Producer Owned Cooperative Packing Plants and Mandatory Price Reporting: Unintended Consequences

The Livestock Mandatory Reporting Act (LMR) passed by Congress in 1999, and reauthorized in 2015, was developed to, “facilitate open, transparent price discovery and provide all market participants, both large and small, with comparable levels of market information for slaughter cattle, swine, sheep, boxed beef, lamb meat, and wholesale pork” (USDA). USDA-AMS is responsible for implementing mandatory price reporting (MPR) and reauthorization required AMS to conduct a comprehensive MPR review. A recent baseline study of livestock and meat marketing providing the base for AMS’ review highlights dynamic and changing livestock markets. In this market and policy environment unexpected occurrences with unintended consequences do and have occurred. Producer owned cooperative meat packer’s transactions are termed “intra-company transactions”, and outside of the normal marketplace structure by AMS. In this case, producer owned cooperative production is interpreted as “packer owned” and therefore prices paid by a cooperative are not reported. AMS’s interpretation has resulted in slaughter lamb prices reported only 7 out of 36 weeks this year. The result is a reduction in transparent price discovery, opposite of what LMR intended. This paper examines cooperative meat packer structure, consequences of current AMS interpretation, and potential solutions contributing to improved transparency in price discovery.