Controversy

The ability of the former voluntary price reporting system to generate market transparency in U.S. livestock markets was called into question by producer groups and academic research prior to the new federal system of mandatory price reporting being implemented. The market transparency issue is investigated by comparing price data collected from the former AM S voluntary price reporting system to mandatory price reporting data for live slaughter steers collected by the State of South Dakota before the advent of the new federal system. The relationship between a set of public price report series and the South Dakota mandatory price series is analyzed using cointegration techniques. The empirical findings indicate a strong long-run and short-run integrated relationship between the mandatory price series and a majority of the selected public price reports. We conclude that in the cash market for live steers in South Dakota, the former voluntary price reporting system did foster market transparency and aided in the price discovery process. 1 Wachenhiem and DeVuyst (2001) discuss the issue of price transparency in livestock markets. They report an Agricultural Marketing Service (AMS) estimate that 35 % to 40 % of all negotiated spot market cattle transactions are not reported under the voluntary price reporting system. Note: Under the former voluntary price reporting syste