ORGANIZATION FOR COMPETITIVE MARKETS
P.O. Box 6486
Lincoln, NE 68506
Web site: www.competitivemarkets.com
ocm@competitivemarkets.com
Date: July 5, 2001 For Immediate Release
Contact: Fred Stokes: 662-476-5568
Michael Stumo: 860-379-6199
The Organization for Competitive Markets (OCM) raised grave concerns with the recent USDA suggestion to water down the livestock mandatory reporting program by reporting only historical, as opposed to current, market data. A USDA advisory committee made the suggestion in report focusing on problems associated with the livestock mandatory reporting program released on July 2.
The Livestock Mandatory Reporting Act was passed in October 1999. USDA’s Agricultural Marketing Service (AMS) began implementing the mandatory reporting system on April 2, 2001. In response to severe criticism of the reporting methods, Ag Secretary Ann Veneman ordered a Review Team of USDA employees to evaluate the mandatory reporting system. The team issued a report dated July 2, 2001.
The report focused, in part, on the controversy surrounding what has become known as the Department’s self-imposed 3/60 guideline. This policy results in drastic underreporting of market conditions because the USDA will not release reports if less than three packers are in a market, or one packer purchases more than 60% of the animals in that period. The recent USDA document notes that nearly one quarter of all reports have been blocked from public view because of this requirement. Most notably, the vast majority of negotiated purchases from the Kansas cattle market, one of the most important cattle markets in the country, and much of the information on the lamb market have gone unreported.
Rather than recommending the abandonment of the 3/60 rule, the USDA advisory committee suggests that an alternative is to apply the 3/60 standard over a longer period of time, for example a multiday period. Unfortunately, such a change would risk concealing current market information by blending it with historical data of the previous day’s markets.
“Although I’m happy that the USDA acknowledges the problems caused by the 3/60 rule, the suggestion that AMS should retain the rule and abolish reports reflecting current market conditions is a little absurd,” said Fred Stokes, president of OCM. “Just as the futures markets and stock markets require up-to-the-minute reporting, the livestock markets must have timely and full price information to function properly. The mandatory reporting law was intended to provide accurate, timely, and full market information to independent farmers and ranchers. The USDA price reporting study essentially admits that these goals will be frustrated if the 3/60 rule continues.”
Keith Mudd, a Missouri farmer and vice-president of OCM said “the 3/60 rule has revealed one thing: the lack of competition in the livestock markets. Many livestock markets either have only one or two bidders, or one player dominates that market by purchasing the vast majority of livestock. The 3/60 rule exacerbates the problem that the dominant packers are the only ones who actually know current market conditions. The guideline must be repealed to shed light on the livestock markets.”
“The confidentiality concerns are overblown,” said Stokes. “Does anyone seriously believe that one major packer doesn’t know what other major packers are paying? The only ones the 3/60 rule leaves in the dark are independent farmers and ranchers.”
The Organization for Competitive Markets is a multidisciplinary, nonprofit group of farmers, ranchers, academics, attorneys, and policy makers dedicated to reclaiming the agricultural marketplace for independent farmers, ranchers and rural communities.
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