[Federal Register Volume 63, Number 175 (Thursday, September 10, 1998)]
[Proposed Rules]
[Pages 48450-48451]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24329]
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Proposed Rules
Federal Register
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This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 63, No. 175 / Thursday, September 10, 1998 /
Proposed Rules
[[Page 48450]]
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DEPARTMENT OF AGRICULTURE
Grain Inspection, Packers and Stockyards Administration
9 CFR Part 201
RIN 0580-AA65
Prohibition on the Non-Reporting of Price as a Condition of the
Purchase or Sale of Livestock
AGENCY: Grain Inspection, Packers and Stockyards Administration
(GIPSA), USDA.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The Department of Agriculture (USDA) has received information
that some livestock transactions are conditioned on an agreement that
the transaction price not be reported to public or private reporting
services. USDA is concerned that the non-reporting of price as a
condition of the purchase or sale of livestock may result in inaccurate
and incomplete price information, adversely affecting the price
discovery process. Therefore, USDA is considering a proposed rulemaking
that would prohibit, as a violation of the Packers and Stockyards Act
(P&S Act), the non-reporting of price as a condition of the purchase or
sale of livestock. In order to assess the need for regulatory action,
this Advance Notice of Proposed Rulemaking invites comments from all
interested parties.
DATES: Comments concerning this potential regulatory action must be
received on or before December 9, 1998.
ADDRESSES: An original and two copies of all comments may be sent to
the Deputy Administrator, Packers and Stockyards Programs, GIPSA, USDA,
Stop 3641, 1400 Independence Avenue, SW, Washington, D.C. 20250-3641.
Comments may also be sent by fax to (202) 205-3941 or by e-mail to
[email protected]
FOR FURTHER INFORMATION CONTACT: Daniel L. Van Ackeren, Director,
Office of Policy/Litigation Support at (202) 720-6951.
SUPPLEMENTARY INFORMATION: The Packers and Stockyards Programs (P&S),
GIPSA, monitors and regulates purchases and sales of livestock in
interstate commerce. The Market News Service, Agricultural Marketing
Service, USDA, and other public and private reporting entities collect
and disseminate reported spot market transaction prices for cattle and
other livestock. This price information is used by livestock industry
members to evaluate the purchase or sale price of livestock.
Currently, the price reporting system is voluntary; neither party
to a sale is required to report a spot market transaction price.
Because the reporting system is voluntary and some prices may not be
reported by the parties to the transaction, the prices reported to
Market News Service and other price reporting services may not reflect
the highest and lowest prices paid for livestock. As a result, the
prices reported by Market News Service and other price reporting
services may not be complete. Many sellers may make decisions on when
or at what price to sell based on the prices reported by these
reporting services. Consequently, conditioning the purchase or sale of
livestock on non-reporting of prices may be an unfair trade practice in
violation of the P&S Act. Additionally, a regulation that prohibits
non-reporting of price as a condition of the purchase or sale of
livestock may enhance the availability and accuracy of complete market
information.
The livestock industry has a vested interest in the accuracy and
completeness of price information. The importance of price information
to the livestock industry, particularly small cattle producers, was
made evident during the public hearings held by the USDA Advisory
Committee on Agricultural Concentration.1 This perspective
was echoed in the comments 2 filed in response to the
petition 3 for rulemaking filed by the Western Organization
of Resource Councils.
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\1\ The substance of the hearings conducted by the Advisory
Committee is contained in Agricultural Marketing Service, USDA,
Concentration in Agriculture: A Report of the USDA Advisory
Committee on Agricultural Concentration (June 1996).
\2\ Comments filed in response to WORC's petition are available
for review in the Office of the Deputy Administrator, Packers and
Stockyards Programs, GIPSA, USDA. GIPSA's analysis of the petition
and comments is available on GIPSA's Internet site (http://
www.usda.gov/gipsa/lateadd/lateadd.htm) or by contacting the Deputy
Administrator, Packers and Stockyards Programs, GIPSA, USDA, Stop
3641, 1400 Independence Avenue, SW, Washington, D.C. 20250.
\3\ 63 Fed. Reg. 1845-59 (January 14, 1997). WORC's petition is
also available on GIPSA's Internet site (http://www.usda.gov/gipsa/
lateadd/lateadd.htm).
