[Federal Register Volume 77, Number 163 (Wednesday, August 22, 2012)]
[Rules and Regulations]
[Pages 50561-50575]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-20443]
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Rules and Regulations
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Federal Register / Vol. 77, No. 163 / Wednesday, August 22, 2012 /
Rules and Regulations
[[Page 50561]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 59
[Doc. No. AMS-LS-11-0049]
RIN 0581-AD07
Livestock Mandatory Reporting Program; Establishment of the
Reporting Regulation for Wholesale Pork
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: On April 2, 2001, the U.S. Department of Agriculture (USDA),
Agricultural Marketing Service (AMS) implemented the Livestock
Mandatory Reporting (LMR) program as required by the Livestock
Mandatory Reporting Act of 1999 (1999 Act). In October 2006, the LMR
program was reauthorized by Congress through September 2010. On
September 28, 2010, the Mandatory Price Reporting Act of 2010 (2010
Reauthorization Act) reauthorized LMR for an additional 5 years and
added a provision for mandatory reporting of wholesale pork cuts. The
2010 Reauthorization Act directed the Secretary to engage in negotiated
rulemaking to make required regulatory changes for mandatory wholesale
pork reporting and establish a negotiated rulemaking committee to
develop these changes. This final rule reflects the work of the USDA
Wholesale Pork Reporting Negotiated Rulemaking Committee (Committee).
DATES: Effective Date: This rule is effective on January 7, 2013.
FOR FURTHER INFORMATION CONTACT: Michael Lynch, Director; USDA, AMS,
LS, LGMN Division; 1400 Independence Ave. SW., Room 2619-S; Washington,
DC 20250; at (202) 720-6231; fax (202) 690-3732, or email
Michael.Lynch@ams.usda.gov.
SUPPLEMENTARY INFORMATION:
Background
The 1999 Act was enacted into law on October 22, 1999 (Pub. L. 106-
78) as an amendment to the Agricultural Marketing Act of 1946 (7 U.S.C.
1621-1627, 1635-1638d). The purpose of the 1999 Act was to establish a
program of information regarding the marketing of cattle, swine, lambs,
and the products of such livestock that provides information that can
be readily understood by producers; improves the price and supply
reporting services of USDA; and encourages competition in the
marketplace for livestock and livestock products. On December 1, 2000,
AMS published the final rule to implement the LMR program as required
by the 1999 Act (65 FR 75464) with an effective date of January 30,
2001. This effective date was subsequently delayed until April 2, 2001
(66 FR 8151).
The statutory authority for the program lapsed on September 30,
2005. At that time, AMS sent letters to all packers required to report
under the 1999 Act requesting they continue to submit information
voluntarily. In October 2006, Congress passed the Livestock Mandatory
Reporting Reauthorization (2006 Reauthorization Act) (Pub. L. 109-296).
The 2006 Reauthorization Act re-established the regulatory authority
for the continued operation of the LMR program through September 30,
2010, and separated the reporting requirements for sows and boars from
barrows and gilts, among other changes. On May 16, 2008, USDA published
the final rule to re-establish and revise the LMR program (73 FR
28606). The rule incorporated the swine reporting changes contained
within the 2006 Reauthorization Act, and enhanced the program's overall
effectiveness and efficiency based on AMS' experience in the
administration of the program. The LMR final rule became effective on
July 15, 2008.
The Food, Conservation, and Energy Act of 2008 (2008 Farm Bill)
(Pub. L. 110-234) directed the Secretary of Agriculture (Secretary) to
conduct a study to determine advantages, drawbacks, and potential
implementation issues associated with adopting mandatory wholesale pork
reporting. The report from this study concluded that voluntary
negotiated wholesale pork price reporting is thin, and becoming
thinner. It also found some degree of support for moving to mandatory
price reporting at every segment of the industry interviewed, and that
the benefits likely would exceed the cost of moving from a voluntary to
a mandatory reporting program for wholesale pork. The report was
delivered to Congress on March 25, 2010. A copy of the full report is
available on the AMS Web site at http://www.ams.usda.gov/AMSv1.0/marketnews by clicking on ``Livestock, Meats, Grain, and Hay,'' then
``Livestock Mandatory Reporting.''
On September 28, 2010, the 2010 Reauthorization Act (Pub. L. 111-
239), reauthorized LMR for an additional 5 years and added a provision
for mandatory reporting of wholesale pork cuts. The 2010
Reauthorization Act directed the Secretary to engage in negotiated
rulemaking to make required regulatory changes for mandatory wholesale
pork reporting and establish a negotiated rulemaking committee to
develop these changes. The statute required that the committee include
representatives from (i) organizations representing swine producers;
(ii) organizations representing packers of pork, processors of pork,
retailers of pork, and buyers of wholesale pork; (iii) the USDA; and
(iv) interested parties that participate in swine or pork production.
Further, the 2010 Reauthorization Act stated that any negotiated
rulemaking committee established by the Secretary would not be subject
to the Federal Advisory Committee Act (5 U.S.C. Appendix 2).
Purpose of Regulatory Action
The objective of this rule is to improve the price and supply
reporting services of AMS in order to encourage competition in the
marketplace for wholesale pork products by increasing the amount of
information available to participants. This is accomplished through the
establishment of a program of information regarding the marketing of
wholesale pork products as specifically directed by the 1999 Act, the
2010 Reauthorization Act, and these regulations, as described in detail
in the background section. Further, a mandatory wholesale pork
reporting program will address concerns relative to the asymmetric
availability of market
[[Page 50562]]
information. Previously, pork processors were not required by law to
report wholesale pork cut prices. Rather, AMS collected information on
daily sales and price information from pork processors on a voluntary
basis. The 2008 Farm Bill directed the Secretary to conduct a study to
determine advantages, drawbacks, and potential implementation issues
associated with adopting mandatory wholesale pork reporting. The study
found that wholesale pork price reporting is thin, and frequently
results in missing or unreportable price quotes for subprimals.
This final rule is issued in accordance with the Mandatory Price
Reporting Act of 2010 (2010 Reauthorization Act) [Pub. L. 111-239],
which reauthorized Livestock Mandatory Reporting for 5 years and
required the addition of wholesale pork through negotiated rulemaking.
Summary of the Major Provisions of the Regulatory Action in Question
This final rule requires packers to report wholesale pork sales to
AMS. Specifically, the rule outlines what information packers will be
required to submit to AMS, how the information should be submitted, and
other program requirements. Packers will submit the price of each sale,
quantity, and other characteristics (e.g., type of sale, item
description, destination) that AMS will use to produce timely,
meaningful market reports.
The final rule is effective January 7, 2013. The effective date for
this final rule is the date on which packers are required to submit
data. Data submitted after this date is subject to audit for compliance
with the 1999 Act and subsequent regulations, including this final
rule.
During the 4-month period following the publication of the
regulation, AMS will conduct an industry education and outreach program
concerning the provisions and requirements of this rule. The Agency
believes this period of time is adequate for packers to adapt to the
wholesale pork reporting requirements.
AMS plans to continue publishing voluntary wholesale pork reports
for a period of 180 days after the effective date of this regulation.
Costs and Benefits
The benefits of this rule are diffuse and difficult to quantify;
therefore, this analysis considers benefits only on a qualitative
basis. The qualitative benefits derived from the literature are:
1. The increased number of firms reporting prices to AMS under the
mandatory program will provide a more complete data set, leading to
increased price transparency and more efficient price discovery;
2. Allows AMS more opportunity to keep wholesale pork reporting
current with industry marketing practices and product offerings; and,
3. Provides information to industry participants that cannot afford
to purchase data, including small pork processing operations, small
wholesalers and retailers, and direct and niche marketing operations.
The major cost of complying with this rule involves the information
collection and reporting process. The regulatory objective of this rule
is to increase the amount of information available to participants in
the marketplace for wholesale pork and pork products by mandating
reporting of market information by certain members of the industry. The
Committee developed the rule to achieve this objective in the most
cost-effective manner possible. To the extent practicable, the
Committee drew upon current industry practices and reporting procedures
for other commodities covered by LMR in order to minimize the burden to
the industry.
Annual industry costs are expected to be $95,770. These represent
start-up costs associated with information technology enhancements,
recordkeeping, and submission costs. The annual cost for each of the 56
respondents is estimated to be $1,710. Total annual cost to the
government is expected to be approximately $300,000. This is largely
for salaries and benefits for personnel who will collect, review,
assemble, and publish market reports on wholesale pork. Additional
costs of approximately $325,000 will be incurred in the first year to
accommodate information technology system development. A complete
discussion of the cost and benefits can be found under the Executive
Order 12866 section.
Negotiated Rulemaking Committee
AMS convened a negotiated rulemaking committee to develop the
regulatory language outlined in this rule as mandated by the 2010
Reauthorization Act. The negotiated rulemaking process, which is
authorized by the Negotiated Rulemaking Act of 1996 (NRA) (5 U.S.C.
561-570), involves a committee composed of people representing
interests that will be significantly affected by the rule, and the
rulemaking agency developing the regulations.
On November 24, 2010, AMS published a notice announcing its intent
to convene a negotiated rulemaking committee (75 FR 71568). The notice
sought public comment on the need for the committee and on its proposed
membership, and provided others interested in being committee members
the opportunity to submit nominations. AMS proposed a number of
organizations for membership on the committee that represented those
interests required to be included on such a committee by the 2010
Reauthorization Act.
