A new market hog price report direct from a pork packer is now available for producers to read. The report is provided from a packer and reported on the Internet website of the National Pork Producers Council (NPPC) and National Pork Board. The report was expected to begin Oct. 1. The website address is: www.nppc.org
Initially, the report will be prices received from Farmland Industries Meats Group. NPPC hopes to expand the report to prices received by other pork packers.
Farmland will provide an average price of the previous day's open market transactions. This price will include the average price paid for the purchase, the average backfat, average percent lean, and average carcass weight. The actual high price and actual low price for that previous day will also be reported.
"As a result, producers will be better able to understand the relationship between quality and price," explains Wayne Snyder, vice president of Farmland's livestock production. "We're not going to say, 'Here's the base price and you figure out the quality premiums on top.'"
Farmland's quality premium grid will also be published so producers can determine prices for any quality hog.
Criticisms of USDA's current market hog price reporting system center on that point. USDA's figures are base prices only. No premiums are included. Plus, the prices are reported on a live basis, when many producers sell on carcass weight. (USDA does plan a revision in their reports. See sidebar.)
This new report represents a first for NPPC. Never before has the organization reported market prices. NPPC President Donna Reifschneider defended this move saying, "In order to make the right marketing decisions, producers need expanded information."
She added that NPPC has been working with USDA and the pork packing industry to come up with a meaningful price reporting vehicle. "We think we've found it," Reifschneider says.
Contract Hogs Not Included Farmland's reports will involve between 8,000-10,000 hogs/day, all bought on the open market. They will not report hogs sold on contracts. Why?
"The number of different contractual arrangements in existence is almost too numerous to count," Snyder explains. "I think we can confuse the marketplace quite a bit by listing the contract price for maybe 100 head or even 100,000 head. It would mask the validity of the open market."
Prices from each of Farmland's four market locations will be reported including: Crete, NE; Denison, IA; Dubuque, IA; and Monmouth, IL.
NPPC acknowledges that many producers do not have access to the Internet. Therefore, they are encouraging farm broadcasters, newspapers and wire services to use this information.
"Congress and USDA have struggled for years to define what needs to be comprised in a mandatory price reporting system," says Al Tank, NPPC's executive vice president. Possibly, a voluntary system with packers willing to participate will offset the push for mandatory reporting.
"Having a voluntary approach should be of value to all packers," adds Reifschneider. "Some packers wouldn't want to participate (in a mandatory system)."
Mandatory Reporting Considered In fact, Congress will consider a bill calling for mandatory price reporting by packers, including hogs sold on contracts. The bill is contained in the 1999 agricultural appropriations bill.
Recently, attorney generals from 20 states endorsed the mandatory price reporting provision. Iowa Attorney General Tom Miller led the endorsements, saying farmers need open and fair markets with the current concentration in red meat production and packing.
There is no doubt among the NPPC leadership that a better price reporting system is needed, especially with the changes occurring in industry structure.
"Less and less information is available at a time when more information is absolutely essential for producers to make the right decisions," Tank says. "This is no failure of USDA. But the prices being reported probably are not reflective of true values being paid to producers."
The USDA Market News Service plans to revise their market hog price reports soon. The revisions could come as soon as this month (October), according to John Van Dyke, chief of Livestock and Grain Market News.
The biggest change being considered is a switch from prices reported on a live basis to a carcass basis. Van Dyke says they have reported some premiums and discounts in their lean value reports and will continue to do so.
"We've been gradually changing, but this is an opportunity to more accurately reflect the latest buying and selling procedures in the industry," he says. The proposed revisions are currently under pork industry review.