The importance of unbiased public information

Thursday, December 5, 2013

When the U.S. government shut down last October, the flow of agricultural information also dried up, information on which pork producers rely

by RANDY DUFFY

We often take things for granted. They have always been there and we assume they will continue to be there. The Canadian agricultural industry relies on many reports published by the U.S. government, in particular those from the U.S. Department of Agriculture. But when the U.S. government shut down from Oct. 1 to 16, many agricultural reports on which market participants rely were not published.

For the Canadian pork industry, the lack of U.S. market data deprived us of up-to-date information about prices. There was also a gap in feed-related information as reports containing prices for corn, soybean meal, DDGS and other ingredients were not available.

Fortunately, the industry could use the Chicago Mercantile Exchange lean hog futures to formulate a daily local cash price. The Ontario pork industry had policies in place to deal with this situation. There were also discussions held with the major Ontario processors and an agreement was reached on how to calculate an alternative Ontario formula price during this period. This does raise the question of whether the discussion needs to be revisited about having an Ontario-based (or Canadian-based) pork price.

Some of the reports that were not published during that time have since been posted to fill in some of the holes. This will not be the case with other reports and data series. Moreover, the United States faces more fiscal deadlines early in 2014. As a result, we could be facing a lack of market information reports again.

This isn't just a U.S. issue. Many Canadian reports put out by Statistics Canada over the years have been terminated or the reporting frequency has been reduced. Some of this is due to cost-saving measures, but also to perceived lack of value or use by industry.

One of the most important report changes specific to the pork industry has been with the pig inventory reporting that is now semi-annual (Jan. 1 and July 1) rather than quarterly, as in the past. Due to seasonality in the pork industry, we see swings in production, slaughter, consumption, exports, imports and prices. This is a result of actual current pigs on the ground, but also future intentions. Less information available puts the industry at a disadvantage.

Publicly available market reports and survey results put out by government allow for benchmarking comparisons, contribute to market and price transparency, and are perceived to be unbiased information. These reports are occasionally questioned as to their validity and reliability. However, with any report there is usually information contained within it that someone finds important and of value. Having some information is better than having no information.

In summary, this experience has reinforced at least two observations. The first is that the importance of neutral, unbiased public information reporting can't be overstated. The second is the importance of having industry roundtable advisory groups in place to be able to come to mutually beneficial decisions when issues that impact the entire sector like this occur. BP

Randy Duffy is research associate at the University of Guelph, Ridgetown Campus.