Additionally, AMS solicited nominations from affected organizations
who also wanted to be represented on the committee. In determining
membership, AMS considered whether the interest represented by a member
will be affected significantly by the final product of the committee
and whether that interest was already adequately represented by other
members. Under section 562(5) of the NRA, ``interest'' means ``with
respect to an issue or matter, multiple parties which have a similar
point of view or which are likely to be affected in a similar manner.''
In accordance with the NRA, committee membership was limited to a
maximum of 25 members.
On January 26, 2011, AMS announced the establishment of the
Wholesale Pork Reporting Negotiated Rulemaking Committee (Committee);
responded to comments from the November 24, 2010, notice; identified
the final list of members; and set forth the dates for the first
meeting (76 FR 4554). The Committee members were: American Meat
Institute; Chicago Mercantile Exchange; Food Marketing Institute;
Grocery Manufacturers Association; Livestock Marketing Information
Center; National Farmers Union; National Livestock Producers
Association; National Meat Association; National Pork Producers
Council; North American Meat Processors Association, American
Association of Meat Processors, and Southeastern Meat Association (one
combined representative for all three per organizations' request);
United Food and Commercial Workers Union; and USDA, Agricultural
Marketing Service.
On February 8-10, 2011, the Committee met in St. Louis, Missouri.
Notably, during this meeting, the Committee members developed ground
rules that addressed general rules of conduct, participation, and
reiterated the Committee's purpose. The ground rules also established
that all decisions would be made by ``consensus,'' and defined
``consensus'' as unanimous concurrence among the Committee members. The
Committee held second (76 FR 12887) and third (76 FR 23513) meetings in
Arlington, Virginia; March
[[Page 50563]]
15-17, 2011, and May 10-11, 2011, respectively. All meetings were open
to the public without advance registration. Members of the public were
given opportunities to make statements during the meetings at the
discretion of the Committee, and were able to file written statements
with the Committee for its consideration. The language developed by the
Committee served as the basis for the proposed rule (77 FR 16951) and
the regulatory text outlined in this final rule.
Reporting Requirements
Pork processors, or packers, will be required to report sales of
wholesale pork to AMS so that AMS may produce timely, meaningful market
reports. These requirements are discussed in detail in the sections
immediately following and represent the information on price, volume,
and related characteristics of wholesale pork sales that packers will
be required to submit under LMR.
According to the LMR program (7 CFR part 59), a packer, for
purposes of swine and wholesale pork reporting, is defined as any
person engaged in the business of buying swine in commerce for the
purposes of slaughter, of manufacturing or preparing meats or meat food
products from swine for sale or shipment in commerce, or of marketing
meats or meat food products from swine in an unmanufactured form acting
as a wholesale broker, dealer, or distributor in commerce. For any
calendar year, the term ``packer'' includes only federally inspected
swine processing facilities that slaughtered an average of at least
100,000 swine per year during the immediately preceding 5 calendar
years and a person that slaughtered an average of at least 200,000
sows, boars, or combination thereof per year during the immediately
preceding 5 calendar years. Additionally, in the case of a swine
processing plant or person that did not slaughter swine during the
immediately preceding 5 calendar years, it shall be considered a packer
if the Secretary determines the processing plant or person should be
considered a packer under this subpart after considering its capacity.
For the ease of the reader, this section is organized to highlight
major components of the rule.
Definition of Wholesale Pork
The term ``wholesale pork'' represents what is widely considered
wholesale pork to packers, processors, retailers, and others in the
supply chain. For example, items with commonly-added ingredients used
to extend shelf life, such as a salt or sodium phosphate solution, are
included in this definition, and, therefore, required to be reported.
However, items that are flavored (e.g., teriyaki pork tenderloins,
seasoned ribs, lemon pepper sirloin roasts) are not considered
wholesale pork and are, therefore, excluded from LMR reporting
requirements. For the purposes of this rule, offal (e.g., heart,
kidney) is not considered wholesale pork; whereas processing floor
variety meats that are normally harvested from the chilled carcass--
such as neck bones, tails, skins, feet, hocks, jowls, and backfat--are
considered wholesale pork and must be reported.
Reporting Times
Packers will be required to report twice a day (by 10:00 a.m. and
2:00 p.m. Central Time) for barrow and gilt product and once per day
(by 2:00 p.m. Central Time) for sow and boar product. These reporting
times are outlined in section 59.205, and are consistent with reporting
times for other commodities covered under LMR. Separation of the
reporting requirements for sow and boar product will minimize the
reporting burden on sow and boar packers where possible and makes the
information published for sow and boar products more meaningful to the
industry. As a general rule, these plants slaughter fewer animals than
their counterparts who primarily slaughter barrows and gilts, and
would, therefore, have a lower number of reportable transactions.
Further, publishing sow/boar product information twice daily would
provide little benefit in terms of added market transparency, as prices
in this sector of the market fluctuate less than in the barrow/gilt
market. Many of the plants producing this type of product would be
smaller in nature, and it would be unnecessarily burdensome to require
twice daily reporting.
Price Reporting Basis
Packers will submit prices using two different reporting bases:
Free-on-Board (F.O.B.) Omaha basis, which was used for the voluntary
program; and F.O.B. Plant basis, which is used for mandatory reporting
of boxed beef and lamb. This method is used to assuage concern within
the industry that moving to a different reporting basis would cause
unnecessary disruption in the marketplace. To ensure consistent and
uniform methodology is used to obtain F.O.B. Omaha prices, AMS will
provide freight information. While this information is not part of the
regulation and will not be published in the Code of Federal
Regulations, AMS received comments during the public comment period
that its proposed methodology did not capture all the variables
involved in determining the cost of transportation. In response, AMS
will investigate alternative methods for deriving an F.O.B. Omaha price
and will consult, as necessary, with industry stakeholders. AMS is
currently engaged in this research in order to have resolution by the
informational meeting with packers, which will be scheduled following
the publication of in the final rule. AMS does not believe this
approach will impede or hinder packers' ability to adapt or develop
information technology systems or otherwise prepare for mandatory
wholesale pork reporting.
As discussed in the proposed rule, AMS initially considered two
options in developing this information to derive F.O.B. Omaha prices--a
freight map with concentric zones that reflect different freight
adjustments based on a shipping destination's distance from Omaha and a
per loaded mile freight rate. A zone map could prove to be difficult
for reporting entities to comply with as it would not be practical to
display every U.S. city, nor to expect reporting entities to know which
cities belong in which zones. AMS believed a simpler option was to
establish a per loaded mile freight rate that packers could apply. For
example, to determine the F.O.B. Omaha price for a load of pork loins
shipped to Phoenix, Arizona, the packer would figure the distance from
Omaha to Phoenix and multiply that distance by the per loaded mile
rate, which would then be divided by the total hundredweight of the
product being shipped. This resulting freight expense would be deducted
from the actual delivered price per hundredweight to reflect the F.O.B.
Omaha price submitted to AMS. AMS also believed this method would be
easier for reporting packers to comply with and document for audit
purposes. It should be noted that regardless of the final method for
determining freight, AMS will revisit this information on a quarterly
basis to ensure it is up-to-date.
Prices reported to AMS shall include any applicable brokerage fees,
but should not include any direct, specific, and identifiable marketing
costs (such as point of purchase material, marketing funds, accruals,
rebates, and export costs). Removing these types of additional costs
provides AMS a more homogeneous price for reporting purposes.
Furthermore, costs for things such as accruals or rebates, if known at
the time of transaction, should be removed from the price provided to
AMS. The requirements for reporting prices of wholesale pork sales are
outlined in section 59.205.
[[Page 50564]]
Product Characteristics
Outlined below are items characteristic of a sale that will be
reported to AMS. These items are discussed below appear in section
59.205.
Type of Sale. When packers report sales of wholesale pork to AMS,
they will be identified using one of these three categories:
Negotiated, forward, or formula marketing arrangement. A negotiated
sale is one that represents what is considered the ``spot'' market,
and, therefore, sets delivery parameters for both boxed product (within
14 days of the date of agreement) and combo product (within 10 days of
the date of agreement). To ensure consistency with current industry
practices, the day after the seller-buyer agreement will be considered
``Day 1'' for reporting delivery periods.
The definition of a forward sale is designed to capture
transactions that occur outside the traditional negotiated, or spot,
window. Therefore, the definition for forward sale means an agreement
for the sale of pork where the delivery is beyond the timeframe of a
negotiated sale and means a sale by a packer selling wholesale pork to
a buyer of wholesale pork under which the price is determined by
seller-buyer interaction and agreement.
The definition of a formula marketing arrangement bases the price
paid not on seller-buyer interaction and agreement on a given day, but
instead in reference to publicly available quoted prices. The
definition of formula marketing arrangement was revised based on
comments received to remove the requirement that this type of sale only
covered product that had not already been produced. These definitions
for the terms ``Type of sale,'' ``Negotiated sale,'' ``Forward sale,''
and ``Formula marketing agreement'' appear in section 59.200.
Specifications. Packers will report a description of the
specifications of each pork item being transacted (e.g., vacuum-packed
\1/4\ inch loins) to AMS. It will be the agency's responsibility to
group like products together for the purpose of publishing reports. The
item's specification will also contain weight ranges for the product.
Characteristics that entities would be required to report are outlined
in section 59.205(a)(1).
Product Delivery Period. Packers will report the delivery period
for negotiated pork trades in calendar days, as outlined in section
59.205(a)(1). This is consistent with other commodities reported under
LMR, but is a change from the way transactions were reported under the
voluntary system.
Pork class. Packers will report the type of swine from which the
product was derived from one of three categories: Barrow/gilt, sow, or
boar. This is outlined in section 59.205(a)(1) and is accompanied by a
definition for ``pork class'' in section 59.200.
