LMR Wholesale Pork Reporting is Mission Critical, Report Concludes

For the first time ever, economic analysts have completed an external review of wholesale pork reporting in USDA’s Livestock Mandatory Reporting (LMR) system. Since wholesale pork reporting began in 2013, the industry has experienced many changes and the pork cutout number (derived from wholesale pork reporting) is impacting more and more market transactions.

“The motivation to get the pork cutout right is pretty steep,” says Glynn Tonsor, one of the three analysts who completed the review. “There is value in backing up and just saying, what’s changed? How’s the industry different now than it was then? Have we adapted the procedures? Could we do more? Should we do more? Are there some things we should sunset that aren’t as relevant today as they were before?”

The Numbers Matter
Tonsor believes the public data provided by USDA Ag Marketing Service (USDA AMS) makes ag markets operate more efficiently because there’s more information reflecting the supply, demand and market situation. Although it may feel like LMR has been around forever, he points out that it wasn’t that long ago that producers and packers were without this information.

“I grew up on a hog farm in northeast Missouri and graduated from high school in 1998,” Tonsor explains. “1998 was not a fun year for the hog market. Anybody my age or older will remember we had hogs you couldn’t give away towards the end of 1998. With that, of course, was lots of emotion and accusations about why that happened. We don’t need to relive that, but what is relevant was there was assertions of unequal market information among those buying and selling market hogs.”

This argument led to a political push that resulted in LMR. It started in the hog industry, and spilled over into other parts, including fed cattle and wholesale beef, and ultimately, wholesale pork was added later in 2013. This requires qualified pork packers to submit information about qualified wholesale pork sales to USDA AMS.

“Leveling the field from an information perspective is one of the historic calls for why you mandate,” Tonsor says. “It’s a reminder that there is broader public value in public data and information sets. But there’s a quite a bit of elevated uncertainty right now about the future of public data and information and how commodity ag markets might operate if we do change what public data and information is available, how it works, or how detailed and frequent it is.”