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R-CALF sues four major U.S. packers

Progressive Cattleman Editor Carrie Veselka Published on 26 April 2019

The Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF) organization, along with four cattle-feeding ranchers from Iowa, Nebraska, Kansas and Wyoming, launched a class action lawsuit last week against four major U.S. packing companies: Tyson Foods Inc., Cargill Inc., National Beef Packing Company LLC and the U.S. branch of Brazil-based packer JBS S.A. Together, the four companies control over 80 percent of the market for U.S. fed cattle. 

The four packing companies were accused of violating federal antitrust law, the Packers and Stockyards Act, and the Commodity Exchange Act by colluding to “depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits,” according to a report from The Associated Press. 

The lawsuit seeks a recoup of perceived losses for two classes believed harmed by the alleged violation – cattle producers who sold fed cattle to any of the four packing companies from January 2015 to present and traders who transacted live cattle futures or options contracts on the Chicago Mercantile Exchanges (CME) from January 2015 to present. 

According to the lawsuit, the packing companies are accused of conspiring to depress prices by an average of 7.9 percent since January 2015 through several tactics, including:

  • collectively reducing their slaughter volumes and purchases of cattle sold on the cash market in order to create a glut of slaughter-weight fed cattle.

  • manipulating the cash cattle trade to reduce price competition among themselves, including by enforcing an antiquated queuing convention through threats of boycott and agreeing to conduct substantially all their weekly cash market purchases during a narrow 30-minute window on Fridays.

  • transporting cattle over uneconomically long distances, including from Canada and Mexico, in order to depress U.S. fed cattle prices.

  • deliberating closing slaughter plants to ensure the underutilization of available U.S. beef packing capacity.

Tyson responded saying the lawsuit was “baseless.” The other companies did not immediately respond to requests for comment.  end mark

Carrie Veselka
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