Destination. Packers will report a product's destination in one of
three categories: Domestic, Export overseas, or North American Free
Trade Agreement (NAFTA).
Refrigeration. Packers will report a product's refrigeration type
as a means for distinguishing fresh product transactions that may be
discounted or priced differently due to age of the product. Splitting
the fresh category into two product age groups provides a means for
identifying product that may be discounted due to potential shelf life
limitations. For reporting purposes, ``Day 1'' is considered the day
after production. The form contained in Appendix A provides timeframes
against which packers will report product refrigeration.
Specialty Pork Products. Packers will be required to report
specialty pork products in order to capture trade of wholesale pork
that is produced or marketed under any specialty program, such as, but
not limited to, genetically-selected pork, certified programs, or
specialty selection programs for quality or breed characteristics. A
trademark brand on a product will not by itself make the product a
specialty pork product, as outlined in section 59.200.
General Provisions
This rule amends the regulations issued in 7 CFR part 59, Livestock
Mandatory Reporting, to incorporate wholesale pork into LMR. Subpart A
of part 59, General Provisions, addresses requirements pertinent to all
aspects of mandatory reporting. Some conforming changes are necessary
to fully incorporate wholesale pork into Subpart A, and are largely
administrative in nature. Most sections in Subpart A remain unchanged,
but are discussed here to provide context for the reader.
Section 59.10 details how packers will be required to report
information and how reporting will be handled over weekends and
holidays. The information will be reported to AMS by electronic means.
Electronic reporting involves the transfer of data from a packer's
electronic recordkeeping system to a centrally located AMS electronic
database. The packer is required to organize the information in an AMS-
approved format before electronically transmitting the information to
AMS. Once the required information has been entered into the AMS
database, it will be aggregated and processed into various market
reports which will be released according to the daily and weekly time
schedule set forth in these regulations. Information regarding the
specific characteristics of each reported sale must be supplied by lot
without aggregation. No changes were made to section 59.10 to
accommodate the additional requirement of reporting wholesale pork
cuts.
This rule requires the reporting of specific market information
regarding the sales of wholesale pork products. Section 59.20 is
amended by the addition of (f), Reporting Sales of Wholesale Pork. In
addition to the aforementioned reporting requirements, packers will be
required to maintain a record to indicate the time a unit of wholesale
pork cuts was sold, as occurring either before 10 a.m. central time,
between 10 a.m. and 2 p.m. central time, or after 2 p.m. central time.
To allow packers time to collect, assemble, and submit the information
to AMS by the prescribed deadlines, all covered transactions up to
within one half hour of the specified reporting times are to be
reported.
Further, section 59.20 identifies the recordkeeping requirements
imposed by the 1999 Act and regulations on reporting entities.
Reporting packers are required to maintain and to make available the
original contracts, agreements, receipts, and other records associated
with any transaction relating to the purchase, sale, pricing,
transportation, delivery, weighing, slaughter, or carcass
characteristics of all livestock and livestock products. In addition,
they are required to maintain such records or other information as is
necessary or appropriate to verify the accuracy of the information
required to be reported under these regulations. All of the above
mentioned documentation must be maintained for at least 2 years and
must be made available to employees or agents of USDA for routine
compliance audits, as well as for investigations involving suspected
noncompliance or potential violations. More information regarding
compliance and review procedures can be found in the LMR Information
section of the Livestock and Grain Market News Web site at http://marketnews.usda.gov/portal/lg.
Lastly, under Subpart A, section 59.30 details the general
definitions of terms used throughout the regulations and applicable to
all subparts. Where definitions apply to only one reportable commodity,
those are included in the
[[Page 50565]]
appropriate subpart. For example, definitions that pertain only to
swine and swine products are contained in Subpart C. The majority of
definitions in section 59.30 remain unchanged from those that were
published in the 2008 final rule. Changes to section 59.30 as a result
of the addition of wholesale pork are found in the definitions for the
terms ``F.O.B.'' and ``Lot.'' The change to F.O.B. is amended to
require packers to report prices on both a plant and Omaha basis. The
change to the term ``Lot'' adds wholesale pork. There is also an
administrative change to the definition of IMPS to update a Web site
address and phone number.
Other Provisions
The 1999 Act set forth the requirements for maintaining
confidentiality regarding the packer reporting of proprietary
information and list the conditions under which Federal employees can
release such information. While none of these provisions were amended
by the 2010 Reauthorization Act or will be changed as a result of this
rule, they are presented here for information. These administrative
provisions also establish that the Secretary can make necessary
adjustments in the information reported by packers and take action to
verify the information reported, and directs the Secretary to report
and publish reports by electronic means to the maximum extent
practical. The 1999 Act provides for what constitutes violations of
that Act, such as failure to report the required information on time or
failure to report accurate information.
The section on enforcement establishes a civil penalty of $10,000
for each violation and provides for the Secretary's issuance of cease
and desist orders. This section also provides for notice and hearing of
violations before the Secretary, judicial review, and issuance of an
injunction or restraining order. The fees section directs the Secretary
to not charge or assess fees for the submission, reporting, receipt,
availability, or access to published reports or information collected
through this program. The section on recordkeeping requires each packer
to make available to the Secretary on request for 2 years the original
contracts, agreements, receipts, and other records associated with any
transaction relating to the purchase, sale, pricing, transportation,
delivery, weighing, slaughter, or carcass characteristics of all
livestock and livestock products, as well as such records or other
information that is necessary or appropriate to verify the accuracy of
information required to be reported. Also, the 1999 Act provides that
reporting entities will not be required to report new or additional
information that they do not generally have available or maintain, or
the provisions of which would be unduly burdensome.
Committee Recommendations
As noted in the proposed rule (77 FR 16951), the Committee's work
focused on developing regulatory text to implement mandatory wholesale
pork reporting under the LMR program. The Committee also developed
several recommendations that, while outside their statutory purview,
were discussed in the proposed rule and were further supported by some
of the comments received by AMS during the comment period. For a
complete discussion of these recommendations, see the ``Comments and
Responses'' section of this rule.
OMB Control Numbers
Subpart E of part 59 covers the OMB control number 0581-0186
assigned pursuant to the Paperwork Reduction Act of 1995 (PRA) (44
U.S.C. Chapter 35) for the information collection requirements listed
in Subparts B through D of part 59. All required information must be
reported to AMS in a standardized format. The standardized form is
embodied in the data collection form that is contained in Appendix A
and described in Appendix B at the end of this document.
For reporting wholesale pork information, swine packers will
utilize one form (Appendix A). This additional reporting requirement
does not impact the reporting requirement that packers may have for
other reportable commodities, such as swine.
Appendices
The final section of this document contains two appendices. These
appendices will not appear in the Code of Federal Regulations. Appendix
B describes the form that will be used by those required to report
information under this program. The actual form is contained in
Appendix A.
Comments and Responses
AMS received nine comments in response to the proposed rule (77 FR
16951). In general, commenters were supportive of the proposal,
bringing wholesale pork under LMR, and of the negotiated rulemaking
process. Many of the comments dealt with issues outside the scope of
the proposed regulation, such as development of reports, transition
period, and training sessions.
Definitions
Two commenters stated that the definition of ``Specialty pork
product'' should be amended to clarify that the examples identified in
the definition of what constitutes a specialty pork product are not
limiting or all inclusive. AMS agrees with this comment and believes
the changes proposed do not contradict, only clarify, the work of the
Committee. Accordingly, AMS has amended the definition of specialty
pork product as it appears in this rule.
One commenter suggested AMS amend the definition of ``Formula
marketing arrangement'' because the inclusion of the phrase ``executed
in advance of manufacture'' would exclude formula-priced product whose
sale is agreed upon following manufacture. AMS agrees with this comment
and believes the changes proposed do not contradict, only clarify, the
work of the Committee. Accordingly, AMS has amended the definition of
formula marketing arrangement as it appears in this rule.
Costs of Compliance With the Rule
One commenter asked that AMS provide technical support personnel
that packers can easily access as a means of reducing start-up costs.
As outlined in the preamble of the proposed rule and in this final
rule, AMS recognizes there are costs associated with complying with
this new requirement of LMR. Further, AMS understands the differences
that exist among companies, information technology (IT) systems, and
business structure. While AMS does not have the resources to dedicate
an IT specialist to this transition, it will make every effort to
provide IT support when needed by packers. In regards to testing of the
information technology systems, AMS understands that affected entities
(i.e., packers) will not effectively be able to make enhancements to
their reporting systems until the requirements are known; that is,
until the final rule is published. AMS will work with packers to ensure
that an appropriate amount of time is allowed for development and
testing of systems necessary to submit the required data. Another
commenter suggested that AMS' estimates for initial start-up costs and
annual submission costs were too low; however, the commenter did not
provide additional information.
Transition Period
Three commenters asserted that the 6-month transition period during
which both mandatory and voluntary reports will be published side-by-
side is
[[Page 50566]]
insufficient and suggested instead a 12-month transition period.
Commenters suggested that a 6-month period would not allow for
observance of the seasonal differences that may exist, and,
subsequently, would not provide market participants with enough
information to adjust price formulas properly. While these comments do
not pertain to the regulation, but rather to AMS' implementation of the
mandatory wholesale pork reporting program, AMS will take these
suggestions into account.
