Export Reporting for Meat and Meat Products

SUMMARY: The U.S. Department of Agriculture (USDA) is soliciting

comments and views on a proposal by the Secretary of Agriculture to

require reporting of export sales of meat (including poultry meat) and

meat products. The proposal responds to a recommendation by the USDA

Advisory Committee on Agricultural Concentration. Under the proposal,

firms involved in exporting meat products could be required to report

detailed information on these sales to the Department on a weekly

basis. Compiled data would be made available to all market

participants, giving farm-level producers and others timely access to

information that many view as necessary to anticipate and plan for

changing market conditions. The intent is to provide broad access to

export sales information and to thereby improve efficiency in livestock

and poultry markets.

DATES: Comments in response to the advance notice should be received on

or before January 13, 1997 to be assured of consideration.

ADDRESSES: Comments should be sent to: Export Sales Reporting Branch,

Trade and Economic Analysis Division, Room 5959--Stop 1025, Foreign

Agricultural Service, U.S. Department of Agriculture, 1400 Independence

Ave. SW, Washington, DC 20250-1025. All written comments received will

be available for public inspection at the above address during business

hours from 8:00 a.m. to 5:00 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Thomas B. McDonald, Jr., Chief, Export

Sales Reporting Branch, Trade and Economic Analysis Division, Foreign

Agricultural Service, U.S. Department of Agriculture, (202) 720-3273;

fax (202) 690-3275.

SUPPLEMENTARY INFORMATION:

Background

The Advisory Committee on Agricultural Concentration (the

Committee), formed by the Secretary of Agriculture to investigate

concentration in the livestock, poultry, and rail sectors, presented

its findings and recommendations on June 6, 1996. Among its findings

was a strong endorsement of the view that widely accessible, timely,

and accurate information is a vital component of a well-functioning,

competitive marketplace.

The Committee made several recommendations in the area of market

information, suggesting improvements that the Department should

consider in the collection and dissemination of information on the

livestock and poultry sectors. The recommendations focused on enhancing

the quality, breadth, and timeliness of information on supply and

demand for livestock and poultry, including information on trade.

With regard to exports, the Committee suggested timely reporting of

volume and price data on all sales to foreign markets of meat and meat

products, including beef, veal, pork, lamb, chicken, and turkey.

Specific recommendations dealt with the timing of the reports (within a

week following the week of the export sale) and with report content:

chilled, frozen, and aggregate total tonnage exported; tonnage of

carcasses and each primal cut by USDA grade where applicable; tonnage

of variety meats and processed meats; and country destinations for

variety meats, processed meats, and boxed primals, by quality grade

when applicable.

The Committee's recommendations for improvements in market

information are, in part, a response to the changing structure of the

livestock and poultry sectors and changes in the types of transactions

within these sectors. These changes have contributed to concerns about

gaps and inequities in information flows to producers. Increasingly,

the sectors are comprised of numerous producer-sellers at the farm

level and a small group of highly concentrated buyers, including

packers, processors, and integrators. Beyond these first-buyers or

handlers are wholesalers, exporters, retailers, and, ultimately,

domestic and foreign consumers.

Many producer-sellers of cattle, hogs, sheep, and poultry contend

that they have far less access than do their first-buyers--the packers,

processors, and integrators--to current market signals that reflect

final demand by consumers. The result, they claim, is an imbalance in

market power, as well as slower, more erratic, and less accurate

adjustments in market prices, production practices, and marketing

strategies as producers try to plan ahead to provide a product with the

characteristics desired by consumers.

The argument, supported by economic theory, is that when producers

or other participants lack adequate and up-to-date information, the

market is less efficient than it could be in recognizing and responding

to changing consumer preferences. Inefficiencies in markets typically

raise costs, which are ultimately passed on to consumers in the form of

higher food costs, or are passed back to producers in terms of lower

prices. Inefficiencies can also translate into a loss of market share

as U.S. consumers shift to alternative products or as foreign consumers

shift to other products or other suppliers.

