Comments on Madatory Price Reporting

September 14, 2007

Contact: Dave Warner (202) 347-3600

Washington, September 24, 2007 

Dear Mr. Preston,

The National Pork Producers Council (NPPC) submits, on behalf of its members, these comments in response to the proposed rule on Livestock Mandatory Reporting; Reestablishment and Revision of the Reporting Regulation for Swine, Cattle, Lamb, and Boxed Beef in the Federal Register on August 8, 2007. NPPC is a federation of 44 state pork producer organizations and represents the interests of the nation’s 67,000 pork producers. The U.S. pork industry represents a major value-added activity in the  agricultural economy and a major contributor to the overall U.S. economy. NPPC appreciates the U.S. Department of Agriculture’s (USDA) decision, on September 5, 2007, to extend the comment period.

The National Pork Producers Council (NPPC) offers the following comments regarding the Proposed Rule for Reestablishment and Revision of the Reporting Regulations for Swine as were first established pursuant to the Livestock Mandatory Reporting Act (LMRA) of 1999.

NPPC agrees with the proposal to drop the requirement that agreement on a delivery day must be reached in order for a sale to be classified as a negotiated sale. We believe that this requirement resulted from a misinterpretation of the original legislation. It has caused many negotiated sales to be omitted from the data for the day on which the price agreement was actually made and errantly placed in the data for the day on which a delivery date is established. Prices and quantities from negotiated sales should be included in the data for the date of the negotiation and agreement on price and this change makes that possible.

Proposed Requirements: Swine (page 44676)

The proposed rule contains what we believe to be a typographical error on page 44676 in that it refers to section 59.303 as the new rules for reporting prices of sows and boars. The new rules for sows and boars actually appear in section 59.203. We believe all of the other items on page 44676 agree with the changes that were included in PL 109-296, the LMRA reauthorization dated October 5, 2006. While not a part of the reauthorization legislation, NPPC supports USDA’s proposal to define “inferior hogs” and to allow packers to exclude information on those animals from the data they submit to USDA. In the past, USDA has applied some arbitrary limits to weights and prices in order to omit these low-priced animals from the published data. It makes more sense to allow the packers to omit these animals since they actually know whether the hog is “inferior”. NPPC does not believe this practice will be detrimental to producers and including the practice in the rules adds transparency to the system. NPPC does urge USDA to continue to look for and omit extreme prices according to a standard, objective protocol.

NPPC strongly supports the publication of a “Net Price Distribution Report” for all barrows and gilts slaughtered on the previous day. However, it is imperative that the Agency work closely with the industry to determine the most effective reporting format for providing meaningful market information to our producers. Further, as the Agency implements the new regulation, we believe it is critical to evaluate current reports that are regularly used for pricing hogs. Section 251(e) of the reauthorized LMRA gives the Secretary the authority to make “reasonable adjustments” to submitted data in order to prevent harm to producers, packers and other market participants. We are convinced there is a great opportunity to use the net price distributions and other information to modify existing reports so they are more reflective of the market situation.

Subpart C – Swine Reporting (pages 44698 – 44700)

Section 59.200 Definitions. The definition of “inferior hogs” is reasonable and the new definition of “packer” agrees with the changes made to the law to accommodate sow slaughter companies. Section 59.202 (a) Prior Day Report correctly lists that changed reporting time for prior day slaughter data for barrows and gilts and includes the exception for inferior swine. However, the term here (“inferior swine”) is not the same as the defined term (“inferior hogs”). We believe those terms should be consistent. Section 59.202 (a)(4) includes language directing the Secretary to publish price distributions but gives USDA until 3:00 p.m. each day to do so. The wording allows USDA to publish the distributions earlier but we see little reason that USDA can not include the distribution in the prior day slaughter report that is published at 10:00 a.m. Therefore, we believe the 3:00 p.m. deadline is too lax and urge USDA to include the distributions in the 10:00 a.m. prior day slaughter report.

Section 59.203 – Mandatory daily reporting for sows and boars contains several  provisions upon which we offer comments.

– Part (a) requires sow and boar slaughter companies to report prior day data by 7:00  a.m. While that technically agrees with the wording of the reauthorization (“not later than 9:30 a.m.”), we believe that it fits neither the negotiations between producers, packers and Congress nor the expectations resulting from those negotiations. Neither packers nor producers agreed to the “not later than 9:30 a.m.” reauthorization language with 7:00 a.m. in mind. We urge USDA to set the reporting time no earlier than 9:00 a.m. and, preferably, 9:30 a.m. as the statute reads
– The reporting requirements in parts (a)(1) through (a)(4) look reasonable. It appears that all of the information listed in the reauthorizing legislation can be derived from the data that will be supplied under these proposed rules.
– Part (a)(5) lists a publication time of 8:00 a.m. That fits with the 7:00 a.m.  submission time but will need to be changed if the submission deadline is changed. The publication time should be at least one hour after the submission time.
– While not included in the rules, NPPC urges USDA to fully comply with the reauthorizing legislation’s requirements to provide for electronic submission of sow and boar information through an Internet website or equivalent means. Sow and boar slaughterers are generally small firms that cannot absorb significant compliance costs. USDA must streamline reporting methods and minimize costs for these firms to avoid an adverse effect on producers.

We appreciate this opportunity to comment on the proposed rules to implement the reauthorized and amended LMRA. Should you have any additional questions please call

our Washington, D.C. Public Policy Center at (202) 347-3600.
Sincerely,
Jill Appell
President
National Pork Producers Council