04/12/2006

Jurors Unanimously Support Cattle Producers in Verdict; Three Multinational Meat Packers to be Fined Millions
R-CALF United Stockgrowers of America

Billings, Mont. – Yesterday jurors in a federal class action trial underway since April 3 in Aberdeen, S.D., reached a unanimous verdict against three out of four of the nation’s largest multinational meat packers for ignoring – at the expense of U.S. cattle producers – incorrect boxed-beef price reports issued by the U.S. Department of Agriculture during a six-week period in the spring of 2001.

R-CALF USA President and Region V Director Chuck Kiker said this is a great day for U.S. cattle producers.

“R-CALF has always been about competition and fairness in markets,” Kiker said. “This jury – and the jury that heard the Pickett v Tyson case – proved that these packers have engaged in conduct that had the purpose or effect of controlling or manipulating fed cattle prices.

“Today’s verdict brings us one step closer to strengthening our cattle industry by helping us accomplish what our organization set out to do, and that’s to get fair, competitive markets for cattle producers,” he emphasized.

The lawsuit was filed in July 2002 by three cattle producers, all of whom are proud members and staunch supporters of R-CALF USA: R-CALF USA Co-Founder and Region III Director Herman Schumacher of South Dakota, Michael Callicrate of Kansas, and Roger Koch of Nebraska. Each of these men sold cattle to the defendant-packing companies during the misreporting period. In June 2004, U.S. District Court Judge Charles Kornmann certified the case as a class action on behalf of all cattle producers who sold fed cattle on the cash market, or a basis affected by it, during the misreporting period to any of the four packer defendants. The packers also filed motions to have the case dismissed, before and during the trial, Kornmann denied each of those requests.

Defendants included: Tyson Fresh Meats Inc., formerly IBP Inc.; Cargill Meat Solutions, d/b/a Excel Corporation; Swift & Co., formerly known as ConAgra Beef Co.; and National Beef Packing Co., formerly known as Farmland National Beef Packing Co. Combined, the defendants control about 80 percent of the market for beef products in the United States. Jurors recommended a $4 million fine against Tyson, a $3 million fine against Cargill, and a $2.25 million fine against Swift. The jurors found National Beef not liable.

“This verdict is a victory for struggling cattle producers nationwide against the unlawful practices of the big packing companies,” said Schumacher, a co-founder of R-CALF USA. “For years, the packers have acted to crush competition and squeeze the small cattle producer to maximize packer profits. We are pleased that a jury of everyday citizens has held the packers accountable for the unlawful activities in this case.”

The Grain Inspection, Packers and Stockyards Administration (GIPSA) is charged with administering the Packers and Stockyards Act (PSA), a law that is supposed to regulate market abuses by the meatpacking industry. However, GIPSA administrators, according to USDA’s Inspector General, prevented employees from conducting investigations into complaints of anti-competitive activities and price manipulation by packers, and found that USDA staff had falsely inflated the number of such investigations.

The misreporting of boxed beef prices occurred at the start of mandatory reporting of boxed beef prices, which took effect April 2, 2001. Under the mandatory reporting law, the packers were required to report twice daily to USDA certain information on cattle prices, including prices being received by the packers for boxed-beef cuts. USDA’s duty was to then release the price information to the public, so cattle producers and other market players would have accurate, up-to-date information on cattle prices for their business operations. During the misreporting period, the prices the packers reported contained substantial errors that actually underreported the price the packers were receiving for boxed beef, which had the effect of depressing the prices cattle producers received for fed cattle sold to the packers during the same time period.

The reporting errors occurred in Choice and Select USDA boxed beef prices, with Choice prices underreported by between $1 per hundredweight (cwt) to more than $6 cwt during the period, and Select prices generally underreported by about $1 cwt for most of the period. The lawsuit alleged the packer-defendants violated the PSA, which prohibits unfair and deceptive practices by packers and stockyards. The suit claimed the packers’ conduct was unlawful because the packers knew from their internal records what prices they were receiving for boxed beef, while the sellers of fed cattle accepted lower prices for their cattle because of the inaccurately reported USDA boxed-beef prices.

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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