As described in the proposed rule, AMS plans to transition from a
voluntary program to a mandatory program by publishing ``dual'' reports
for 6 months. That is, for a period of time, AMS will publish reports
reflecting information collected under a voluntary reporting system and
reports reflecting information collected under a mandatory reporting
system for wholesale pork. If AMS determines that the information
collected under a voluntary program becomes of little utility before
the 6-month mark, or if sufficient AMS resources are not available, it
will cease collecting and publishing this information. On the contrary,
if at the end of the 6-month period any problems still exist with the
collection or publication of data, or if the cessation of dual reports
would unnecessarily cause market disruption, AMS will consult with the
industry to determine an appropriate course of action. In that
instance, AMS would consider extending the dual reporting period until
a full 12-month period has occurred. Further, during the transition
period, AMS intends to publish reports reflecting information collected
under the mandatory program on a delay and will consider the
Committee's recommendation regarding the appropriate time to release
such reports.
Freight Calculations
Three commenters stated their belief that the freight calculation
methodology proposed by AMS is too simplistic. Commenters suggested
that there are associated costs with loading product that may not be
included if a simple ``per mile'' freight cost is used. Commenters
believed this would result in F.O.B. Omaha prices that are higher than
they should be, and that the agency should consider issues involving
less-than-truckload (LTL) freight rates. While these comments do not
pertain to the regulation, but rather to AMS' implementation of the
mandatory wholesale pork reporting program, AMS will take these
suggestions into account. AMS plans to discuss the freight calculation
with stakeholders, with the goal of having the final methodology
determined for the planned workshops. Additional discussion is provided
in the Reporting Requirements section of this document.
Reporting of Products
Two commenters requested that AMS keep the reporting of pork skins
destined for domestic, North American Free Trade Agreement (NAFTA), and
overseas markets separate and distinct. While these comments do not
pertain to the regulation, but rather to AMS' implementation of the
mandatory wholesale pork reporting program, AMS will take these
suggestions into account. Further, AMS is unable to determine if
confidentiality issues will arise regarding these products until
information is submitted under the new program. The 1999 Act requires
USDA to publish mandatory data on livestock and meat price trends,
contracting arrangements, and supply and demand conditions in a manner
that protects the identity of reporting entities and preserves the
confidentiality of proprietary transactions. AMS' guidelines, which are
commonly referred to as the ``3/70/20 rule'' requires the following
three conditions be met for publication of information: (1) At least
three reporting entities need to provide data at least 50 percent of
the time over the most recent 60-day time period; (2) No single
reporting entity may provide more than 70 percent of the data for a
report over the most recent 60-day time period; and (3) No single
reporting entity may be the sole reporting entity for an individual
report more than 20 percent of the time over the most recent 60-day
time period.
Training and Outreach
One commenter suggested that AMS conduct training sessions for
packers who will be required to submit wholesale pork prices under LMR.
AMS agrees with this comment and has allotted $20,000 in funds for this
type of activity, as outlined in the Executive Order 12866 and
Executive Order 13563 sections of the proposed rule (77 FR 16951) and
this rule.
Executive Order 12988
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is not intended to have retroactive effect.
Section 259 of the 1999 Act prohibits States or political subdivisions
of a State to impose any requirement that is in addition to, or
inconsistent with, any requirement of the 1999 Act with respect to the
submission or reporting of information, or the publication of such
information, on the prices and quantities of livestock or livestock
products. In addition, the 2010 Reauthorization Act does not restrict
or modify the authority of the Secretary to administer or enforce the
Packers and Stockyards Act of 1921 (7 U.S.C. 181-229); administer,
enforce, or collect voluntary reports under the 1999 Act, the 2006
Reauthorization Act, or any other law; or access documentary evidence
as provided under sections 9 and 10 of the Federal Trade Commission Act
(15 U.S.C. 41-58). There are no administrative procedures that must be
exhausted prior to any judicial challenge to the provisions of this
rule.
Civil Rights Review
AMS has considered the potential civil rights implications of this
rule on minorities, women, or persons with disabilities to ensure that
no person or group shall be discriminated against on the basis of race,
color, national origin, gender, religion, age, disability, sexual
orientation, marital or family status, political beliefs, parental
status, or protected genetic information. This review included persons
that are employees of the entities that are subject to this regulation.
This rule does not require affected entities to relocate or alter their
operations in ways that could adversely affect such persons or groups.
Further, this rule would not deny any persons or groups the benefits of
the program or subject any persons or groups to discrimination.
Executive Order 13132
This rule has been reviewed under Executive Order 13132,
Federalism. This Order directs agencies to construe, in regulations and
otherwise, a Federal statute to preempt State law only when the statute
contains an express preemption provision. This rule is required by the
1999 Act. Section 259 of the 1999 Act, Federal preemption, states, ``In
order to achieve the goals, purposes, and objectives of this title on a
nationwide basis and to avoid potentially conflicting State laws that
could impede the goals, purposes, or objectives of this title, no State
or political subdivision of a State may impose a requirement that is in
addition to, or inconsistent with, any requirement of this subtitle
with respect to the submission or reporting of information, or the
publication of such information, on the prices and quantities of
livestock or livestock products.''
Prior to the passage of the 1999 Act, several States enacted
legislation mandating, to various degrees, the reporting of market
information on transactions of cattle, swine, and lambs conducted
within that particular State.
[[Page 50567]]
However, since the national LMR program was implemented on April 2,
2001, these State programs are no longer in effect. Therefore, there
are no Federalism implications associated with this rulemaking.
Executive Order 13175
This rule has been reviewed in accordance with the requirements of
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments. The review reveals that this regulation will not have
substantial and direct effects on Tribal governments and will not have
significant Tribal implications.
Executive Order 12866 and Executive Order 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives, and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated ``not significant'' under
section 3(f) of Executive Order 12866, and, therefore, has not been
reviewed by the Office of Management and Budget (OMB). The proposed
rule (77 FR 16951), however, was designated significant; and,
therefore, AMS prepared a cost-benefit analysis for the proposed rule,
and it was reviewed by OMB. For the final rule, AMS has prepared a
cost-benefit analysis notwithstanding this rule's non-significant
designation.
Regulations must be designed in the most cost-effective manner
possible to obtain the regulatory objective while imposing the least
burden on society. This rule would amend the LMR regulations to
implement mandatory wholesale pork reporting and was developed by the
Committee, comprising organizations representing pork packers,
processors, retailers, and buyers of wholesale pork; swine producers;
USDA; and other interested parties.
Since all of the entities who will be required to report wholesale
pork sales already report information under LMR regarding their swine
purchases, costs to reporting another commodity are expected to be
minimal. A complete analysis of the number of affected entities and the
required volume of reporting is discussed under the Paperwork Reduction
Act (PRA) section following this section.
Alternatives to the rule's language were thoroughly discussed
during the course of the negotiated rulemaking meetings, and the
consensus language reflects the best efforts of all participating
parties to ensure the successful implementation of wholesale pork
reporting.
Until the promulgation of this rule, pork processors were not
required by law to report wholesale pork cut prices. Rather, AMS
collected information on daily sales and price information from pork
processors on a voluntary basis. The 2008 Farm Bill directed the
Secretary to conduct a study to determine advantages, drawbacks, and
potential implementation issues associated with adopting mandatory
wholesale pork reporting. The study found that voluntary wholesale pork
price reporting is thin, and frequently results in missing or
unreportable price quotes for subprimals. The number of missing data
has increased over time.
In addition, changes in the way pork is traded in recent years have
led to inconsistencies in industry practices and current AMS guidelines
for defining reportable trades. The study found that more pork is
being: (1) Traded in forms that are either not reported or not
reportable (e.g., enhanced product, case ready product, branded
product, or frozen product); (2) transacted through intra-firm
transfer, through inter-firm transfer, through formula pricing, through
forward price contracts well in advance of delivery (beyond 7 or 10
days forward as used by AMS); and, (3) destined for export markets
which are excluded from AMS pork price reports for the negotiated cash
guidelines used by AMS.
As a result of thin pork price reporting, industry participants had
raised concerns about potential selective price reporting in the
voluntary program. These concerns have reduced the perceived value of
published price reports to the industry. The study found support for
mandatory price reporting throughout the industry, and concluded that
the benefits likely would exceed the cost of moving from a voluntary to
a mandatory reporting program for wholesale pork.
The benefits of this rule are diffuse and difficult to quantify;
therefore, this analysis considers benefits only on a qualitative
basis. A complete discussion of the benefits is found in the summary of
benefits section. The major cost of complying with this rule involves
the information collection and reporting process. The information
collection and reporting process is explained in the Summary of Costs
section and is referenced in section 59.10(f), Reporting Methods. A
complete discussion of the cost analysis can be found in the summary of
costs section.
Summary of Benefits. Government intervention in a market is
conducted because the free market has tendencies to fail whenever
certain criteria hold. Market failures occur in cases such as public
goods, externalities, and asymmetric and/or missing information
problems appear. Agricultural markets in particular are subject to
information asymmetry, with both large and small operators in every
aspect of the value chain, ranging from multinational corporations to
part-time operators. Agricultural markets are also characterized by a
large degree of uncertainty and missing information.
In 2001, George Akerloff, Michael Spence, and Joseph Stiglitz \1\
won the Nobel Prize in Economics for their seminal work on the
Economics of Information, establishing it as a field within economics.
Their combined works showed that: (1) Even small gaps in information
can cause a misallocation of resources; (2) attempts to gather
information by market participants generally incur costs that may not
be recouped; (3) participants may turn to the use of nonmarket
``signaling'' to gather information, rather than the price mechanism;
(4) attempts to obtain information by the participants may themselves
cause sufficient levels of distortion in the markets, even with small
information costs; and, (5) the existence of other market failures can
alter the individual's valuation of the benefits and costs of
information.\2\ Each of these situations can lead to either a failure
to attain an efficient equilibrium, or may lead to multiple
equilibriums, both of which reduce economic welfare. Failure to achieve
an equilibrium outcome can result in the failure of supply and demand
to intersect at an equilibrium point, with persistent surpluses or
shortages in the market.