Among the information gaps that may impede efficient decisionmaking

by producers and others is the lack of timely data on export sales.

Exports represent a growing source of demand in an otherwise slow-

growing domestic market for meat. In the past, the gathering and

dissemination of information about demand for livestock and poultry

products focused mainly on domestic consumption. For the most part, the

United States was a net importer of meat. However, market-opening

agreements, changes within the meat industries, new technologies, and

global supply-demand developments have combined to significantly expand

export opportunities for high-quality U.S. meats over the last 10

years. As a result, the United States is now a net meat exporter.

Export markets account for a rapidly increasing share of U.S. beef,

pork, and poultry production. In the mid-1980's, exports accounted for

less than 2

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percent of annual production of both beef and pork, and less than 4

percent of poultry production. In 1996, exports are forecast to account

for 8 percent of beef production, 6 percent of pork production, and 17

percent of poultry production. These shares are expected to increase

further in 1997. On a value basis, total 1995 exports of red meats

(including variety meats) and poultry meats exceeded $6 billion and

generated a trade surplus of nearly $4 billion.

Among the reasons for the rapid expansion in exports are increased

U.S. industry competitiveness, processing and technological advances

that allow fresh and frozen products to be transported long distances

at affordable prices, and high income growth in many markets. In Asia,

especially, rising incomes have stimulated strong demand for meat and

meat products.

However, many in the industry perceive the trade information

currently available on meats as failing to keep pace with the

increasingly important role that exports play in U.S. livestock and

poultry markets. According to this view, the data fail to provide the

depth, quality, and timeliness needed to anticipate market conditions

and plan production and marketing decisions.

At present, U.S. Customs data on meat export shipments are compiled

and released by the U.S. Bureau of the Census. These statistics are

released 6-10 weeks following the actual shipments and do not report

sales for future delivery. Although this reporting process for official

U.S. trade data documents past export activity and may be used to

discern trends that have emerged in the marketplace, the data lack

timeliness and provide no information on forward sales. Market impacts

are most likely to occur when sales are first contracted and well

before the product is finally shipped. As a result, even instantaneous

reporting of shipment data--unlikely in the immediate future--would

provide only a marginally better indicator of current and future demand

and prices.

Description of the Proposal

Based on the recommendations of the Advisory Committee on

Agricultural Concentration and the perceived need within segments of

the meat industry for accurate, comprehensive, and timely data on

exports, the Department is reviewing statutory authorities and possible

methods for collecting this type of information.

One of the tools currently available to the Secretary of

Agriculture for collecting export data is Section 602 of the

Agricultural Trade Act of 1978, as amended. Under this section,

exporters are now required to report information pertaining to the

export sale of certain specified agricultural commodities, such as

wheat and corn, as well as other agricultural commodities that may be

designated by the Secretary. These reporting requirements are

implemented through the Export Sales Reporting Program of the Foreign

Agricultural Service under regulations codified in 7 CFR Part 20.

Individual firm reports collected under this program are

confidential by law and are released to the public in compilation form

each week following the week of reporting.

Reporting under 7 CFR Part 20 is mandatory. Any person who

knowingly fails to report shall be fined not more than $25,000 or

imprisoned for not more than 1 year, or both.

To add meat and meat products to the Export Sales Reporting Program

as now structured and administered, the following guidelines would

apply:

The reporting week would be Friday through Thursday. The

marketing year would be January 1-December 31.

Individuals and firms would be required to report on a

weekly basis the quantity sold to foreign buyers, the marketing year of

shipment, and the country of destination. Information on prices is not

collected under the Export Sales Reporting Program.

Among the questions that would have to be addressed in implementing

such a reporting program for meats are the units of measure to be used

(pounds, metric tons, etc.), the specific products to be included,

whether reporting should be separate for fresh/chilled versus frozen

product, and the extent of the breakdowns for individual meat cuts and

USDA grades.

