Cattle Price-Fixing Allegations Leveled In Lawsuit, But Hard To Say If Reforms Will Follow

May 3, 2019
Originally published on May 9, 2019 11:36 am

A group of Midwestern feedlot operations have filed a class-action lawsuit, alleging that several major meatpacking companies, including JBS, Cargill and Tyson, broke antitrust laws by conspiring to lower the prices paid to ranchers.   

In the past few years, price-fixing allegations have been leveled against poultry and pork industries. And it’s not clear whether any of the lawsuits for any type of meat producers will bring about reforms.

In the 121-page court document filed April 30, plaintiffs claim desperate ranchers were forced into accepting reduced prices for their animals. The lawsuit alleges that meatpacking companies, which control 80 percent of the market, profited from record margins.

For example, the lawsuit alleges, slaughter plants would temporarily shut down operations in order to drive up the supply of cattle and reduce demand.

R-CALF USA President Bill Bullard also said companies also appear to have coordinated their buying schedules to just one day a week and for as little as a half-hour at a time.

“This puts the producer in a very difficult position, trying to market a perishable commodity,”said Bullard, whose association of cattlemen is one of the lead plaintiffs.

Officials with the Meat Institute, an association that represents the meatpacking industry, told Harvest Public Media that the allegations are “unfounded and ignore the economics of the marketplace.”

The lawsuit seeks to recoup lost profits for rancher and reinforce federal laws that Bullard said have been broken, including the Packers and Stockyards Act and the Commodity Exchange Act.

Chicken plants have faced similar lawsuits over the last two years, coming from major food companies Heinz Kraft and Nestle USA Inc. The companies named in those suits include Pilgrim’s Pride (a subsidiary of JBS) and Tyson.

While the lawsuits against the poultry plants are still pending, they’re unlikely to cause significant reforms within the industry because it’s private litigation, according to University of Wisconsin-Madison law professor Peter Carstensen.

On the other hand, Carstensen said, the cattle ranchers’ suit may have a better outcome because a large industry association is behind it.

“It is somewhat more likely that there would be a stronger focus on forward-looking relief,” said Carstensen, who is an expert on competition and regulations in the meat industry.

He noted that he’s concerned that the U.S. Departments of Justice and Agriculture, as well as state governments, aren’t doing anything about the increasing allegations of collusion in the buying markets for livestock and poultry.

Follow Esther on Twitter: @EstherHonig

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