Class action lawsuit against beef processors proceeds

A federal judge in Minnesota ordered a class action lawsuit against JBS, Tyson, National Beef and Cargill to proceed. In the ruling, Judge John R. Tunheim found that plaintiffs have plausibly plead that defendants conspired to suppress the price of fed cattle and increase the price of beef.

“We are pleased the effort to restore pricing transparency and competitiveness to the cattle markets is moving forward in the courtroom. This case is nearly two-and-a-half years old, and we look forward to the next step in the litigation,” comments Rob Larew, National Farmers Union president, which is a plaintiff in the case.

The case now enters the discovery phase of the trial, where evidence and information will be presented to demonstrate how packers violated the Sherman Antitrust Act, the Packers and Stockyards Act and the Commodity Exchange Act.

The class-action antitrust lawsuit was originally filed in April 2019 by R-CALF USA though its counsels Scott+Scott Attorneys at Law LLP, along with Cafferty Clobes Meriwether & Sprengel LLP.

USA’s antitrust action alleges the four processors violated the Sherman Antitrust Act of 1890 by engaging in a price-fixing conspiracy. It also alleges the entities violated the Packers and Stockyards Act as well as the Commodity Exchange Act.

“As the case moves to discovery, NFU will continue to hold the packers accountable. Malfeasance in the cattle markets has been very damaging to independent farmers and ranchers, and we look forward to continuing to advocate for our members in the courtroom,” Larew adds.

A public version of the order will be available at a later date, according to plaintiffs.

Separate DOJ investigation

On May 22, 2020, the DOJ’s Antitrust Division sent civil investigative demands to the nation’s four biggest meatpackers. Since that time, the American people have seen no public results from the investigation. In fact, there is no information to even suggest whether the investigation has concluded or is still ongoing, the letter notes.

Rep. Dusty Johnson, R-S.D. previously reported that Congress has not received any update from the Department of Justice on its own investigation into the cattle price changes. He says this is not “unusual” as “agencies are notoriously tight-lipped about ongoing investigations, and there are legal reasons for that.”

However, he did note that the joint statement from leading cattle groups out of a Phoenix meeting in May confirmed their joint desire for a final report from DOJ. At the producer-led meeting, four member leaders from each the American Farm Bureau Federation, National Cattlemen’s Beef Association, National Farmers Union, R-CALF USA and the United States Cattlemen’s Association established several action items including demanding DOJ issue an update on its investigation into packer activity.

Johnsons says it’s important to make sure these investigations get run to the ground and that the DOJ investigation is “for real, rather than just investigations for show.”

“I think there is a strong bipartisan coalition on the fact that these investigations really do need to conclude, and then we need to have a very transparent release of their findings.”

Following the meeting, Johnson and Sen. John Thune, R-S.D., led a bicameral letter to U.S. Attorney General Merrick Garland urging the Department of Justice to move forward with their investigation into anticompetitive practices in the meatpacking industry.

Livestock groups unite on need to address cattle markets

Cattle producers have faced significant challenges over the last few years. And as Brett Crosby, fifth-generation cattle rancher from Wyoming, explains, 2020 was a tipping point for everybody.

Crosby, who also serves as a board member of the U.S. Cattlemen’s Association, was one of just under two dozen members of the cattle industry who came together May 10 at the request of the Livestock Marketing Association to discuss challenges involved in the marketing of finished cattle with the ultimate goal of bringing about a more financially sustainable situation for cattle feeders and cow-calf producers.

Four meatpacking companies control over 80% of the cattle processing industry. “This simple fact leaves the cattle industry particularly vulnerable to market disruptions,” says Randy Feenstra, R-Iowa, while speaking about the cattle market challenges during a House Agriculture Committee discussion on May 18.

“Over the past few weeks, we have again seen the price of boxed beef continue to increase, while cattle prices remain stagnant. The gross packer margin on cattle has grown, but I continue to hear from cattle producers struggling to break even,” Feenstra says, noting some cattle producers are losing $100 to $120 per head.

In 2019, a fire at a single beef plant in Kansas, a facility that accounted for approximately 6% of the nation’s beef processing capacity at the time, created significant market disruptions.  In 2020, the COVID-19 pandemic-related plant closures led to additional processing capacity shortfalls and supply chain disruptions throughout the country. Today labor shortages and COVID-19 precautions have impacted processor’s ability to operate at full capacity.

At the producer-led meeting, four member leaders from each the American Farm Bureau Federation, National Cattlemen’s Beef Association, National Farmers Union, R-CALF USA and the United States Cattlemen’s Association met in Phoenix, Arizona. Crosby notes there was clearly some apprehension heading into the meeting on what could be accomplished by groups who don’t always see eye to eye.

Those present talked openly and candidly about a wide range of important issues facing the industry, including but not limited to packer concentration, price transparency and discovery, packer oversight, Packers & Stockyards Act enforcement, the level of captive supply and packer capacity.

As the meeting progressed, Crosby notes that he and others soon realized they’re all just a bunch of cattlemen trying to survive. “We realized we agreed on a lot of stuff. So, we pressed forward working on action items on some things we agreed were critical,” Crosby says.

Those action items include expediting the renewal of USDA’s Livestock Mandatory Reporting, demanding the Department of Justice issue an update on its investigation into packer activity and encouraging investment in new independent, local and regional packers.

Arizona Farm Bureau President Stefanie Smallhouse, whose family owns and operates a fifth-generation cow-calf operation in Arizona and who also participated in the meeting on behalf of the American Farm Bureau Federation, says those involved in the discussion left with a more optimistic view that common ground could be found.

“It was a pleasant surprise how much we agreed on the systemic problems in the beef industry in terms of supply chain, oversight and transparency and management of supply itself,” Smallhouse says.