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As early as 1991, P&S received complaints from cattle sellers that
some sales were conditioned on the seller not reporting the price to
Market News Service. The sellers complained that buyers were
conditioning the purchase of higher quality cattle on a commitment not
to report the price to Market News Service. Because the highest prices
may not be reported, the reported prices may not reflect the prices
actually paid for cattle. Consequently, higher quality cattle purchased
in other sales may obtain lower prices than would be obtained if
sellers were permitted to report the actual price obtained in all
sales.
Conversely, sellers of livestock may request that buyers make a
commitment not to report low prices. Because the lowest prices may not
be reported, the reported prices may not reflect the prices actually
paid for some cattle. Consequently, lower quality cattle purchased in
other sales may obtain higher prices than would be obtained if buyers
were permitted to report the actual price paid in all purchases.
In addition to affecting the prices (including the low, high, and
average prices) reported by Market News Service and other price
reporting services, conditioning the purchase or sale of livestock on
the non-reporting of prices may serve to give the buyers a competitive
advantage over the sellers of livestock in the form of greater market
information. Because the buyers of livestock generally are parties to
more purchase transactions than are the sellers of livestock, the
buyers may have more market information available to them than do the
sellers. As a result, sellers of livestock may rely more heavily on
publicly reported prices when making their sales decisions. Buyers, on
the other hand, may supplement the market information they have
assimilated from other purchases (including the purchase prices of
[[Page 48451]]
transactions that are not reported) with reported market prices, which
may give them an advantage over sellers.
Because conditioning the purchase or sale of livestock on non-
reporting of prices may be an unfair trade practice in violation of the
P&S Act, P&S is considering taking regulatory action to prohibit non-
reporting of price as a condition of the purchase or sale of livestock
on spot market transactions. The Agency is interested in receiving
information from members of the public, segments of the livestock
industry (including producers, marketing firms, packers, associations,
etc.), academia, and industry consultants on this issue. The Agency is
particularly interested in receiving information from small entities
that would be affected by regulatory action. Small entities are defined
as firms that meet the following standards: (1) beef cattle feedlots
with annual receipts of $1.5 million or less; (2) beef cattle
producers, except feedlots, and producers of hogs, sheep, goats, and
horses or other equines, with annual receipts of $500,000 or less for
beef cattle, hog, sheep, goat, and horse or other equine sales; and (3)
meat packing plants with 500 employees or less.
We are seeking information on how frequently conditioning the
purchase or sale of livestock on the non-reporting of prices occurs and
how different segments of the industry are affected by this practice.
The information received in response to the following questions will be
considered in determining whether this practice violates the P&S Act
and whether regulatory action is warranted.
Do you use reported market prices in making livestock
purchase or sales decisions? If so, how do you use reported market
prices? For example, do you use reported market prices to determine
what purchase price to bid or what sales price to offer? If so, how? Do
you use reported market prices to determine whether to accept or reject
a buyer's bid or a seller's offer? If so, how?
Do you encounter or engage in non-reporting of price as a
condition of purchasing or selling livestock? If so, please describe
the circumstances under which this practice occurs, the frequency with
which it occurs, whether you participate in this practice, and the
business reasons for your decision. When this practice occurs, are the
prices higher, lower, or about the same as concurrent reported prices?
What benefits, if any, would a prohibition on non-
reporting of price as a condition of the purchase or sale of livestock
have on your business? The livestock and meat packing industries? The
accuracy of reported market prices? Prices paid for livestock? The
quality of livestock available for purchase or sale? The price
discovery process? Competition? Please describe the bases for your
conclusions.
What harm or costs, if any, would a prohibition on non-
reporting of price as a condition of the purchase or sale of livestock
have on your business? The livestock and meat packing industries? The
accuracy of reported market prices? Prices paid for livestock? The
quality of livestock available for purchase or sale? The price
discovery process? Competition? Please describe the bases for your
conclusions.
Do you have available any economic, statistical, or other
research relevant to the use and effects of non-reporting of price as a
condition of the purchase or sale of livestock? If so, please provide
us with a copy of the research and a brief summary of the conclusions.
USDA is seeking extensive public comment from all sectors of the
livestock and meat packing industries concerning the practice of non-
reporting of price as a condition of the purchase or sale of livestock.
We strongly encourage participation in this important process.
Dated: September 3, 1998.
James R. Baker,
Administrator.
[FR Doc. 98-24329 Filed 9-9-98; 8:45 am]
BILLING CODE 3410-EN-P