---------------------------------------------------------------------------
\1\ ``The Sveriges Riksbank Prize in Economic Sciences in Memory
of Alfred Nobel 2001.'' Nobelprize.org. 7 Sep 2011 available at
http://www.nobelprize.org/nobel_prizes/economics/laureates/2001/.
\2\ Stiglitz, J.E. ``The Contributions of the Economics of
Information to Twentieth Century Economics.'' 2000. The Quarterly
Journal of Economics 115(November):1441-1478.
---------------------------------------------------------------------------
The wholesale pork reporting study mandated by Congress found
evidence consistent with Akerloff, et al., and indicates that mandatory
price reporting will improve information in the wholesale pork market.
Following the results of Akerloff, et al. cited above, this report
found that: (1) The wholesale
[[Page 50568]]
pork reporting information under the voluntary program is thin, getting
thinner, and does not properly reflect changes in the pork market in
recent years. Mandatory reporting would improve this situation by
increasing the number of reporting firms, including sow/boar meat in
the reporting, responding to changes in the marketing of pork and pork
products, and reducing the number of missing price quotes, particularly
for subprimals; (2) Data users will have improved information without
incurring additional costs such as private market analyses and data
subscriptions, which may be too costly for small producers, small
packers, small processors, and other data users; (3) Mandatory price
reporting will lead to increased transparency in prices and more
efficient price discovery. In addition, price data will be more
consistent with current trade practices, providing more clear-cut
market information, and less need for ``signaling''; (4) Mandatory
wholesale pork price reporting will reduce concerns the industry now
has about selective price reporting, which can potentially distort
market information; and (5) Mandatory wholesale pork price reporting
will benefit small market participants to a greater extent than larger
participants, who are likely to have more information available to them
than the smaller participants, although larger firms with more staff
may have greater ability to analyze the data than small firms. The
report concluded that mandatory wholesale pork reporting would reduce
the inequities in market information and create a more competitive
environment.
These findings indicate that mandatory price reporting will be an
improvement over the current voluntary program, and that market
efficiency as well as overall economic welfare will be increased by
implementing the mandatory price reporting program for pork and pork
products. Research on existing mandatory livestock price reporting also
supports this conclusion.
Early research on problems associated with pricing in livestock
markets often considered the distinction between price determination
and price discovery, and the resulting issues faced by livestock
producers in a particular market. Ward and Schroeder (2009) \3\
describe the difference between price determination and price discovery
by noting that price determination is the interaction of supply and
demand factors in a broad market situation to determine the general
price level. Price discovery is the process whereby buyers and sellers
interact in a specific market at a specific time to ascertain the value
of a commodity in that market at that time. Price discovery involves
the consideration of multiple factors, including market structure,
futures prices and risk management options. However, the first
consideration in price discovery is typically the general market price
level, i.e. price determination is the starting point for price
discovery.
---------------------------------------------------------------------------
\3\ Ward, C.E. and T.C. Schroeder. ``Understanding Livestock
Pricing Issues.'' Oklahoma Cooperative Extension Fact Sheet, AGEC-
551 August 2009.
---------------------------------------------------------------------------
The importance of price reporting by AMS is that it provides data
that gives market participants knowledge of the general price levels of
a commodity, as well as insight into the overall conditions in that
market. This information assists participants in more effectively
discovering prices in their specific market.
Research on livestock mandatory pricing has demonstrated that
mandatory pricing does increase transparency and improves the
efficiency of the price discovery process. Ward (2004a and b) \4\ found
that mandatory price reporting increased information, showing mandatory
reports significantly improved the amount, type, and timeliness of data
related to captive supplies, and increasing transparency. USDA's
Economic Research Service (ERS) (Perry, MacDonald, Nelson, Hahn, Arnade
and Plato, 2005) \5\ extended Ward's work, yielding similar results.
ERS also found that prices were twice as volatile under the mandatory
system than under the voluntary system. The reason was thought to be
the filtering or interpretive role of market reporters under voluntary
reporting relative to the reduced filtering role with mandatory
reporting.
---------------------------------------------------------------------------
\4\ Ward, C.E. ``Captive Supply Trends since Mandatory Price
Reporting.'' Oklahoma Cooperative Extension Fact Sheet F-597,
November 2004a. Ward, C.E. ``Captive Supply Price Relationships and
Impacts.'' Oklahoma Cooperative Extension Fact Sheet F-598, November
2004b.
\5\ Perry, J., J. McDonald, K. Nelson, W. Hahn, C. Arnade, and
G. Plato. 2005. ``Did the Mandatory Requirement Aid the Market?
Impact of the Livestock Mandatory Reporting Act.'' United States
Department of Agriculture, Economic Research Service, LDP-M-135-01.
---------------------------------------------------------------------------
Koontz (2007) \6\ studied the vertical relationship between the
national fed cattle price and boxed beef cutout values using a standard
price transmission model. He found boxed beef cutout values had both a
greater and quicker impact on fed cattle than before the mandatory
program. However, he also detected more uncertainty. This supports
earlier research indicating both increased transparency and increased
volatility associated with mandatory reporting. In addition, Lee, Ward
and Brorsen (2011) \7\ examined the role of cash prices in price
discovery for fed cattle and hogs as cash market share fell over the
years of 2001-2010. They found that the cash market remains important
for price discovery, although thinning of the cash market has had a
negative impact on the process.
---------------------------------------------------------------------------
\6\ Koontz, S.R. ``Impacts of Mandatory Price Reporting on the
Relationship Between Fed Cattle Prices and the USDA Boxed Beef
Cutout Value.'' 2007. Working Paper, Department of Agricultural and
Resource Economics, Colorado State University.
\7\ Lee Y., Ward C.E. and Brorsen, B.W. 2011. ``Cash Market
Importance in Price Discovery for Fed Cattles and Hogs.'' Division
of Agricultural Science and Natural Resources, Oklahoma Agricultural
Experiment Station, Oklahoma State University.
---------------------------------------------------------------------------
As the wholesale pork study indicated, there are some market
participants who are likely to benefit more than others. Niche and
direct marketing producers are likely to benefit from improved data, as
they are less likely to be able to have other means of price
determination available to them, primarily due to cost. These producers
account for a small but growing segment of U.S. agriculture.
In summary, research on existing livestock mandatory price
reporting has demonstrated that it has improved transparency issues in
livestock markets, enabling more efficient and effective price
discovery in these markets, although there has been increased
variability in reported prices, largely due to the change in approach
from voluntary to mandatory. This improved transparency and increased
efficiency is consistent with economic theory of information. The
wholesale pork reporting study mandated by Congress shows evidence that
mandatory reporting will have a similar impact on the wholesale pork
market.
For the economic analysis of the rule, AMS was unable to determine
a quantitative assessment of the benefits due to limitations on
existing research and the disparate nature of the benefits to be
achieved. The qualitative benefits derived from the literature and are:
The increased number of firms reporting prices to AMS
under the mandatory program will provide a more complete data set,
leading to increased price transparency and more efficient price
discovery;
Allows AMS more opportunity to keep wholesale pork
reporting current with industry marketing practices and product
offerings; and
Provides information to industry participants that cannot
afford to purchase data, including small pork processing operations,
small
[[Page 50569]]
wholesalers and retailers, and direct and niche marketing operations.
Summary of Costs. The regulatory objective of this rule is to
increase the amount of information available to participants in the
marketplace for wholesale pork and pork products by mandating reporting
of market information by certain members of the industry. The rule was
developed in the most cost-effective manner possible, and, to the
extent practicable, draws upon current industry practices and reporting
procedures for other commodities covered by LMR in order to minimize
the burden to the industry.
The least cost reporting method to accomplish the objectives of the
rule continues to be the transfer of electronic data from the reporting
entity to AMS, as is the current practice with mandatory price
reporting for other covered commodities. Electronic data transmission
of information is accomplished using an interface with an existing
electronic recordkeeping system. Packers will provide for the
translation of the information from their existing electronic
recordkeeping system into the required AMS standardized format. Once
accomplished, the information will be electronically transmitted to AMS
where it will be automatically loaded into an AMS database. We
estimated that the creation of this interface by in-house computer
personnel will require an industry average of 15 hours per respondent.
Further, we estimated the cost per hour for labor to average $49.30
(Bureau of Labor Statistics),\8\ for a total cost, on average, of $740.
Those companies not having in-house computer personnel will incur such
costs as are necessary to bring in outside computer programmers to
accomplish the task.
---------------------------------------------------------------------------
\8\ http://www.bls.gov/oes/current/oes_nat.htm#00-0000.
Initial Electronic Startup Cost per Respondent
------------------------------------------------------------------------
------------------------------------------------------------------------
Hours to develop interface................................. 15
Labor cost per hour........................................ x $49.30
------------
Total cost per respondent................................ $739.50
------------------------------------------------------------------------
Startup Cost Prorated over 3 Year Life of Program:
$739.50 / 3 = $246.50 annual cost per respondent
Additionally, AMS estimated the annual cost per respondent for the
storage of the electronic data files which were submitted to AMS in
compliance with the reporting provisions of this rule to be $116.10 (5
hours for recordkeeping at $23.22).
In this rule, information collection requirements include
submission of the required information on a daily basis in the standard
format provided in the Wholesale Pork Daily Report (LS-89). A copy of
this report is included in the Appendices at the end of this rule.
