U.S.D.A. releases livestock and meat marketing study
(MEATPOULTRY.com, February 21, 2007)
by MEAT&POULTRY Staff
WASHINGTON — Complying with a congressional mandate, the Grain Inspection, Packers and Stockyards Administration of the U.S. Department of Agriculture has released the long-awaited Livestock and Meat Marketing Study. The report outlines the analyses of the effects of alternative marketing arrangements for fed cattle and beef, hog and pork, and lamb and lamb meat industries.
The final report focuses on the amount of A.M.A.’s; analyzes price differences and price effects; measures the costs and benefits of A.M.A.’s and assesses the range of implications of using these different marketing agreements.
An A.M.A. includes arrangements such as forward contracts, marketing agreements, procurement or marketing contracts, production contracts, packer ownership, custom feeding and custom slaughter. Cash or spot market transactions refer to transactions that occur immediately, or "on the spot." These include auction barn sales; video or electronic auction sales; sales through order buyers, dealers, and brokers; and direct trades.
The general conclusions of the study are:
• Use of A.M.A.s during October 2002 through March 2005, including packer ownership, is estimated at 38% of the fed beef cattle volume, 89% of the finish hog volume, and 44% of the fed lamb volume sold to packers.
• Packer-owned livestock accounted for a small percentage of transactions for beef and lamb (5% or less), even when the small percentage of partial ownership arrangements is included, but accounted for a large percentage of transactions for pork (20% to 30% depending on assumptions).
• Given the current environment and recent trends, researchers expect moderate increases in use of A.M.A.’s in the lamb industry, but little or no increase in the beef and pork industries.
• Cash market transactions serve an important purpose in the industry, particularly for small producers and small packers. In addition, reported cash prices are frequently used as the base for formula pricing for cash market and A.M.A. purchases of livestock and meat.
• The use of A.M.A.’s is associated with lower cash market prices, with a much larger effect occurring for finished hogs than for fed cattle.
• Many meat packers and livestock producers obtain benefits through the use of A.M.A.s, including management of costs, management of risk (market access and price risk), and assurance of quality and consistency of quality.
• Restrictions on the use of A.M.A.’s for sale of livestock to meat packers would have negative economic effects on livestock producers, meat packers, and consumers.
For more information about the livestock and meat marketing study, go to: http://www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=lmp&topic=ir-mms
meatpoultry.com
(MEATPOULTRY.com, February 21, 2007)
by MEAT&POULTRY Staff
WASHINGTON — Complying with a congressional mandate, the Grain Inspection, Packers and Stockyards Administration of the U.S. Department of Agriculture has released the long-awaited Livestock and Meat Marketing Study. The report outlines the analyses of the effects of alternative marketing arrangements for fed cattle and beef, hog and pork, and lamb and lamb meat industries.
The final report focuses on the amount of A.M.A.’s; analyzes price differences and price effects; measures the costs and benefits of A.M.A.’s and assesses the range of implications of using these different marketing agreements.
An A.M.A. includes arrangements such as forward contracts, marketing agreements, procurement or marketing contracts, production contracts, packer ownership, custom feeding and custom slaughter. Cash or spot market transactions refer to transactions that occur immediately, or "on the spot." These include auction barn sales; video or electronic auction sales; sales through order buyers, dealers, and brokers; and direct trades.
The general conclusions of the study are:
• Use of A.M.A.s during October 2002 through March 2005, including packer ownership, is estimated at 38% of the fed beef cattle volume, 89% of the finish hog volume, and 44% of the fed lamb volume sold to packers.
• Packer-owned livestock accounted for a small percentage of transactions for beef and lamb (5% or less), even when the small percentage of partial ownership arrangements is included, but accounted for a large percentage of transactions for pork (20% to 30% depending on assumptions).
• Given the current environment and recent trends, researchers expect moderate increases in use of A.M.A.’s in the lamb industry, but little or no increase in the beef and pork industries.
• Cash market transactions serve an important purpose in the industry, particularly for small producers and small packers. In addition, reported cash prices are frequently used as the base for formula pricing for cash market and A.M.A. purchases of livestock and meat.
• The use of A.M.A.’s is associated with lower cash market prices, with a much larger effect occurring for finished hogs than for fed cattle.
• Many meat packers and livestock producers obtain benefits through the use of A.M.A.s, including management of costs, management of risk (market access and price risk), and assurance of quality and consistency of quality.
• Restrictions on the use of A.M.A.’s for sale of livestock to meat packers would have negative economic effects on livestock producers, meat packers, and consumers.
For more information about the livestock and meat marketing study, go to: http://www.gipsa.usda.gov/GIPSA/webapp?area=home&subject=lmp&topic=ir-mms
meatpoultry.com