Packers and Stockyards Programs:
USDA's Response to Studies on Concentration in the Livestock Industry
RCED-97-100: Published: Apr 23, 1997. Publicly Released: May 8, 1997.
- Full Report:
Pursuant to a congressional request, GAO provided information on the U.S. Department of Agriculture's (USDA) report on concentration in the red-meatpacking industry, focusing on whether: (1) the report identified the geographic boundaries of livestock procurement markets; (2) the report provided guidance on how to monitor these markets; (3) as a result of this report, USDA had identified additional data that the Grain Inspection, Packers and Stockyards Administration (GIPSA) could use to enhance its monitoring of these markets; and (4) GIPSA plans to take actions as a result of this report. GAO also provided information on the Department of Justice's views on the usefulness of GIPSA's data for conducting its regulatory responsibilities in the livestock procurement markets.
GAO noted that: (1) the February 1996 concentration report commissioned by GIPSA indicated that the relevant boundaries of the livestock procurement market are not fixed; (2) instead, these boundaries vary, depending on the economic issue being considered; (3) for example, when examining the basis for pricing fed cattle, the relevant market boundaries are generally national; (4) when a proposed merger is being evaluated, the relevant market boundaries are generally regional; (5) while the concentration report did not provide specific guidance for monitoring markets, it did provide extensive data that can serve as a baseline for future monitoring analysis; (6) most of these data existed previously only in aggregate form; (7) these data, which are for nearly all fed-cattle slaughter plants nationwide, include, among other things, the types and volume of livestock slaughtered and the prices paid to producers; (8) the concentration report did not identify the specific data that need to be collected for better market monitoring; (9) however, an advisory committee, convened by the Secretary of Agriculture and established prior to the publication of the concentration report, used the report's results to examine market concentration; (10) in its own report, issued in June 1996, this committee recommended that additional data, such as information on the number of cattle contracted for future sale, be routinely collected on various elements of the livestock procurement market to provide a better understanding of how that market functions; (11) the USDA has begun to collect and disseminate these data; (12) the concentration report was considered by the advisory committee in its recommendation that the USDA review its surveillance, investigation, and enforcement practices within the livestock procurement market; (13) as a result of this review, the USDA begun reallocating its resources to place more emphasis on detecting anticompetitive violations; (14) because GIPSA's resources are limited, this shift in focus will come at the expense of its efforts to carry out other responsibilities, such as ensuring that financial transactions among market participants are conducted fairly and honestly; (15) Department of Justice officials told GAO that Justice collects its own data when investigating issues that are under its regulatory purview; and (16) this information is useful to Justice as a background for its own investigations.