[Federal Register Volume 61, Number 221 (Thursday, November 14, 1996)]
[Proposed Rules]
[Pages 58343-58345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29105]


      
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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 61, No. 221 / Thursday, November 14, 1996 / 
Proposed Rules  

[[Page 58343]]



DEPARTMENT OF AGRICULTURE

Office of the Secretary

7 CFR Part 20


Export Reporting for Meat and Meat Products

AGENCY: Foreign Agricultural Service, USDA.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The U.S. Department of Agriculture (USDA) is soliciting 
comments and views on a proposal by the Secretary of Agriculture to 
require reporting of export sales of meat (including poultry meat) and 
meat products. The proposal responds to a recommendation by the USDA 
Advisory Committee on Agricultural Concentration. Under the proposal, 
firms involved in exporting meat products could be required to report 
detailed information on these sales to the Department on a weekly 
basis. Compiled data would be made available to all market 
participants, giving farm-level producers and others timely access to 
information that many view as necessary to anticipate and plan for 
changing market conditions. The intent is to provide broad access to 
export sales information and to thereby improve efficiency in livestock 
and poultry markets.

DATES: Comments in response to the advance notice should be received on 
or before January 13, 1997 to be assured of consideration.

ADDRESSES: Comments should be sent to: Export Sales Reporting Branch, 
Trade and Economic Analysis Division, Room 5959--Stop 1025, Foreign 
Agricultural Service, U.S. Department of Agriculture, 1400 Independence 
Ave. SW, Washington, DC 20250-1025. All written comments received will 
be available for public inspection at the above address during business 
hours from 8:00 a.m. to 5:00 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: Thomas B. McDonald, Jr., Chief, Export 
Sales Reporting Branch, Trade and Economic Analysis Division, Foreign 
Agricultural Service, U.S. Department of Agriculture, (202) 720-3273; 
fax (202) 690-3275.

SUPPLEMENTARY INFORMATION:

Background

    The Advisory Committee on Agricultural Concentration (the 
Committee), formed by the Secretary of Agriculture to investigate 
concentration in the livestock, poultry, and rail sectors, presented 
its findings and recommendations on June 6, 1996. Among its findings 
was a strong endorsement of the view that widely accessible, timely, 
and accurate information is a vital component of a well-functioning, 
competitive marketplace.
    The Committee made several recommendations in the area of market 
information, suggesting improvements that the Department should 
consider in the collection and dissemination of information on the 
livestock and poultry sectors. The recommendations focused on enhancing 
the quality, breadth, and timeliness of information on supply and 
demand for livestock and poultry, including information on trade.
    With regard to exports, the Committee suggested timely reporting of 
volume and price data on all sales to foreign markets of meat and meat 
products, including beef, veal, pork, lamb, chicken, and turkey. 
Specific recommendations dealt with the timing of the reports (within a 
week following the week of the export sale) and with report content: 
chilled, frozen, and aggregate total tonnage exported; tonnage of 
carcasses and each primal cut by USDA grade where applicable; tonnage 
of variety meats and processed meats; and country destinations for 
variety meats, processed meats, and boxed primals, by quality grade 
when applicable.
    The Committee's recommendations for improvements in market 
information are, in part, a response to the changing structure of the 
livestock and poultry sectors and changes in the types of transactions 
within these sectors. These changes have contributed to concerns about 
gaps and inequities in information flows to producers. Increasingly, 
the sectors are comprised of numerous producer-sellers at the farm 
level and a small group of highly concentrated buyers, including 
packers, processors, and integrators. Beyond these first-buyers or 
handlers are wholesalers, exporters, retailers, and, ultimately, 
domestic and foreign consumers.
    Many producer-sellers of cattle, hogs, sheep, and poultry contend 
that they have far less access than do their first-buyers--the packers, 
processors, and integrators--to current market signals that reflect 
final demand by consumers. The result, they claim, is an imbalance in 
market power, as well as slower, more erratic, and less accurate 
adjustments in market prices, production practices, and marketing 
strategies as producers try to plan ahead to provide a product with the 
characteristics desired by consumers.
    The argument, supported by economic theory, is that when producers 
or other participants lack adequate and up-to-date information, the 
market is less efficient than it could be in recognizing and responding 
to changing consumer preferences. Inefficiencies in markets typically 
raise costs, which are ultimately passed on to consumers in the form of 
higher food costs, or are passed back to producers in terms of lower 
prices. Inefficiencies can also translate into a loss of market share 
as U.S. consumers shift to alternative products or as foreign consumers 
shift to other products or other suppliers.
    Among the information gaps that may impede efficient decisionmaking 
by producers and others is the lack of timely data on export sales. 
Exports represent a growing source of demand in an otherwise slow-
growing domestic market for meat. In the past, the gathering and 
dissemination of information about demand for livestock and poultry 
products focused mainly on domestic consumption. For the most part, the 
United States was a net importer of meat. However, market-opening 
agreements, changes within the meat industries, new technologies, and 
global supply-demand developments have combined to significantly expand 
export opportunities for high-quality U.S. meats over the last 10 
years. As a result, the United States is now a net meat exporter.
    Export markets account for a rapidly increasing share of U.S. beef, 
pork, and poultry production. In the mid-1980's, exports accounted for 
less than 2

