|By DOUG SCHMITZ
WASHINGTON, D.C. — Two lawmakers, Sen. Charles Grassley (R-Iowa) and Sen. Tom Harkin (D-Iowa), offered a proposal to extend the Sept. 30 deadline for the mandatory price reporting (MPR) program of the General Accounting Office (GAO).
After investigating numerous concerns, Grassley and Harkin offered legislation last week that would extend the livestock requirement for U.S. farmers by one year.
“Since mandatory price reporting was implemented by the USDA in 2001, I have heard from producers across Iowa who question the integrity and accountability of the reported prices under mandatory price reporting,” said Grassley, a former chairman of the U.S. Senate Agriculture Committee who has called for a nationwide ban on packer ownership.
“While there is a lack of believability regarding the information generated by mandatory price reporting, nearly all producers across Iowa feel strongly that the information would be valuable if the program had more credibility and improved transparency.”
Drafted into law in 1999 by Grassley and Harkin to help improve market transparency, the Livestock Price Reporting Act would require meatpackers, processors and importers to provide critical price, contracting and supply and demand information to the USDA, which uses the information to set price reports for livestock producers.
By improving the MPR system, Grassley said the new rule would give independent livestock producers a guaranteed share in the marketplace.
“We’ve heard from enough livestock producers to know that there can be improvement to this important law,” Grassley said. “Independent livestock producers should have the opportunity to receive a fair price. Producers need a consistent spot market for information and access.
“Waiting until the GAO report is completed so we can make appropriate adjustments to the legislation just makes sense.”
Harkin said the base price for many livestock contracts are already established directly from reports resulting from the MPR, which covers cattle, beef, lamb and swine sales, as well as monthly reporting of retail prices for beef, chicken, lamb, pork, turkey and veal.
“Livestock Mandatory Price Reporting levels the playing field for farmers by giving them the information they need to make sound decisions in livestock markets,” Harkin said.
Last year, Grassley and Harkin requested a GAO investigation into the accuracy of the USDA’s reported prices.
Among the complaints against the GAO were late filed reports by packers, whether negotiated purchases are being portrayed correctly in price reports, as well as inadequate oversight at USDA to ensure compliance and enforcement of the law.
Iowa Pork Producers Assoc. (IPPA) President Steve Kerns said the state’s largest independent hog group supports Grassley and Harkin’s extension because it would shed light on any problems that may exist with the law.
“The Iowa Pork Producers Assoc. delegate body has called for mandatory price reporting since January 1999,” Kerns said. “Each year, we survey our producer members asking their level of support for mandatory price reporting. That level continues to remain around 77 percent in favor of mandatory price reporting.”
During the Iowa Cattlemen’s Assoc. (ICA) Summer Conference in June, the ICA Cattle Production Committee passed a policy resolution regarding MRP.
Joel Brinkmeyer, ICA executive vice president, said while the ICA supports MRP, the current system is flawed because about 70 percent of U.S. cattle aren’t being reported.
“We understand the concerns of U.S. Senators Grassley and Harkin about the Livestock Price Reporting Act and are pleased that their legislation only extends the Act for one year until the GAO can finish their report and make recommendations to strengthen the law,” Brinkmeyer said last week.
“While the GAO is doing an audit of the MPR system, the ICA urges Congress to wait for the GAO to complete its audit before taking action on mandatory price reporting.”
Although Grassley and Harkin’s proposed bill would continue the MPR program over the next year, the Iowa senators said the extension would give them more time to identify weaknesses in the existing law and incorporate recommendations once the GAO has completed its report.
The U.S. House Agriculture Committee met on July 27 to approve H.R. 3408, a bill that would reauthorize MPR for five years.
However, Grassley said the House and Senate would need to work out differences to pass a final bill reauthorizing the act.
“Iowa’s livestock producers have made it abundantly clear that there is no reason to move forward without substantive review and improvement to the current program,” Grassley told reporters last week.
“We should take the opportunity to improve this legislation and not push forward without the recommendations from the GAO.”
“It would be a mistake to provide a long-term extension of the law before GAO has had time to finish its work,” Harkin said. “If there are problems with the law, then Congress has a responsibility to producers to fix it, and to do so next year, as our bill envisions.”
But while the GAO report isn’t expected to be completed until the end of the year, Caroline Rydell, director of Congressional Relations for the American Farm Bureau Federation (AFBF), said Congress should move to reauthorize the law.
Published in the September 14, 2005 issue of Farm World.