the livestock industry have significantly changed the way they buy and sell livestock. While these changes have affected all species, they are most pronounced in the hog market where as many as 70% of the hogs are now sold using some form of contractual sale as opposed to the traditional spot-market system. The existing livestock price reporting system does not report contracted sales. As a result, the market data reported by the system does not include the majority of hogs marketed each day. This discrepancy has raised concerns with most participants, especially producers, that the market data reported by the existing reporting system does not accurately reflect market conditions.

The desire to have more accurate market information was the driving force leading to enactment of the Livestock Mandatory Reporting Act of 1999. The Agricultural Marketing Service (AMS) cites a similar goal for its proposed rule implementing the Act: "The objective of this proposed rule is to improve the price and supply reporting services of the Department of Agriculture in order to encourage competition in the marketplace for livestock and livestock products by increasing the amount of information available to participants." Federal Register, vol. 65, No. 53, page 14662. The Iowa Attorney General's Office in the past has supported and continues to support these efforts to provide complete, relevant, and accurate market information to Iowa livestock producers.

April 17, 2000

Page Two

In an effort to suggest changes in the proposed rule that will result in the new reporting system more effectively meeting these valuable goals, the Iowa Attorney General's Office submits the following comments:

The data collected by the new reporting system should be reported on a state and regional level in order to improve the quality of the data presently reported by the AMS. In fact, since the market for slaughter hogs is in most cases a local, not a national market (usually involving a geographic area much smaller than an entire state), the present proposal to report data on a national level decreases the accuracy of the present regional reporting system. Any concerns regarding maintaining the confidentiality of information should be very narrowly construed, since the express legislative purpose of the Act is to increase the market information available to participants in the livestock markets.

In order to allow for better oversight and enforcement, the exact time of the transaction should be maintained in the records that packers are required to keep rather than recording the transaction during one of three blocks of time as required in the proposed rule.

Packers should be required to submit to AMS, on a lot basis, the relevant raw data used to calculate the packer's percent lean. Absent the raw data, oversight and enforcement by GIPSA and other applicable state agencies, such as the Iowa Attorney General's Office, is vastly more difficult and in the end less effective.

The rule should contain an express procedure to address the potential need for state enforcement agencies to use their legal authority to gain access to the raw data collected by AMS.

5. AMS needs to use as much care as possible to make sure that reported data accurately reflect market reality. For example, aggregating price data from floor, ledger or window contracts with formula contracts that do not include the price limitations included in those contracts could result in reported data that does not accurately reflect market conditions.

6. Packers should be required to provide producers with the raw data they used to calculate the percent lean of a producer's hogs so that producers can compare their transaction results with the AMS's publicly reported information.

The scope of the contract library maintained by the USDA needs to include copies of entire existing marketing contracts offered by packers, including pricing terms, if that library is to provide the kind of market information necessary to meet the express legislative purpose of the Act.

April 17, 2000

Page Three

The Iowa Attorney General's Office appreciates the opportunity to submit these comments. If you have any questions or need any additional information, please contact my Office at your convenience.

Sincerely,

THOMAS J. MILLER

Attorney General of Iowa

 

STEPHEN MOLINE
Assistant Attorney General
Environmental & Agricultural
Law Division
Tel: (515) 281-6634
FAX: (515) 242-6072

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