There are expected to be a total of 56 respondents (34 commodity pork
processors, 12 sow and boar meat processors, and 10 processors of all
types of meat). Plants that slaughter both commodity pork (from barrows
and gilts), and sow/boar meat will file one combined report so that the
maximum number of reports per day is two.
Annual Submission Costs per Respondent
----------------------------------------------------------------------------------------------------------------
Number of Cost per
Type of product respondents respondent Total cost
----------------------------------------------------------------------------------------------------------------
Commodity Pork.................................................. 34 $1,509.30 $51,316.20
Sow/Boar Meat................................................... 12 754.65 9,055.80
Combination Meat Types.......................................... 10 1,509.30 15,093.00
-----------------------------------------------
Total Annual Submission Costs............................... 56 .............. 75,465.00
----------------------------------------------------------------------------------------------------------------
By dividing total submission costs of $75,465.00 over the total
number of respondents (56) yield an average submission cost of
$1,347.59 on an annual basis. This value can be used to estimate the
total cost burden to the industry, which is determined to be $95,770.64
per year.
Annual Industry Costs
----------------------------------------------------------------------------------------------------------------
Cost per Number of Total cost to
respondent respondents industry
----------------------------------------------------------------------------------------------------------------
Start-up Costs.................................................. $246.50 56 $13,804.00
Recordkeeping/.................................................. 116.10 56 6,501.60
Average Submission Costs........................................ 1,347.59 56 75,465.04
-----------------------------------------------
Total Annual Costs.......................................... 1,710.19 56 95,770.64
----------------------------------------------------------------------------------------------------------------
In 2010, federally inspected pork production was 22.274 billion
pounds. Assuming this level of production, the cost of this final rule
to the private sector is $4.30 per million pounds ($95,770.64/22.274
billion pounds).
In addition to these costs to packers for submitting information,
AMS will reallocate staff, issue regulations, and set up an electronic
database to capture data and develop reports. The 3 staff years
required to administer and produce mandatory price reports include
reporters and auditors. Salary-related costs in each year are estimated
at $271,000. Other costs include approximately $20,000 for travel/
transportation, training, and outreach; $5,000 for miscellaneous costs
such as printing, training, office supplies, and equipment; and
$325,000 in the first year for a computer systems contract to develop
the database required to manage the data.
The mandatory price reporting program would cost AMS $621,161 in
the first year of implementation, and subsequent year costs are
estimated to be $296,161. Therefore, the costs would be roughly
$404,500 per year.
[[Page 50570]]
Total Annual Cost to Government
----------------------------------------------------------------------------------------------------------------
First year Following Average cost/
Cost type costs years' costs year
----------------------------------------------------------------------------------------------------------------
Salaries........................................................ $271,160.82 $271,160.82 $271,160.82
System Development Contract..................................... 325,000.00 .............. 108,333.33
Travel (20 trips @$1,000/trip).................................. 20,000.00 20,000.00 20,000.00
Miscellaneous................................................... 5,000.00 5,000.00 5,000.00
-----------------------------------------------
Total Costs................................................. 621,160.82 296,160.82 404,494.15
----------------------------------------------------------------------------------------------------------------
Adding the costs to industry, together with the costs to
government, yields the total cost to society associated with this
regulation. Because benefits could not be quantified, comparison of
costs with benefits is not possible. However, total costs, shown
annually, over the life of the rule, and discounted over the life of
the rule have been calculated. These figures show that this rule does
not meet the threshold for an economically significant rule ($100
million).
Total Costs of Regulation
------------------------------------------------------------------------
------------------------------------------------------------------------
Annual Costs............................................ $5,000,277.52
Total Costs over 3 Years................................ 1,500,832.56
Discounted Costs over 3 Years (3% rate)................. 1,457,543.39
Discounted Costs over 3 Years (7% rate)................. 1,404,788.36
------------------------------------------------------------------------
Regulatory Flexibility Act
This rule has been reviewed under the requirements of the
Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612). The purpose of the
RFA is to consider the economic impact of a rule on small business
entities. Alternatives, which would accomplish the objectives of the
rule without unduly burdening small entities or erecting barriers that
would restrict their ability to compete in the marketplace, were
evaluated by the Committee. Moreover, the requirements contained in
this rule were negotiated with members of the industry, some of whom
represented small and mid-size firms.
Regulatory action should be appropriate to the scale of the
businesses subject to the action. The collection of information is
necessary for the proper performance of the functions of AMS concerning
the mandatory reporting of livestock information. The 1999 Act requires
AMS to collect and publish livestock market information. The required
information is only available directly from those entities required to
report under the 1999 Act and by these regulations and exists nowhere
else. Therefore, this rule does not duplicate market information
reasonably accessible to USDA.
For any calendar year, any federally inspected swine plant which
slaughtered an average of 100,000 head of swine a year for the
immediately preceding 5 calendar years, and any packing firm that
slaughtered at least 200,000 sows and/or boars on average during the
preceding 5 years, are required to report information. Additionally,
any swine plant that did not slaughter swine during the immediately
preceding 5 calendar years is required to report if the Secretary
determines that the plant should be considered a packer based on the
capacity of the processing plant. This accounts for approximately 56
out of 611 swine plants or 9.2 percent of all federally inspected swine
plants. Fully 90.8 percent of all swine plants in the U.S. are exempted
by this rule from reporting information.
Accordingly, we also have prepared this final regulatory
flexibility analysis. The RFA compares the size of meat packing plants
to the North American Industry Classification System (NAICS) to
determine the percentage of small businesses within the meat packing
industry. Under these size standards, meat packing companies with 500
or less employees are considered small business entities.
Objectives and Legal Basis. The objective of this rule is to
improve the price and supply reporting services of AMS in order to
encourage competition in the marketplace for wholesale pork products by
increasing the amount of information available to participants. This is
accomplished through the establishment of a program of information
regarding the marketing of wholesale pork products as specifically
directed by the 1999 Act, the 2010 Reauthorization Act, and these
regulations, as described in detail in the background section.
Estimated Number of Small Businesses. This rule provides for the
mandatory reporting of market information by pork wholesalers who, for
any calendar year, have slaughtered 100,000 head of swine during the
immediately preceding 5 calendar years, or any packing firm that has
slaughtered at least 200,000 sows and/or boars on average during the
preceding 5 years. Processing plants that have not slaughtered
livestock during the immediately preceding 5 calendar years are also
required to report if the Secretary determines that the plants should
be considered packers based on their capacity.
The NAICS size standard classifies a small business in the meat
packing industry as a company with less than 500 employees. Although it
is common in the red meat industry for larger companies to own several
plants, some of which may employ less than 500 people, those companies
with a total slaughter plant employment at all locations of less than
500 are considered to be small businesses for the purposes of this rule
even though individual plants are mandated to report as provided by the
1999 Act, 2010 Reauthorization Act, and this regulation.
Approximately 36 individual pork packing companies representing a
total of 56 individual plants are required to report information to
AMS. Based on the NAICS size standard, 24 of these 36 pork packing
companies are considered small businesses, representing 27 individual
plants that are required to report. The figure of 56 plants required to
report represents 9.2 percent of the swine plants in the United States.
The remaining 90.8 percent of swine plants, nearly all estimated to
qualify as small business, are exempt from mandatory reporting.
AMS estimates the total annual burden on each swine packing entity
to be, on average, $1,710.19, including $1,347.59 for annual costs
associated with electronically submitting data, $246.50 for annual
share of initial startup costs of $739.50, and $116.10 for the storage
and maintenance of electronic files that were submitted to AMS.
Projected Recordkeeping. Each packer required to report information
to the Secretary must maintain such records as are necessary to verify
the accuracy of
[[Page 50571]]
the information provided to AMS. This includes information regarding
price, volume, weight, cut, and other factors necessary to adequately
describe each transaction. These records are already kept by the
industry. Reporting packers are required by these regulations to
maintain and to make available the original contracts, agreements,
receipts, and other records associated with any transaction relating to
the purchase, sale, pricing, transportation, delivery, or weighing of
all transactions. Reporting packers are also required to maintain
copies of the information provided to AMS. All of the above-mentioned
paperwork must be kept for at least 2 years. Packers are not required
to report any other new or additional information that they do not
generally have available or maintain. Further, they are not required to
keep any information that would prove unduly burdensome to maintain.
The paperwork burden that is imposed on the packers is further
discussed in the section entitled ``Paperwork Reduction Act'' that
follows. In addition, we have not identified any relevant Federal rules
that are currently in effect that duplicate, overlap, or conflict with
this rule.
Professional skills required for recordkeeping under this rule are
not different than those already employed by the reporting entities.
Reporting will be accomplished using computers or similar electronic
means. AMS believes the skills needed to maintain such systems are
already in place in those small businesses affected by this rule.
This rule as directed by the 2010 Reauthorization Act requires pork
packing plants of a certain size to report information to the Secretary
at prescribed times throughout the day and week. These regulations
already exempt many small businesses by the establishment of daily
slaughter and processing capacity thresholds. Based on figures
published by the National Agricultural Statistics Service (NASS), there
were 611 federally inspected swine slaughter plants operating in the
United States at the end of 2010. AMS estimates that approximately 56
swine plants are required to report information, representing 9.2
percent of all federally inspected swine plants. Therefore, fully 90.8
percent of all swine plants are not required to report.
The impact of the costs of the rule to industry was also analyzed
by plant capacity, measured in terms of number of head slaughtered.
Industry cost by firm size, as measured in number of head slaughtered,
is shown in the following table. Firms that slaughter fewer than
100,000 per year are exempt from the rule. These data do not
distinguish between barrow/gilt slaughter and sow/boar slaughter, so
all firms are assumed to report on barrows/gilts.
