The following Questions & Answers provide information about the Livestock and Poultry Program’s compliance activities related to the Livestock Mandatory Reporting Act of 1999 (Act).
Q: What is the purpose of the Act?
A: The purpose of the Act is to: provide information on pricing, contracting for purchase, and supply and demand conditions for livestock, livestock production, and livestock products that can be readily understood by producers, packers, and other market participants, to improve the price and supply reporting services of the Agricultural Marketing Service (AMS), and encourage competition in the marketplace.
Q: Who is required to report market data under the Act?
A: Packers who annually process more than 125,000 cattle; 100,000 hogs, or a person that slaughtered an average of 200,000 head of sows, boars of combination thereof per year during the immediately preceding 5 calendar years; or 35,000 lambs are required to report market data under the Act. Importers who annually import an average of 1,000 metric tons of lamb meat are also required to report.
Q: What information are packers and importers that are subject to the Act required to report?
A: Packers are required to report the details of all transactions involving purchases of livestock (cattle, swine, and lambs), the details of all transactions involving domestic and export sales of boxed beef cuts, sales of wholesale pork, sales of boxed lamb cuts, and sales of lamb carcasses. Importers are required to report information concerning their domestic sales of imported boxed lamb cuts.
Q: What are the penalties for violations of the Act?
A: The Act specifies what constitutes a violation such as failure to report the required information on time or failure to report accurate information.
The section on enforcement provides for a civil penalty of up to $10,000 for each violation and provides for the Secretary’s issuance of cease and desist orders. The Act also provides for notice and hearing of violations before the Secretary, judicial review, issuance of an injunction or restraining order, and establishes a civil penalty for failure to obey a cease and desist order.
Q: Who oversees compliance activities?
A: The Livestock, Poultry and Grain Market News Division ensures compliance with the law. The division’s compliance staff audit packers covered under the Act, and the division’s market reporting staff evaluates this information to ensure conformance with the Act, regulations, and policies.
Q: How often are audits conducted?
A: Each covered packer is audited a minimum of once every six months. The majority of these audits encompass the review of randomly sampled lots selected through statistical sampling. The auditor may look at any supporting documentation the company has pertaining to information submitted under LMR. Each plant is also subject to a full day audit once per fiscal year. This includes the review of all of the packer’s transactions (purchases and sales) for a randomly selected day, which is selected by LPGMN auditors. If there is reason to believe that a packer may not be correctly reporting any required information, the auditor can request additional lots outside of their randomly sampled lots to verify compliance.
Q: What happens during the audit?
A: At the beginning of each audit, the auditor interviews the appropriate personnel to discuss any changes to the packer’s operations or business practices that have occurred since the previous audit as well as current business practices. In addition, the status of any unresolved non-compliances from prior audits is also reviewed and discussed. Audits are conducted using the International Organization for Standardization (ISO) 19011:2002 guidelines for quality and/or environmental management systems auditing to provide a format for evaluating program documentation to ensure consistent auditing practices and promote international recognition of audit results. For further information see the LMR Compliance Verification Program General Programs and Procedures (pdf).
During the review of randomly sampled lots, the auditor reviews and evaluates documentation supporting the selected data to verify compliance with the Act and regulation including: original contracts, agreements, receipts and other records associated with any transaction relating to the purchase, sale, pricing, transportation, delivery, weighing, slaughter, or carcass characteristics of all livestock, and any other records necessary or appropriate to verify the accuracy, timeliness, and completeness of the submitted information. In reviewing the data under both types of sampling protocols, the auditor will also determine whether there are any issues which appear to be reoccurring non-compliances, which could prompt legal action against the packer.
The auditor also reviews the LMR submissions of a full day’s transactions from the packer once per fiscal year. To do this, the auditor audits the kill summary, scale tickets, and sales invoices and/or bills of lading as applicable for a randomly selected one-day period and compares that to the information that was submitted through the LMR system to determine if all transactions covered under the Act have been reported to AMS. For lots that were not reported to AMS, the packer must provide supporting documentation that shows why the lots were not covered under the Act.
Q: Are there different levels or types of non-compliance?
A: If non-compliance is found, it is assigned a level of designation indicating its severity. These levels are as follows:
Major - A plant covered under the Act does not submit information or inadvertently submits incorrect information that affects the accuracy of published reports. Examples are:
- An issue that can be replicated due to programming errors;
- A replicated issue that causes inaccurate data submitted on published reports;
- A plant failing to submit files;
- A plant is consistently submitting late or inaccurate files.
Minor - A plant covered under the Act does not submit information in compliance with applicable rules and regulations, but their submission or incomplete submission has minimal effect on the accuracy of published data. Examples are:
- A typo, data entry error or some other issue that is not readily replicated;
- The plant is inadvertently submitting inaccurate data that has no effect on published reports (the data is not utilized in reports).
Q: What steps are taken to ensure compliance during an audit?
A: The auditor will write-up a compliance report after an audit, regardless if any non-compliances are found. If any non-compliance is discovered during an audit, the auditor will discuss the non-compliance(s) with LPGMN reporting staff and then send the compliance report to the plant personnel with specific deadlines by which the non-compliance(s) must be addressed.
Q: What happens if non-compliances are not corrected in the timeframe given?
A: To view the timeline process see LMR Audit Process Flowchart . If a packer continues to be in violation of the Act and does not implement corrective action, an official "warning" letter is prepared by legal counsel and delivered to packer management, explaining the non-compliance issue and the required corrective action. If the packer continues to violate the Act, enforcement of civil penalties up to $10,000 for each offense will be initiated by legal counsel.
Q: What can I do if I believe that the price for my transaction is not represented in the LPGMN published report for the applicable reporting period?
A: The individual should contact LPGMN and be prepared to provide all of the pertinent information regarding the transaction, including the actual settlement sheet if possible. Within the confines of the confidentiality provisions of the Act, which prohibit USDA from releasing the identity of any person, LPGMN will conduct an investigation to determine if the livestock were reported by the packer as required.
Q: Where can I find more information about Livestock Mandatory Reporting or the audit and review procedures?
A: For more information, please visit the Livestock Mandatory Reporting Page. This page also contains key contact information, addresses, and telephone numbers.