WASHINGTON – A Government Accountability Office (GAO) report concluded that supply and demand factors between 2013 and 2016, including drought conditions from 2010 to 2013, affected the price of cattle feed and the price of fed cattle more than competition levels among packers.
In an April 2016 letter, a group of US senators asked the GAO to conduct a “robust analysis” of the market forces that might have caused the 15.1 percent drop in fed cattle prices during the last half of 2015. The initiative was brought to the attention of the senators by R-CALF USA.
GAO officials examined economic data from the USDA and the Commodity Futures Trading Commission (CFTC) documentation, analyzing transaction data on beef packer purchases from 2013 through 2015. They also interviewed experts, cattle industry stakeholders and agency officials.
GAO made two recommendations starting with the USDA reviewing how price reporting groups can share daily transaction data with Packers & Stockyard Program (P&SP) and determine if that sharing is permissible. The GAO recommended that the USDA should submit a proposal to Congress to allow the sharing.
USDA currently does not allow sharing of this information and it doesn’t advise doing so, citing concerns about the public’s trust in the program.
“While P&SP routinely conducts monitoring and investigations, the program does not have routine access to daily price reporting data or periodically analyze the transaction data that it currently collects from packers,” the GAO report stated. “The Livestock Mandatory Reporting Act of 1999 allows AMS’s price reporting group to share data with P&SP for enforcement purposes, as directed by the Secretary of Agriculture, but USDA does not believe it has the authority to do so, based on its interpretation of ‘enforcement purposes’ in the statute.”
GAO also recommended the Secretary of Agriculture direct the Agricultural Marketing Service administrator “to ensure that P&SP routinely conducts in-depth analysis of the transaction data that it collects. Such analysis could include but not be limited to examining competition levels in different areas of the country.”