Adding meat and meat products to the current Export Sales Reporting

Program would provide more timely and comprehensive data on export

sales. Public availability of this data would reduce perceived

inequities in access to important market information among different

segments of the industry. Similarly, this information could presumably

improve market efficiency by assisting producers and others, including

the government, in making well-informed, timely, and accurate decisions

relating to the orderly flow of meat and meat products in domestic and

export markets.

In addition to presumed benefits, the costs and the reporting

burden to the private sector, as well as costs to the government, must

be among the primary considerations in implementing this or any similar

proposal. It is estimated that between 75 and 125 private firms may be

regularly involved in the sale of meat for export. Many of these firms

are small businesses. USDA estimates that the annual paperwork burden

on these firms will total approximately 7,000 hours. Annual costs to

the Federal Government for collecting, processing, and disseminating

export sales data on meat and meat products on a weekly basis are

estimated at approximately $400,000.

Although the Export Sales Reporting Program is one alternative for

implementing this proposal, similar data on meat exports could also be

collected under other authorities. For example, 7 U.S.C. 2204

authorizes the Secretary of Agriculture to procure information

concerning agriculture through various methods, including the

collection of statistics. Most of this collection is conducted on a

voluntary basis.

A voluntary program would be preferred by many of those who export

meat and who might otherwise be faced with a mandatory requirement for

weekly reporting of export sales. However, other sectors of the meat

industry have expressed serious reservations about reliance on

voluntary reporting in a concentrated industry where relatively few

firms account for the large majority of sales. These parties contend

that the dominant firms already have sufficient information on export

demand and therefore lack the incentive to comply with a voluntary

program, rendering such a program unreliable. The concern is that if

even a few of the larger firms involved in exports did not fully and

consistently cooperate, the resulting data would not be useful for

accurately assessing foreign demand and current and future market

conditions.

Issues for Public Comment

USDA is considering the implementation of a program that would

provide timely and comprehensive data on U.S. export sales of meat

(including poultry meat) and meat products. If implemented under the

authority of Section 602 of the Agricultural Trade Act of 1978, such a

program would require all private firms involved in U.S. export sales

of meat and meat products to report all such sales on a weekly basis.

Accordingly, USDA is seeking comments on the benefits, costs, and

methods of collecting meat export sales information. If comments

confirm the need for this information but indicate substantial problems

or concerns regarding mandatory reporting, alternative approaches will

be considered. The aim of any approach

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should be to ensure (1) that the benefits of the additional information

would justify the costs, and (2) that the best and most useful

information is obtained in a manner that maximizes its value to

industry participants and minimizes the burden of collection and

reporting.

Interested persons are encouraged to comment on the following

issues relating to this proposal:

The extent to which lack of timely export sales

information represents a problem for the meat industry or those within

the industry.

The extent to which the Secretary of Agriculture's

proposal, based on the recommendation of the Advisory Committee on

Agricultural Concentration, responds to the identified problems.

The proper role of the Federal Government in collecting

and reporting export sales information on meat and meat products.

The benefits and costs of the proposal, including benefits

and costs of mandatory reporting by private firms.

The benefits and costs of possible alternative approaches,

including approaches that may include voluntary reporting or other

methods of achieving the identified goals.

Interested persons are also invited to comment on the following

specific considerations involved in implementing an export sales

reporting program for meat and meat products:

The frequency of reporting and the reporting period to be

covered.

The information to be reported, such as the meats and meat

products to be included, the breakdown of cuts and grades, and the

units of measure for reporting (pounds, metric tons, etc.).

The relative benefits and costs of requiring firms to

report all export sales to all country destinations, versus reporting

only sales above a specified threshold volume and/or only sales to

specified leading markets for individual meats.

The specific need, if any, for price information in

addition to export sales volumes.

The way the data should be compiled, summarized, and

reported to the public by USDA.

USDA welcomes comments on these and any related issues.

Signed at Washington, DC, November 6, 1996.

August Schumacher, Jr.,

Administrator, Foreign Agricultural Service.

[FR Doc. 96-29105 Filed 11-13-96; 8:45 am]

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