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Highlights

Livestock producers, with gross income of $63 billion in 2004, depend on USDA's daily, weekly, and monthly livestock market news reports. These reports provide them and others in the industry with livestock and meat prices and volumes, which are helpful as they negotiate sales of cattle, hogs, lamb and meat products. Packers also use the average prices in these reports as a basis for paying some producers with whom the packers have contracts. In 1999, the Livestock Mandatory Reporting Act was passed to substantially increase the volume of industry sales transactions covered by USDA's market news reports and thereby encourage competition in the industry. In the context of ongoing discussions about the renewal of this act, GAO reviewed (1) USDA's efforts to ensure the quality of its livestock market news reports and (2) the coordination between two USDA agencies that are responsible for promoting competition in livestock markets.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture Should Congress extend the Livestock Mandatory Reporting Act, the Secretary of Agriculture should direct the Administrator, Agricultural Marketing Service to increase transparency by (1) reporting to market news readers on its reporters' instructions for making reporting decisions that reflect prevailing market conditions, (2) periodically reporting on the effects of reporters' decisions on AMS reported prices, and (3) reporting the results of its audit efforts.
Closed - Implemented
The Agricultural Marketing Service (AMS) took steps to increase transparency by posting information about program procedures on the agency's web site. This included providing information about reporter instructions for preparing reports, the effect of reporter decisions on reported prices, and the results of audit efforts.
Department of Agriculture Should Congress extend the Livestock Mandatory Reporting Act, the Secretary of Agriculture should direct the Administrator, Agricultural Marketing Service to clarify AMS reporter's instructions to make them more specific and consistent by (1) consulting with packers, producers, agricultural economists, and other interested stakeholders, and (2) undertaking revisions that consider economic analyses of past reporting trends, livestock and meat market variations, and federal statistical and information reporting guidance.
Closed - Implemented
The Agricultural Marketing Service (AMS) took multiple steps to revise reporter instructions to make them more specific and consistent. This included issuing guidance to reporters that clarifies AMS' policy for excluding transactions, modifying selected report preparation manuals, holding discussions with reporters to clarify acceptable reasons for exclusions. Additionally, to encourage consistency in excluding transactions, AMS established drop-down menus in its computer system for reporters to identify their rational for excluding any transactions and published basic information on AMS' website about reporter instructions. According to agency officials, these efforts were conducted with the input of economists, marketing specialists, and others, and the agency follows federal and departmental statistical and information reporting guidance. Furthermore, additional outreach has been conducted via trade shows, industry meetings, and visits with packers and others.
Department of Agriculture Should Congress extend the Livestock Mandatory Reporting Act, the Secretary of Agriculture should direct the Administrator, Agricultural Marketing Service to develop information about the overall accuracy of packers' transaction data by auditing a statistical sample of packers' transactions.
Closed - Not Implemented
Action not taken.
Department of Agriculture Should Congress extend the Livestock Mandatory Reporting Act, the Secretary of Agriculture should direct the Administrator, Agricultural Marketing Service to further develop AMS audit strategies to identify recurring significant problems.
Closed - Not Implemented
Action not taken.
Department of Agriculture Should Congress extend the Livestock Mandatory Reporting Act, the Secretary of Agriculture should direct the Administrator, Agricultural Marketing Service to address the timeliness and consistency of AMS reporters' efforts to follow-up on audit findings.
Closed - Implemented
The Agricultural Marketing Service (AMS) took steps to better monitor the timeliness and consistency of its reporters' efforts to follow-up on audit findings. Specifically, the agency made a number of changes to its process for tracking the problems identified by its auditors, including documenting the timeliness of AMS reporter and auditor follow up and consistency across livestock types. This involved implementing a way to track interim follow-up milestones to determine whether they conform to established agency timeliness goals. It also included initiating quarterly tracking of the average time it takes to follow up on audit findings by livestock type, packer, and severity level, as well as quarterly tracking of the timeliness of follow up as compared to agency timeliness goals.
Department of Agriculture The Secretary of Agriculture should direct the Administrators of the Agricultural Marketing Service and the Grain, Inspection, and Packers and Stockyards Administration to further investigate the reporting practices of one packer's low-price purchases of livestock.
Closed - Implemented
The Agricultural Marketing Service (AMS) and Grain Inspection, Packers and Stockyards Administration (GIPSA) took additional steps to further investigate the reporting practices in question. According to AMS' Associate Deputy Administrator and Chief of the Livestock & Grain Market News, AMS investigated the transactions in question and collaborated with GIPSA. GIPSA opened a formal investigation into the transactions, and, according to the Director of the Business and Economic Analysis Division, made an overall finding of no violation and closed the file.

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