The U.S. Department of Agriculture has modified Choice and Select beef cutout values for Monday and Tuesday May 14 and 15 due to a previous programming error. NCBA has contacted USDA regarding the announced changes.
“It is our understanding that the computer program that was calculating the cut out products was including the no roll product prices in both the choice and in the select cut out prices,” says Chuck Lambert, chief economist for NCBA.
The no roll product that was incorporated into the choice accounts for about 7 percent of the total production and typically sells for $2.50 less than select. The error under values all choice and select carcasses by lowering the average base price used in value-based pricing grids.
At this time it is not known how long the programming error has been in effect. “USDA has published revised prices for Monday and Tuesday, May 14 and 15, and now are going back and reviewing the cutout prices back to April 1 to see if and when this error in the program began,” says Mr. Lambert. “Any modification or corrections in the cut out will be published by May 23rd.”
Though only confirmed as happening two days, the error in calculating cutout price could have large financial implications for those beef producers who sold cattle on a formula-pricing grid.
NCBA understands frustration and outrage among producers resulting from potential losses associated with this reporting error. Given the amount of time that was allowed to beta test the reporting system a basic programming error of this type is uncalled for. Members of NCBA staff including Chandler Keys, vice-president of public policy, have talked to USDA and have requested a face-to-face meeting as soon as possible with all the principals to discuss how the situation can be rectified. A meeting has been scheduled for Monday, May 21.
Mandatory price reporting will likely be associated with this programming error. But it's a compilation and not a collection error. The problem stems from the way data are added up to calculate the cutout values after being reported to USDA. The reported prices were accurate, explains Mr. Lambert, it’s how the information was aggregated once it arrived at USDA that remains the issue. The error could have also occurred if the prices had been reported on a voluntary basis.