[[Page 58344]]

percent of annual production of both beef and pork, and less than 4 
percent of poultry production. In 1996, exports are forecast to account 
for 8 percent of beef production, 6 percent of pork production, and 17 
percent of poultry production. These shares are expected to increase 
further in 1997. On a value basis, total 1995 exports of red meats 
(including variety meats) and poultry meats exceeded $6 billion and 
generated a trade surplus of nearly $4 billion.
    Among the reasons for the rapid expansion in exports are increased 
U.S. industry competitiveness, processing and technological advances 
that allow fresh and frozen products to be transported long distances 
at affordable prices, and high income growth in many markets. In Asia, 
especially, rising incomes have stimulated strong demand for meat and 
meat products.
    However, many in the industry perceive the trade information 
currently available on meats as failing to keep pace with the 
increasingly important role that exports play in U.S. livestock and 
poultry markets. According to this view, the data fail to provide the 
depth, quality, and timeliness needed to anticipate market conditions 
and plan production and marketing decisions.
    At present, U.S. Customs data on meat export shipments are compiled 
and released by the U.S. Bureau of the Census. These statistics are 
released 6-10 weeks following the actual shipments and do not report 
sales for future delivery. Although this reporting process for official 
U.S. trade data documents past export activity and may be used to 
discern trends that have emerged in the marketplace, the data lack 
timeliness and provide no information on forward sales. Market impacts 
are most likely to occur when sales are first contracted and well 
before the product is finally shipped. As a result, even instantaneous 
reporting of shipment data--unlikely in the immediate future--would 
provide only a marginally better indicator of current and future demand 
and prices.

