Cattle ranchers in Montana are suing a handful of meatpackers, alleging the meatpackers violated U.S. antitrust laws to beef up their margins.
A federal lawsuit filed Tuesday claims four global meatpackers, including Tyson Foods, colluded to suppress the price of cattle bought at the stockyards from 2015 to the present.
Independent ranchers opposed to the current system, controlled by a few meatpackers who buy almost 90 percent of the U.S. cattle supply, argue they have no room to bargain. As a result, ranchers fell prey to low cattle prices as meatpackers reaped fat margins and fatter profits from high retail prices the past four years.
"Meatpackers are capturing the lion's share of beef dollars to the detriment of cattle producers," said Bill Bullard, chief executive officer of R-CALF, a Montana advocacy group that represents more than 5,000 cattle ranchers across 47 states, including Arkansas.
Tuesday's lawsuit seeks class-action status and named meatpackers Tyson Foods Inc., JBS S.A., Cargill Inc. and the National Beef Packing Co., referred to as the "Big 4."
Independent ranchers, economists and others say they've noticed a tightening among packers, who buy U.S. cattle to be further processed into vacuum-sealed steaks, roasts or ground beef.
In the lawsuit, plaintiffs claim the meatpackers used their influence to suppress the price of "fed cattle" -- heifers and steers raised by independent ranchers for the production and sale of beef products -- from 2015 to the present.
From 2009 to 2015, fed-cattle prices rallied from about $80 to $170 per 100 pounds. After that, ranchers saw steep declines back to near $100-levels a year later, data show. During that time, the retail price of fresh beef stayed around $5.75 per pound.
Defendants drove down cattle prices using various tactics, the suit claims, such as slashing their slaughter volumes and curtailing their purchases of fed cattle, coordinating procurement practices and restraining slaughter periodically, according to the 121-page complaint.
Keith Belk, a meat-safety and quality professor at Colorado State University, disagreed with the lawsuit's allegations.
"Cattle feeding has been pretty profitable for those years" in question, Belk said.
Factors outside the meatpackers' control influenced pricing during that time frame, including years of drought across the South that caused herd losses. Prices were "artificially high as result of shortage and exports going up," he said.
"I would argue cattle prices haven't been bad -- I think they've been profitable," Belk said.
Cattle-price increases dating to 2013 attracted enough attention to warrant an investigation by the Government Accountability Office. While less competition among packers "did not appear to result in lower national prices ... it did account for variations in prices in different parts of the country," the agency said in its findings published last year.
Bullard said his organization, R-CALF, has tried to get Congress to break up the meatpackers from capturing control over the live-cattle supply chain for years, in fear of possible "chicken-izing" of the cattle industry.
Full supply chain integration, from genetics to farm to slaughter, was first adopted by America's chicken industry, then the hog industry. He said the meatpackers are eliminating opportunities for ranchers young and old with increased control over the beef supply chain.
Defendant Tyson Foods does not see it that way and plans to defend itself in court.
"We're disappointed this baseless case was filed," said Gary Mickelson, Tyson's director of communications, said Tuesday in an email.
"As with similar lawsuits concerning chicken and pork, there's simply no merit to the allegations that Tyson colluded with competitors."
"Contrary to the assertions in this lawsuit, Tyson wants its suppliers to succeed," Mickelson said. The Springdale-based company relies on thousands of independent beef, hog and chicken farmers and ranchers for its supply chain.
Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF), along with Weinreis Brothers Partnership, Minatare Feedlot, Inc., Charles Weinreis, Eric Nelson, James Jensen, Lucky 7 Angus and Richard Chambers are the plaintiffs in the lawsuit.
Case no. 1:19-cv-02726 was filed in the Northern District Court of Illinois, where Tyson and competitors also are facing a class-action lawsuit that claims they artificially inflated the price of broiler chickens.
Business on 04/24/2019