Organization for Competitive Markets
For Immediate Release
December 15, 2005
Contact: Chase Carter, Executive Director 402.817.4443
www.competitivemarkets.com
GAO Report Confirms Need for Legislative Reforms to Mandatory Price Reporting
Lincoln, NE ~ On December 12, Senators Tom Harkin (D-IA) and Chuck Grassley (R-IA) released a Government Accountability Office (GAO) report on the Livestock Mandatory Price Reporting program. The report shows serious flaws in the Mandatory Price Reporting law and confirms the need for legislative reform, say representatives of the Organization for Competitive Markets (OCM).
Chase Carter, OCM Executive Director says the time is right for congressional intervention directed at enhancing the program. "The GAO report finds that many meat packers are not reporting data to the U.S. Department of Agriculture correctly, and in some instances, packers are failing to file price reports altogether. These gaps in reporting affect the accuracy of overall price reports to livestock producers and result in biased or incorrect pricing information. In addition, the report finds that USDA is failing to let the public know when these price reports are inaccurate. It's clear the law needs modifications to improve accuracy and transparency, which will benefit both buyers and sellers of livestock," commented Carter.
The Livestock Mandatory Price Reporting program expired on September 30, 2005, after the House and Senate failed to reach agreement on an appropriate extension of the law. The U.S. Senate unanimously passed legislation that would have extended the Livestock Price Reporting Act for one year, allowing producers and other interested parties to receive and examine the GAO report before extending the law for a longer period.
The U.S. House of Representatives passed a five-year extension of the act. Senators have been unwilling to approve a longer extension until problems in the price reporting system identified by the GAO are adequately addressed.
The report revealed the following:
~ The GAO observed and reported lengthy lag times by USDA in correcting problems when packers failed to report, or provided incorrect information. The GAO found that packers incorrectly reported or failed to report required information 64 percent of the time. Many of the GAO audits show, on average, USDA was taking roughly 85 days to ensure a packer made needed corrections to the information.
~ Coordination between the Agricultural Marketing Service (AMS) and the Grain Inspection and Packers and Stockyards Administration (GIPSA) is limited, hindering GIPSA's ability to monitor and correct trends of anti-competitive behavior. The GAO found this is due, in part, to the lack of legal authority for GIPSA to review company specific information. The GAO found that GIPSA is better equipped to review longstanding patterns of anti-competitive behavior, whereas the goal of AMS is primarily to ensure price information is collected quickly and turned around for daily and weekly price reports.
~ Since enactment of the reporting program in 1999, USDA has yet to collect any penalties from packers for violations of program requirements, even in cases of longstanding violations.
~ Packers are not consistently and reliably reporting data to USDA within deadlines specified by the Act.
~ USDA has been adjusting or excluding packer date but not making this practice public to buyers and sellers of livestock or the general public.
Randy Stevenson, OCM Vice-President said one of the most problematic findings in the GAO report, beyond USDA's obvious failures in enforcing the law, is the lack of information exchange between GIPSA and AMS. "This situation is a bit like putting Matt Dillon on Festus Hagin's mule and sending him out to patrol Interstate 40 through Kansas for speeders. It is unacceptable for the information gathering arm of the program not to communicate violations of the law with the enforcing agency. Similar finds were published in a GAO report on GIPSA about six years, and have remained unattended. Price information must be complete, accurate and timely to be of any value to buyers and sellers," noted Stevenson.
"This is indicative of a much greater overall problem at USDA. It is a commonly accepted fact among livestock producers that USDA is a puppet for mega-corporate agriculture. The GAO report proves there have been blatant violations of the mandatory price reporting act by the packing industry, resulting in anti-competitive practices, shielding any price manipulation that could be occurring," Stevenson continued. "The report is proof that USDA initiates very few corrective steps, nor have the violators been punished. How much more evidence do we need before an overhaul is undertaken at the highest levels of the people's agency?"
The Organization for Competitive Markets is an agricultural free market and competition think thank working for honesty, prosperity and economic liberty for farmers, ranchers and rural communities.
