03/28/2006

Cattle Producers Will Work Together to Remedy Supreme Court’s Pickett Decision
R-CALF United Stockgrowers of America

(Billings, Mont.) – Independent cattle producers across the United States were dealt a temporary setback Monday when the U.S. Supreme Court (Court) denied plaintiffs in the Pickett v Tyson Fresh Meats case the opportunity to appeal a lower court’s decision in favor of major meatpackers.

“Recently, 36 cattle-producer groups – including R-CALF – asked the Supreme Court to review this case, and we believe this decision by the Court could profoundly undermine the Packers and Stockyards Act of 1921 (PSA),” said Randy Stevenson, a Wyoming feedlot operator who co-chairs R-CALF USA’s Marketing Committee. “While R-CALF is disappointed with this development, we’re not unprepared.

“The lower court’s decision was based on the fact that certain economic justifications allowed Tyson to engage in activities that resulted in price manipulations, and like the Court’s faulty Kelo decision a few months ago, the Court’s determination not to hear the Pickett appeal confirms the idea that economic justifications trump other legal, ethical and moral standards,” Stevenson asserted. “As long as the activity Tyson engaged in was justified by its own rationalizations, it was off the hook.”

In the Kelo v New London case, the question was to what extent the government could use its power of eminent domain. The U.S. Constitution’s Fifth Amendment grants government the power of eminent domain – provided it pays a fair value for the property taken and the taking is for public use. In the Kelo decision, the Court decided government can take property for the economic benefit of a private entity – a taking based solely on economic justifications that might not benefit the public much at all.

The PSA is a key component of U.S. law that regulates market abuses by the meatpacking industry. Just weeks ago, the U.S. Department of Agriculture’s (USDA’s) Office of Inspector General (OIG) reported the agency has failed to fulfill its duty to enforce PSA regulations, and as a result, the domestic cattle industry has been unprotected while the nation’s largest meatpackers have gained a significant and controlling advantage over the pricing of domestic live cattle. This advantage has been gained by the meatpackers’ use of increasingly sophisticated cattle procurement techniques that deny cattle producers an honest price for their product.

“A monopoly is the economic equivalent of a dictatorship, and producers cannot live with the monopolization of the U.S. cattle industry,” Stevenson emphasized. “A competitive market is the economic equivalent of an election, and the Packers and Stockyards Act is the guardian of an honest and competitive marketplace.”

Stevenson said both the executive and judicial branches of government have come up short in response to producer concerns about PSA.

“It’s long past time to legislatively address this failure,” he continued. “Monday’s Court decision has reinvigorated producers around the country, and we will work together to pursue a legislative remedy that will clarify what Congress intended when it passed the Act back in 1921.

“We especially want the Packers and Stockyards Act to be interpreted literally – to mean the same thing it did in 1921,” urged Stevenson. “Our industry must aggressively work together to accomplish this effort.

“The Packers and Stockyards Act literally had to be dusted off after years of neglect, and now we must update the Act through Congress,” Stevenson explained. “Only then can we expect our industry to be afforded the anti-competitive and unfair business-practices protections Congress wanted us to have, clear back in 1921.

“The U.S. Senate passed a ban on packer ownership during the 2002 Farm Bill discussions, so those folks are already well aware of that need,” he said. “Now, through a coordinated effort, producers must work hand-in-hand to convince their representatives in the House.”

Several members of Congress recently have expressed serious concerns about USDA’s obvious disregard for the Grain Inspection, Packers and Stockyards Administration’s (GIPSA’s) almost nonexistent enforcement of PSA regulations and the agency’s lackadaisical handling of valid requests for investigations into marketplace violations.

“Producers have been deeply concerned for many years over the packing industry’s captive-supply practices, and R-CALF USA believes those actions are flagrant violations of the law,” Stevenson continued.

The Pickett case was brought as a class-action suit on behalf of sellers of fed cattle to challenge marketing arrangements used by the nation’s largest meatpacker, Iowa Beef Producers (IBP), now owned by Tyson Fresh Meats Inc. The cattlemen plaintiffs argued that Tyson forced cattle prices lower with captive-supply contracts, which lessened Tyson’s need to bid fair market value for cattle in the open market, thus giving the packer greater control over the supply and price of cattle.

In 2004, a unanimous jury found these captive-supply contracting methods violated the PSA’s provisions on unfair practices and price manipulation. But the jury verdict was set aside by the trial-court judge, who found that Tyson’s own business justifications defeated the PSA claim. The 11th Circuit affirmed the trial-court judge, and last month the plaintiffs filed a petition for certiorari to seek a review by the Supreme Court.

“Independent cattle producers need clarification of the PSA regulations to make sure the industry can continue successfully for future generations of ranchers,” Stevenson noted. “Cattle producers must have the ability to enforce the rights guaranteed to them under the PSA.”

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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA’s membership consists primarily of cow/calf operators, cattle backgrounders, and feedlot owners. Its members – over 18,000 strong – are located in 47 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.