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USDA Error in Livestock System

May 18, 2001

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WASHINGTON (AP) _ Agriculture Secretary Ann Veneman ordered an internal review of a livestock-reporting system that was churning out inaccurate price reports during its first six weeks of operation.

Thousands of contracts and cattle sales were likely pegged to the reports, which understated wholesale beef prices. Losses to cattle producers could run into the millions of dollars, industry officials say.

``We are taking this very seriously. We’re very concerned about it and we’re going to address it very quickly,″ Veneman said Friday.

She didn’t rule out providing compensation to producers but said she didn’t know whether the department had the legal authority to do so.

USDA officials said they will try to determine what legal recourse producers may have under their contracts with packers. The extent of the producers’ losses won’t be known until all of the daily reports are corrected.

The National Meat Association, which represents some beef processors, called on Veneman to temporarily shut down the system, but she said that wasn’t necessary.

The system was mandated by Congress in 1999 to give livestock producers more accurate and timely data.

Packers also were hurt by the inaccurate reports, which are issued twice daily, because they use the data to determine demand for their products, said Rosemary Mucklow, executive director of the meat association. Because of the industry’s thin profit margins, packers can’t afford to reimburse their cattle suppliers, she said.

``I don’t know how we’ll ever calculate″ the industry’s loss, she said. ``It’s going to be huge.″

The new system, which started April 2, requires packers to report the prices they pay for cattle and charge for their meat. It replaces a system that relied on voluntary reporting.


On the Net: Agricultural Marketing Service: http://www.ams.usda.gov

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