The data show that on a per head basis, the costs of this rule
range from 0.033 cents per head slaughtered for the largest firms to
approximately one cent per head for the smallest plants affected by the
rule. On average, the cost burden is 0.084 cents per head slaughtered.
Roughly 30 plants, or 4.5 percent of all plants in the industry, have
costs that exceed this value. With an average hog carcass price of
$87.90 for the year to date, and an average weight of 205 pounds per
carcass, the price paid per head is roughly $180. The additional cost
of one cent per head, the largest expected cost for plants impacted by
the rule, does not appear to represent a significant cost increase.
In the table below, showing data for 2010, 91.2 percent of all
plants (or 557 of 611 plants) would not have been expected to incur any
reporting costs. All the costs would have been borne by the largest 8.8
percent of plants. Because the data in this table do not differentiate
between sow/boar and barrow & gilt plants, these figures are
approximates of the actual values, but illustrate the expected
distributional impacts of the rule.
Hogs, Number of Federally Inspected Plants, Head Slaughtered, Total Cost, and Cost/Head by Size Group United
States: 2010 *
----------------------------------------------------------------------------------------------------------------
Number of
Number head plants Thousand head Total cost Cost/head
----------------------------------------------------------------------------------------------------------------
1-999........................................... 385 117.6 $0.00 $0.00000
1,000-9,999..................................... 116 328.4 0.00 0.00000
10,000-99,999................................... 56 2,163.0 0.00 0.00000
100,000-249,999................................. 14 2,235.8 23,942.66 0.01071
250,000-499,999................................. 8 2,799.8 13,681.52 0.00489
500,000-999,999................................. 5 3,346.7 8,550.95 0.00255
1,000,000-1,999,999............................. 3 4,850.5 5,130.57 0.00106
2,000,000-2,999,999............................. 11 26,862.7 18,812.09 0.00070
3,000,000-3,999,999............................. 1 3,862.4 1,710.19 0.00044
4,000,000+...................................... 12 62,747.8 20,522.28 0.00033
---------------------------------------------------------------
Total....................................... 611 109,314.7 92,340.26 0.00084
----------------------------------------------------------------------------------------------------------------
* Source: U.S. Department of Agriculture, National Agricultural Statistics Service, ``Livestock Slaughter: 2010
Annual Summary,'' April 2011.
In summary, the RFA analysis showed that of the 56 firms facilities
that are required to report, 27 (just under half) qualify as being
owned by small businesses. These 27 facilities are owned by 24 of the
36 companies subject to the rule. However, given the capital intensive
nature of the industry, a more appropriate approach to the RFA analysis
may be the number of head slaughtered by company. This approach was
recognized by Congress in the original LMR legislation, by placing a
100,000 head minimum slaughter requirement on firms which report. Using
that standard, fewer than 10 percent of all firms in the industry are
affected by this regulation. In addition, the increased cost of the
rule represents at most roughly 0.006 percent the current hog carcass
value ($0.01/$180.00). Based on this analysis, AMS determined that the
rule would not have a significant economic impact on a substantial
number of small entities.
Paperwork Reduction Act
In accordance with 5 CFR part 1320, we include the description of
the reporting and recordkeeping requirements and an estimate of the
annual burden on packers required to report information under this
rule. The OMB reference number assigned to this collection is 0581-
0279. AMS plans to submit to OMB a request to merge this collection
into the currently approved collection, ``Livestock Mandatory
[[Page 50572]]
Reporting Act of 1999,'' OMB number 0581-0186. The reporting
requirement timeline is fully discussed under Supplementary
Information.
The information collection and recordkeeping requirements in this
regulation are essential to establishing and implementing a mandatory
program of livestock and livestock products reporting. Based on the
information available, AMS estimates that there are 34 commodity pork
packer plants, 12 sow/boar meat packer plants, and 10 packer plants
processing both commodity pork and sow/boar meat that are required to
report market information under this rule. These companies have similar
recordkeeping systems and business operation practices and conduct
their operations in a similar manner. AMS believes that all of the
information required under this rule can be collected from existing
materials and systems and that these materials and systems can be
adapted to satisfy the new requirements.
The PRA also requires AMS to measure the recordkeeping burden.
Under this rule, each packer required to report must maintain and make
available upon request for 2 years, such records as are necessary to
verify the accuracy of the information required to be reported. These
records include original contracts, agreements, receipts, and other
records associated with any transaction relating to the purchase, sale,
pricing, transportation, delivery, weighing, slaughter, or carcass
characteristics of all livestock. Under this rule, the electronic data
files which the packers are required to utilize when submitting
information to AMS will have to be maintained as these files provide
the best record of compliance. Therefore, the recordkeeping burden
includes the amount of time needed to store and maintain records. AMS
estimates that, since records of original contracts, agreements,
receipts, and other records associated with any transaction relating to
the purchase, sale, pricing, transportation, delivery, and weighing of
wholesale pork products are stored and maintained as a matter of normal
business practice by these companies for a period in excess of 2 years,
additional annual costs will nominal. AMS estimates the annual cost per
respondent for the storage of the electronic data files which were
submitted to AMS in compliance with the reporting provisions of this
rule to be $116.10. This estimate includes the cost per respondent to
maintain such records which is estimated to average 5 hours per year at
$23.22 per hour.
In this rule, information collection requirements have been
designed to minimize disruption to the normal business practices of the
affected entities. The requirements include the submission of the
required information on a daily basis in the standard format provided
in the form included in the Appendices section. This form requires the
minimal amount of information necessary to properly describe each
reportable transaction, as required under this rule.
1. Wholesale Pork Daily Report: Form LS-89
Estimate of Burden: Public reporting burden for collection of
information is estimated to be 0.125 hours per electronically submitted
response.
Respondents: Packer processing plants required to report
information on wholesale pork sales to the Secretary.
Estimated Number of Respondents: 34 commodity pork plants, 12 sow/
boar meat plants and 10 combination commodity pork/sow/boar meat
plants.
Estimated Number of Responses per Respondent: 520 per year for
commodity pork (2 per day for 260 days); 260 per year for sow/boar meat
(1 per day for 260 days); and 520 per year (2 per day) for combination
commodity pork/sow/boar meat.
Estimated Total Annual Burden on Respondents: 3,250 hours.
With 260 reporting days per year, commodity pork processors, and
processors which produce a combination of commodity pork/sow/boar meat,
will submit a total of 520 responses per year, and sow/boar meat
processors will submit a total of 260 responses per year. This includes
5 hours for recordkeeping annually, for each of the 56 respondents
(total recordkeeping hours of 280).
Breakdown of Estimated Data Submission Cost Burden
----------------------------------------------------------------------------------------------------------------
Total
Item Reporting days Responses responses
----------------------------------------------------------------------------------------------------------------
I. Number of Responses per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination......................... 260 x 2 daily = 520
Sow/Boar Meat...................................... 260 x 1 daily = 260
----------------------------------------------------------------------------------------------------------------
At 0.125 hours per submission, commodity pork/combination
processors will require 65.0 hours of reporting time, while sow/boar
meat processors will require 32.5 hours of reporting time.
----------------------------------------------------------------------------------------------------------------
Submissions/ Hours/ Total hours/
Item year submission year
----------------------------------------------------------------------------------------------------------------
II. Number of Submission Hours per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination......................... 520 x .125 = 65.00
Sow/Boar Meat...................................... 260 x .125 = 32.50
----------------------------------------------------------------------------------------------------------------
Total annual submission costs for commodity pork and combination
pork processors is expected to be $1,509.30 with a clerical cost of
$23.22 per hour, including benefits. Annual costs for sow meat
processors will equal $754.65.
[[Page 50573]]
----------------------------------------------------------------------------------------------------------------
Total hours/
Item year Cost/ hour Total $'s/ year
----------------------------------------------------------------------------------------------------------------
III. Total Submission Cost per Respondent per Year
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination......................... 65.00 x $23.22 = $1,509.30
Sow/Boar Meat...................................... 32.50 x 23.22 = 754.65
----------------------------------------------------------------------------------------------------------------
A total of 44 respondents are expected to report commodity pork/
combination wholesale data, while 12 sow/boar meat respondents are
anticipated. Ten of the respondents will report on both types of
product. In all, 56 different respondents will be reporting, incurring
total annual submission costs of about $75,465.00.
----------------------------------------------------------------------------------------------------------------
Number of
Item Total $'s/ year respondents Total cost
----------------------------------------------------------------------------------------------------------------
IV. Total Yearly Submission Cost for All Respondents
----------------------------------------------------------------------------------------------------------------
Commodity Pork/Combination......................... $1,509.30 x 44 = $66,409.20
Sow/Boar Meat...................................... 754.65 x 12 = 9,055.80
----------------
Total.......................................... ............... ... ............... ... 75,465.00
----------------------------------------------------------------------------------------------------------------
Estimated Total Annual Burden on Respondents: $95,770.64 including
$75,465.00 for annual costs associated with electronically submitted
responses (3,250 annual hours (58.036 annual hours per 56 respondents)
@ $23.22 per hour, for a total of $1,347.59 per respondent), initial
electronic data transfer setup costs of $13,804.00 ($739.50 prorated
over 3 years = $246.50 per 56 respondents), and $6,501.60 ($116.10 per
56 respondents) for the storage and maintenance of electronic files
that were submitted to AMS.
List of Subjects in 7 CFR Part 59
Cattle, Hogs, Sheep, Livestock, Lamb.