Description of the Proposal

    Based on the recommendations of the Advisory Committee on 
Agricultural Concentration and the perceived need within segments of 
the meat industry for accurate, comprehensive, and timely data on 
exports, the Department is reviewing statutory authorities and possible 
methods for collecting this type of information.
    One of the tools currently available to the Secretary of 
Agriculture for collecting export data is Section 602 of the 
Agricultural Trade Act of 1978, as amended. Under this section, 
exporters are now required to report information pertaining to the 
export sale of certain specified agricultural commodities, such as 
wheat and corn, as well as other agricultural commodities that may be 
designated by the Secretary. These reporting requirements are 
implemented through the Export Sales Reporting Program of the Foreign 
Agricultural Service under regulations codified in 7 CFR Part 20.
    Individual firm reports collected under this program are 
confidential by law and are released to the public in compilation form 
each week following the week of reporting.
    Reporting under 7 CFR Part 20 is mandatory. Any person who 
knowingly fails to report shall be fined not more than $25,000 or 
imprisoned for not more than 1 year, or both.
    To add meat and meat products to the Export Sales Reporting Program 
as now structured and administered, the following guidelines would 
apply:
     The reporting week would be Friday through Thursday. The 
marketing year would be January 1-December 31.
     Individuals and firms would be required to report on a 
weekly basis the quantity sold to foreign buyers, the marketing year of 
shipment, and the country of destination. Information on prices is not 
collected under the Export Sales Reporting Program.
    Among the questions that would have to be addressed in implementing 
such a reporting program for meats are the units of measure to be used 
(pounds, metric tons, etc.), the specific products to be included, 
whether reporting should be separate for fresh/chilled versus frozen 
product, and the extent of the breakdowns for individual meat cuts and 
USDA grades.
    Adding meat and meat products to the current Export Sales Reporting 
Program would provide more timely and comprehensive data on export 
sales. Public availability of this data would reduce perceived 
inequities in access to important market information among different 
segments of the industry. Similarly, this information could presumably 
improve market efficiency by assisting producers and others, including 
the government, in making well-informed, timely, and accurate decisions 
relating to the orderly flow of meat and meat products in domestic and 
export markets.
    In addition to presumed benefits, the costs and the reporting 
burden to the private sector, as well as costs to the government, must 
be among the primary considerations in implementing this or any similar 
proposal. It is estimated that between 75 and 125 private firms may be 
regularly involved in the sale of meat for export. Many of these firms 
are small businesses. USDA estimates that the annual paperwork burden 
on these firms will total approximately 7,000 hours. Annual costs to 
the Federal Government for collecting, processing, and disseminating 
export sales data on meat and meat products on a weekly basis are 
estimated at approximately $400,000.
    Although the Export Sales Reporting Program is one alternative for 
implementing this proposal, similar data on meat exports could also be 
collected under other authorities. For example, 7 U.S.C. 2204 
authorizes the Secretary of Agriculture to procure information 
concerning agriculture through various methods, including the 
collection of statistics. Most of this collection is conducted on a 
voluntary basis.
    A voluntary program would be preferred by many of those who export 
meat and who might otherwise be faced with a mandatory requirement for 
weekly reporting of export sales. However, other sectors of the meat 
industry have expressed serious reservations about reliance on 
voluntary reporting in a concentrated industry where relatively few 
firms account for the large majority of sales. These parties contend 
that the dominant firms already have sufficient information on export 
demand and therefore lack the incentive to comply with a voluntary 
program, rendering such a program unreliable. The concern is that if 
even a few of the larger firms involved in exports did not fully and 
consistently cooperate, the resulting data would not be useful for 
accurately assessing foreign demand and current and future market 
conditions.

Issues for Public Comment

    USDA is considering the implementation of a program that would 
provide timely and comprehensive data on U.S. export sales of meat 
(including poultry meat) and meat products. If implemented under the 
authority of Section 602 of the Agricultural Trade Act of 1978, such a 
program would require all private firms involved in U.S. export sales 
of meat and meat products to report all such sales on a weekly basis.
    Accordingly, USDA is seeking comments on the benefits, costs, and 
methods of collecting meat export sales information. If comments 
confirm the need for this information but indicate substantial problems 
or concerns regarding mandatory reporting, alternative approaches will 
be considered. The aim of any approach

[[Page 58345]]

should be to ensure (1) that the benefits of the additional information 
would justify the costs, and (2) that the best and most useful 
information is obtained in a manner that maximizes its value to 
industry participants and minimizes the burden of collection and 
reporting.
    Interested persons are encouraged to comment on the following 
issues relating to this proposal:
     The extent to which lack of timely export sales 
information represents a problem for the meat industry or those within 
the industry.
     The extent to which the Secretary of Agriculture's 
proposal, based on the recommendation of the Advisory Committee on 
Agricultural Concentration, responds to the identified problems.
     The proper role of the Federal Government in collecting 
and reporting export sales information on meat and meat products.
     The benefits and costs of the proposal, including benefits 
and costs of mandatory reporting by private firms.
     The benefits and costs of possible alternative approaches, 
including approaches that may include voluntary reporting or other 
methods of achieving the identified goals.
    Interested persons are also invited to comment on the following 
specific considerations involved in implementing an export sales 
reporting program for meat and meat products:
     The frequency of reporting and the reporting period to be 
covered.
     The information to be reported, such as the meats and meat 
products to be included, the breakdown of cuts and grades, and the 
units of measure for reporting (pounds, metric tons, etc.).
     The relative benefits and costs of requiring firms to 
report all export sales to all country destinations, versus reporting 
only sales above a specified threshold volume and/or only sales to 
specified leading markets for individual meats.
     The specific need, if any, for price information in 
addition to export sales volumes.
     The way the data should be compiled, summarized, and 
reported to the public by USDA.
    USDA welcomes comments on these and any related issues.

    Signed at Washington, DC, November 6, 1996.
August Schumacher, Jr.,
Administrator, Foreign Agricultural Service.
[FR Doc. 96-29105 Filed 11-13-96; 8:45 am]
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