The National Cattlemen’s Beef Association estimates that errors in USDA's price reporting system cost U.S. producers as much as $42 to $54 million between April 27 and May 18.

The errors resulting in the loss occurred when prices were inaccurately calculated, under USDA mandatory price reporting system that went into effect on April 2, 2001. On May 16, USDA's Agriculture Marketing Service announced that prices for "no-roll" products had been incorporated into Choice and Select product prices reported nationwide. Price reports have been accurate since May 16. Following the announcement of the error, NCBA commissioned two economic studies simultaneously, without consultation, from two of the preeminent institutions with strong track records in the areas of beef cattle price discovery and market analysis Dr. Wayne Purcell, Virginia Tech University and Ted Schroeder and Jim Mintert, Kansas State University.

NCBA notes that time constraints have not allowed peer review or comparisons of the results between the two studies. Different methods of analysis would be expected to lead to differences in results and that is the case with these studies. This information, NCBA states, is presented only as being the best available at this time.

The most defensible amount for a total loss to the industry from these analyses is $42 million. Purcell stated that the potential loss could be as high as $54 million, but acknowledged the complexity of debating that losses would have extended through the week ending May 26. Both analyses determined that there were no producer losses attributable to errors in boxed beef price reporting during the April 2 through April 20 period. The Kansas State analysis indicates that losses began during the week of April 21 to 27 while the Purcell analysis does not show losses beginning until the week of April 28 to May 4. The Kansas State losses tend to be spread more evenly across the four-week period while losses in the Purcell analysis tend to increase in the later weeks.

Purcell states that fed cattle prices during late March and early April were likely to decline from nearly $80/hundredweight to the $76-$77/hundredweight range due to factors other than errors in boxed beef price reporting (Most likely improved cattle performance and an increasing supply of market-ready cattle following the worst winter weather in eight years). This factor explains the positive numbers of $4.82 and $1.34 during the first two weeks of April. However, his analysis also shows that the last $2 to $3/hundredweight decline in fed cattle prices during the April 2 through May 25 period can likely be attributed to errors in boxed beef price reporting.

"Now that we have the economic analysis, we are in a better position to consider remedies and determine next steps," says NCBA President Lynn Cornwell and a cattle rancher from Glasgow, Mont. “NCBA's primary objective is a fair and effective price reporting system," he adds.

"There are many factors influencing the cattle market and a variety of ways to calculate the impact of those factors. We are sharing this data with state beef organizations now so that NCBA members can provide clear direction, based on the best available information, on how to proceed. We plan to consider all available options, including legal recourse and financial compensation, over the next few weeks."