For the reasons set forth in the preamble, Title 7, Chapter I, part
59 is amended to read as follows:
PART 59--LIVESTOCK MANDATORY REPORTING
0
1. The authority citation for part 59 continues to read as follows:
Authority: 7 U.S.C 1635-1636i.
0
2. Section 59.20 is amended by adding paragraph (f) to read as follows:
Sec. 59.20 Recordkeeping.
* * * * *
(f) Reporting sales of wholesale pork. A record of a sale of
wholesale pork by a packer shall evidence whether the sale occurred:
(1) Before 10:00 a.m. central time;
(2) Between 10:00 a.m. and 2:00 p.m. central time; or
(3) After 2:00 p.m. central time.
0
3. Section 59.30 is amended by:
0
A. Revising the definition of ``F.O.B.''.
0
B. Revising the last two sentences in the definition of ``Institutional
Meat Purchase Specifications''.
0
C. Revising paragraph (3) of the definition of ``Lot''.
The revisions read as follows:
Sec. 59.30 Definitions.
* * * * *
F.O.B. The term ``F.O.B.'' means free on board, regardless of the
mode of transportation, at the point of direct shipment by the seller
to the buyer (e.g., F.O.B. Plant, F.O.B. Feedlot) or from a common
basis point to the buyer (e.g., F.O.B. Omaha).
Institutional Meat Purchase Specifications. * * * Phone (202) 260-
8295 or Fax (202) 720-1112. Copies may also be obtained over the
Internet at http://www.ams.usda.gov/AMSv1.0/LivestockStandardizationIMPS.
* * * * *
Lot. * * *
(3) When used in reference to boxed beef, wholesale pork, and lamb,
the term `lot' means a group of one or more boxes of beef, wholesale
pork, or lamb items sharing cutting and trimming specifications and
comprising a single transaction between a buyer and seller.
* * * * *
0
4. Section 59.200 is amended by:
0
A. Adding, in alphabetical order, a definition for ``Formula marketing
arrangement''.
0
B. Adding, in alphabetical order, a definition for ``Forward sale''.
0
C. Adding, in alphabetical order, a definition for ``Negotiated sale''.
0
D. Adding, in alphabetical order, a definition for ``Pork class''.
0
E. Adding, in alphabetical order, a definition for ``Specialty pork
product''.
0
F. Adding, in alphabetical order, a definition for ``Type of sale''.
0
G. Adding, in alphabetical order, a definition for ``Variety meats''.
0
H. Adding, in alphabetical order, a definition for ``Wholesale pork''.
The additions read as follows:
Sec. 59.200 Definitions.
* * * * *
Formula marketing arrangement. When used in reference to wholesale
pork, the term `formula marketing arrangement' means an agreement for
the sale of pork under which the price is established in reference to
publicly-available quoted prices.
* * * * *
Forward sale. When used in reference to wholesale pork, the term
`forward sale' means an agreement for the sale of pork where the
delivery is beyond the timeframe of a ``negotiated sale'' and means a
sale by a packer selling wholesale pork to a buyer of wholesale pork
under which the price is determined by seller-buyer interaction and
agreement.
* * * * *
Negotiated sale. The term `negotiated sale' means a sale by a
packer selling wholesale pork to a buyer of wholesale pork under which
the price is determined by seller-buyer interaction and agreement, and
scheduled for delivery not later than 14 days for boxed product and 10
days for combo product after the date of agreement. The day after the
seller-buyer agreement shall be considered day one for reporting
delivery periods.
* * * * *
Pork class. The term ``pork class'' means the following types of
swine purchased for slaughter:
(1) Barrow/gilt;
(2) Sow;
(3) Boar.
* * * * *
[[Page 50574]]
Specialty pork product. The term `specialty pork product' means
wholesale pork produced and marketed under any specialty program such
as, but not limited to, genetically-selected pork, certified programs,
or specialty selection programs for quality or breed characteristics.
* * * * *
Type of sale. The term ``type of sale'' with respect to wholesale
pork means a negotiated sale, forward sale, or formula marketing
arrangement.
Variety meats. The term `variety meats' with respect to wholesale
pork means cut/processing floor items, such as neck bones, tails,
skins, feet, hocks, jowls, and backfat.
Wholesale pork. The term `wholesale pork' means fresh and frozen
primals, sub-primals, cuts fabricated from sub-primals, pork trimmings,
pork for processing, and variety meats (excluding portion-control cuts,
cuts flavored above and beyond normal added ingredients that are used
to enhance products, cured, smoked, cooked, and tray packed products).
When referring to wholesale pork, added ingredients are used to enhance
the product's performance (e.g. tenderness, juiciness) through adding a
solution or emulsion via an injection or immersion process. The
ingredients shall be limited to water, salt, sodium phosphate,
antimicrobials, or any other similar combination of foresaid or similar
ingredients and in accordance with established USDA regulations.
0
5. Adding a new Sec. 59.205 to read as follows:
Sec. 59.205 Mandatory reporting of wholesale pork sales.
(a) Daily reporting. The corporate officers or officially
designated representatives of each packer processing plant shall report
to the Secretary at least twice each reporting day for barrows and
gilts (once by 10 a.m. central time, and once by 2 p.m. central time)
and once each reporting day for sows and boars (by 2 p.m. central time)
the following information on total pork sales established on that day
inclusive since the last reporting as described in Sec. 59.10(b):
(1) The price for each wholesale pork sale, as defined herein,
quoted in dollars per hundredweight on an F.O.B. Plant and an F.O.B.
Omaha basis as outlined in Sec. 59.205(d). The price shall include
brokerage fees, if applicable. All direct, specific, and identifiable
marketing costs (such as point of purchase material, marketing funds,
accruals, rebates, and export costs) shall be deducted from the net
price if applicable and known at the time of sale;
(2) The quantity for each pork sale, quoted by number of pounds
sold; and
(3) The information regarding the characteristics of each sale is
as follows:
(i) The type of sale;
(ii) Pork item description;
(iii) Pork item product code;
(iv) The product delivery period, in calendar days;
(v) The pork class (barrow/gilt, sow, boar);
(vi) Destination (Domestic, Export/Overseas, NAFTA);
(vii) Type of Refrigeration (Fresh, Frozen, age range of fresh
product); and
(viii) Specialty pork product, if applicable
(b) Publication. The Secretary shall make available to the public
the information obtained under paragraph (a) of this section not less
frequently than twice each reporting day for gilt and barrow product
and once each reporting day for sow and boar product.
(c) The Secretary shall obtain product specifications upon request.
(d) The Secretary shall provide freight information for the purpose
of calculating prices on an F.O.B. Omaha basis. The Secretary shall
provide this information periodically, but not less than quarterly.
Dated: August 15, 2012.
David R. Shipman,
Administrator, Agricultural Marketing Service.
Note: The following Appendices will not appear in the Code of
Federal Regulations.
Appendix A--Swine Mandatory Reporting Form
The following form referenced in Subpart C of part 59 would be
used by persons required to report electronically transmitted
mandatory market information on domestic sales of boxed beef to AMS.
Swine.
LS-89--Wholesale Pork Daily Report
Appendix B--Mandatory Reporting Guideline
The following mandatory reporting form guidelines will be used by
persons required to report electronically transmitted mandatory
market information to AMS.
The first 10 fields of each mandatory reporting form provide the
following information: Identification number (plant establishment
number ID number), company name (name of parent company), plant
street address (street address for plant), plant city (city where
plant is located), plant state (state where plant is located), plant
zip code (zip code where plant is located), contact name (the name
of the corporate representative contact at the plant), phone number
(full phone number for the plant including area code), reporting
date (date the information is due to be submitted (mm/dd/yyyy),and
reporting time (the submission time corresponding to the 10:00 a.m.
and the 2:00 p.m. reporting requirements).
(a) Wholesale Pork Mandatory Reporting Forms
(1) LS-89--Wholesale Pork Daily Report. For lots comprising
multiple items, provide information for each item in a separate
record identified with the same lot identification or purchase order
number.
(i) Lot identification or purchase order number (11). Enter code
used to identify the lot to the packer.
(ii) Destination (12). Enter `1', domestic, for product shipped
within the 50 States; `2', exported, for product shipped overseas;
and `3', exported, for product shipped NAFTA (Canada or Mexico).
(iii) Sales type code (13). Enter the code corresponding to the
sale type of the lot of wholesale pork.
(iv) Delivery period code (14). Enter the code corresponding to
the delivery time period of the lot of wholesale pork.
(v) Refrigeration (15). Enter `1' if the product is sold in 0-6
days fresh, combo; `2' if the product is sold 7 or more days fresh,
combo; `3' if the product is sold 0-10 days fresh, boxed; `4' if the
product is sold 11 or more days fresh, boxed; and `5' if the product
is sold in a frozen condition.
(vi) Class code (16). Enter `1' if the product was derived from
barrows/gilts, `2' for sows, `3' for boar, and `4' for mixed.
(vii) Pork item product code (17). Enter the company product
code for item sold.
(viii) Pork item--Description (18). Enter the pork item name.
(ix) Total product weight (19). Enter the total weight of the
wholesale pork cuts in the lot in pounds.
(xii) F.O.B. Plant Price (20). Enter the price received for each
wholesale pork cut in the lot in dollars per one hundred pounds, FOB
Plant basis.
(xiii) F.O.B. Omaha Price (21). Enter the price received for
each wholesale pork cut in the lot in dollars per one hundred
pounds, FOB Omaha basis.
BILLING CODE 3410-02-P
[[Page 50575]]
[GRAPHIC] [TIFF OMITTED] TR22AU12.026
[FR Doc. 2012-20443 Filed 8-21-12; 8:45 am]
BILLING CODE 3410-02-C