Thursday, July 26, 2001

Nebraska Cattle Producers Ask Congress For Help On Price Reporting Glitch By KEVIN O'HANLON Associated Press Writer

LINCOLN, Neb. -- The Nebraska Cattlemen association wants Congress to approve payments to cattle producers who lost millions of dollars because of a glitch in a new government system for reporting livestock prices.

The errors in the reporting system, which began operating April 2, generally understated the prices that packers receive for beef.

The USDA said the glitch, which went unnoticed for six weeks, was caused by a software problem and cost cattle producers an estimated $15 million to $25 million.

But the National Cattlemen's Beef Association estimates the losses were as high as $54 million, based on studies done for the group by economists at Virginia Tech and Kansas State University.

In a letter sent Wednesday to members of Nebraska's congressional delegation, association president J.D. Alexander suggested that the money to compensate producers for their losses could be added to the $5.5 billion agriculture appropriations bill now moving through Congress.

''An amendment to add the necessary dollars and to authorize USDA to implement the program could be added in order that producer restitution efforts could begin immediately,'' he said.

Nebraska accounts for more than 20 percent of U.S. beef production, which means Nebraska producers lost an estimated $8 million and $10 million from the glitch.

The new program, authorized by Congress in 1999, is intended to give cattle, hog and sheep producers more leverage in bargaining with processors.

The disclosure requirement applies to packers who annually process 125,000 cattle, 100,000 hogs or 75,000 lambs.

Packers are required to report details of all livestock purchases as well as sales of boxed beef cuts, boxed lamb cuts and lamb carcasses.

Producers and packers use the price reports to negotiate deals and to track fluctuations in beef demand. Some cattle contracts are pegged directly to the price reports.

The price reports, issued twice daily, are estimates of the average values of beef carcasses based on prices that packers are getting for individual cuts of beef.

The new reporting system uses pricing data that packers are now required to give USDA. It replaced a system that relied on voluntary reports.

The errors generally understated the prices that packers were receiving for beef.

Because of the errors, prices for beef graded as ''choice'' were reported about 2.3 percent lower than they should have been on average.

Price reports for beef that's classified as ''select,'' a lower grade used for leaner meat, averaged about 0.4 percent too low.

On a few days, the price reports were actually too high, said Keith Collins, the department's chief economist.

The USDA has said it would be impractical and unnecessary for the government to compensate the industry for the losses. Nor does it think the government can be held legally liable for the errors.

''This was an error by public employees performing their duties in a workmanlike, well-intentioned way,'' Collins said. ''It's unreasonable to think that every time the government has a misreporting in some form or another of economic intelligence ... that the government should pay a compensation claim on that.''

He also said it would be almost impossible to calculate what each individual's losses were.

Nebraska, with about 6.5 million cattle, is the nation's second-leading beef producer, behind Texas.

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-- Anonymous, July 26, 2001