For Immediate Release
December 15, 2005
Contact: Chase Carter, Executive Director 402.817.4443
www.competitivemarkets.com
GAO Report Confirms Need for Legislative Reforms to Mandatory Price Reporting
Lincoln, NE ~ On December 12, Senators Tom Harkin (D-IA) and Chuck Grassley (R-IA) released a Government Accountability Office (GAO) report on the Livestock Mandatory Price Reporting program. The report shows serious flaws in the Mandatory Price Reporting law and confirms the need for legislative reform, say representatives of the Organization for Competitive Markets (OCM).
Chase Carter, OCM Executive Director says the time is right for congressional intervention directed at enhancing the program. "The GAO report finds that many meat packers are not reporting data to the U.S. Department of Agriculture correctly, and in some instances, packers are failing to file price reports altogether. These gaps in reporting affect the accuracy of overall price reports to livestock producers and result in biased or incorrect pricing information. In addition, the report finds that USDA is failing to let the public know when these price reports are inaccurate. It's clear the law needs modifications to improve accuracy and transparency, which will benefit both buyers and sellers of livestock," commented Carter.
The Livestock Mandatory Price Reporting program expired on September 30, 2005, after the House and Senate failed to reach agreement on an appropriate extension of the law. The U.S. Senate unanimously passed legislation that would have extended the Livestock Price Reporting Act for one year, allowing producers and other interested parties to receive and examine the GAO report before extending the law for a longer period.
The U.S. House of Representatives passed a five-year extension of the act. Senators have been unwilling to approve a longer extension until problems in the price reporting system identified by the GAO are adequately addressed.
The report revealed the following:
~ The GAO observed and reported lengthy lag times by USDA in correcting problems when packers failed to report, or provided incorrect information. The GAO found that packers incorrectly reported or failed to report required information 64 percent of the time. Many of the GAO audits show, on average, USDA was taking roughly 85 days to ensure a packer made needed corrections to the information.
~ Coordination between the Agricultural Marketing Service (AMS) and the Grain Inspection and Packers and Stockyards Administration (GIPSA) is limited, hindering GIPSA's ability to monitor and correct trends of anti-competitive behavior. The GAO found this is due, in part, to the lack of legal authority for GIPSA to review company specific information. The GAO found that GIPSA is better equipped to review longstanding patterns of anti-competitive behavior, whereas the goal of AMS is primarily to ensure price information is collected quickly and turned around for daily and weekly price reports.
~ Since enactment of the reporting program in 1999, USDA has yet to collect any penalties from packers for violations of program requirements, even in cases of longstanding violations.
~ Packers are not consistently and reliably reporting data to USDA within deadlines specified by the Act.
~ USDA has been adjusting or excluding packer date but not making this practice public to buyers and sellers of livestock or the general public.
Randy Stevenson, OCM Vice-President said one of the most problematic findings in the GAO report, beyond USDA's obvious failures in enforcing the law, is the lack of information exchange between GIPSA and AMS. "This situation is a bit like putting Matt Dillon on Festus Hagin's mule and sending him out to patrol Interstate 40 through Kansas for speeders. It is unacceptable for the information gathering arm of the program not to communicate violations of the law with the enforcing agency. Similar finds were published in a GAO report on GIPSA about six years, and have remained unattended. Price information must be complete, accurate and timely to be of any value to buyers and sellers," noted Stevenson.
"This is indicative of a much greater overall problem at USDA. It is a commonly accepted fact among livestock producers that USDA is a puppet for mega-corporate agriculture. The GAO report proves there have been blatant violations of the mandatory price reporting act by the packing industry, resulting in anti-competitive practices, shielding any price manipulation that could be occurring," Stevenson continued. "The report is proof that USDA initiates very few corrective steps, nor have the violators been punished. How much more evidence do we need before an overhaul is undertaken at the highest levels of the people's agency?"
The Organization for Competitive Markets is an agricultural free market and competition think thank working for honesty, prosperity and economic liberty for farmers, ranchers and rural communities.