The old adage “Be careful what you wish for, for you may surely get it” comes to mind when you think of mandatory price reporting.

Livestock producers worked long and hard to get mandatory price reporting made into law. The questions remain, did they get what they wanted; and are they better off today?

Mandatory price reporting officially began on April 2, 2001, following the congressional act passed in late 1999. Early on, the bugs in the system were plentiful, rendering the reporting system nearly useless and leaving a void for livestock producers. More recently, the flow of livestock sales data has improved somewhat, reports USDA's Agricultural Marketing Service.

Still, it appears that the new price reporting system will continue to evolve for some time.

"Given the complexity of the transition from the old voluntary reporting system – in place for decades – to the new mandatory system, it's not surprising there have been a large number of problems," says Kansas State University agricultural economist James Mintert.

Under the old system, regional price reports for the major livestock categories were updated at least daily. However, under the new system, regional data on cattle sales became scarce, and reports on the Iowa hog market were even more infrequent.

Technical problems have plagued the system and have been most pronounced in the hog sector. “Apparently, the problem revolved around AMS' ability to sort through and properly aggregate the vast number of price reports received from packers," says Mintert.

So far this month, the regional hog reports have resumed. But the regional cattle reports remain "infrequent", as are sales data on sheep.

Another problem that presents a challenge to solve relates to a new rule in the price reporting law known as the 3/60 Guideline. This is already a topic for revision.

The guideline was meant to protect confidentiality of firms providing price data, as well as prevent undue influence by one segment's data. The guideline currently says USDA can publish information only if:
(1) It comes from at least three packers/importers who represent different companies.
(2) The data from one packer/importer makes up no more than 60 percent of a report.
(3) AMS believes the report will protect the confidentiality of the information source.

"So, in the short run, [the new reporting system] has come to provide less, rather than more, price information in some markets," Mintert notes.

Long term he is more hopeful. He believes the new system could provide more detailed price information, segmented by livestock weights and quality levels. It also could fill some data gaps, particularly in meat price reporting.

"But, in the case of hogs, it's still difficult to determine what price the bulk of hogs traded at, on any given day,” he says. That of course is largely due to the tremendous growth in contract and other marketing arrangements within the industry.

The quality specifications for hogs changed between the old and new systems, too. Thus, all trend studies and year-to-year comparisons are open to question. "That issue could be resolved once AMS learns to deal with the large volume of information received from packers. It will need to make some modifications in the way it reports that price information," contends Mintert.

So the jury is still out on the usefulness of the long-awaited mandatory price reporting system. Meanwhile, a critical void exists. Some producers are trying to fill that void by getting information from private firms providing market news services. The point is, you may have to take price discovery matters into your own hands at least until the AMS system lands on more solid ground.