Livestock and Meat Marketing Study Overview
In fiscal year 2003, GIPSA received $4.5 million in appropriations for a broad study of marketing practices in the entire livestock and red meat industries from farmers to retailers, food service firms, and exporters. In June 2004, at the culmination of a competitive bidding process, GIPSA awarded a $4.3 million contract to the RTI International (RTI) to conduct the study. RTI delivered an interim report in July 2005 describing alternative marketing arrangements and their terms, and reasons that industry participants give for using alternative arrangements. In February 2007, GIPSA released the final report with the results of the analysis of extent of use, price relationships, and costs and benefits of alternative marketing arrangements.
In fiscal year 2003, GIPSA received $4.5 million in appropriations for a broad study of marketing practices in the entire livestock and red meat industries from farmers to retailers, food service firms, and exporters. Congress specified that the study should address ??issues surrounding a ban on packer ownership?? The study will address the many questions and concerns that have been raised about changes in the structure and business practices in the livestock and meat industries, including captive supply issues.
In June 2004, at the culmination of a competitive bidding process, GIPSA awarded a $4.3 million contract to the Research Triangle Institute (RTI) to conduct an exhaustive study on livestock and meat marketing. This study will develop foundation information needed to understand what economic changes are occurring, why they are occurring, what changes are likely to occur in marketing in the future, and their implications for market participants and the structure of the livestock and meat industries.
The overall objective was to develop foundation information to understand economic changes occurring, why they are occurring, what changes are likely to occur in the future, and their implications for market participants and the structure of the livestock and meat industries. More specifically, the study (1) identifies and determines the use of emerging types of marketing arrangements; (2) determines terms of the marketing arrangements and their availability to entities of different sizes and entities in different geographic locations; (3) analyzes short run relationships between captive supplies and spot and non-spot market prices; (4) determines the long run implications of the marketing arrangements on operating costs; animal and meat quality; marketing risks; prices of livestock and meat; and the structure of the livestock and meatpacking industries; and (5) determines the implications of the marketing arrangements for entry conditions, industry concentration, price discovery and thinning spot markets.
The study contributes to better public understanding of the role of alternative marketing arrangements, the extent of their use, reasons why firms enter into them, and the implications of such arrangements. It helps identify emerging marketing information needs of livestock producers and other market participants. It is also helping GIPSA enforce the Packers and Stockyards Act by contributing to the Agency's understanding of changing marketing practices and by identifying areas that the Agency may need to include in its investigation plans.
February 2006 Update: Transactions Data Collection
As part of the Livestock and Meat Marketing Study, RTI International (RTI) is collecting data on purchase and sales transactions from the largest meat packers, meat processors, food wholesalers, food retailers, food service operators, and meat exporters. The data are being collected exclusively for statistical purposes consistent with the provisions of the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA) and will be kept completely confidential. Additionally, data provided by meat packers and processors are subject to the confidentiality restrictions in the Packers and Stockyards Act.
Response to this data collection, which constitutes a special report, is required for meat packers and meat processors (7 U.S.C. 222) under the Packers and Stockyards Act. Meat packers and meat processors selected for this study must provide daily transactions data for purchases and sales and weekly profit and loss statements for a 2.5-year period (October 2002 through March 2005). Pork packers selected for this study must provide production contract settlement data for finished hogs.
GIPSA is also requesting that food wholesalers, food retailers, food service operators, and meat exporters selected for this study provide a weekly summary of transactions by type of marketing arrangement for a 2.5-year period (October 2002 through March 2005). Participation is voluntary for these industries.
RTI is contacting sampled companies by telephone to identify the individual who will be responsible for providing the requested data. RTI will then send the designated individual information on the data that are required and instructions on how to provide the data. The requested data must be provided by April 14, 2006. GIPSA appreciates your cooperation in this important endeavor.
If you have questions about the study or the request for data, please contact Justin Taylor, RTI, at 1-877-254-1949 or USDAstudy@rti.org.
December 2005 Update: Survey of Alternative Marketing Arrangements in the Livestock and Meat Industries
GIPSA has contracted with RTI International (RTI) to conduct the Livestock and Meat Marketing Study. As part of this study, RTI is surveying livestock producers and feeders, meat packers, meat processors, and companies that buy meat (for example, grocery stores and restaurants). The survey collects information on the use of, terms of, and reasons for using different methods of purchasing and selling livestock and meat. The data are being collected exclusively for statistical purposes consistent with the provisions of the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA) and responses to the survey will be kept completely confidential.
RTI is contacting sampled establishments by telephone to request their participation in the survey. The survey questionnaire will be mailed to respondents so that they may complete it at their convenience. The survey is voluntary. To ensure the survey results properly reflects industry practices, GIPSA encourages all establishments contacted by RTI to respond to the survey.