The nation’s largest meatpacker has illegally squeezed $1.28 billion from independent cattle producers, according to a federal court jury. The finding may help thousands of Western ranchers earn more on their cattle sales. And it boosts an ongoing rebellion that has some environmentalists allied with ranchers, fighting the power of huge agriculture corporations.
Six cattlemen, spread from New Mexico to Alabama, pressed the class-action lawsuit against Tyson/IBP in an Alabama court. The jury found Feb. 16 that Tyson has been manipulating cattle prices in violation of the 1921 Packers and Stockyards Act — an antitrust law partly spurred by novelist Upton Sinclair’s 1906 slaughterhouse exposé, The Jungle. "It’s wonderful," says Mabel Dobbs, who runs 140 head of cattle on her family’s 200-acre ranch near Weiser, Idaho. "In the last 20 years, what’s happened in the meat industry is a tragedy — the bigger guys garner more and more control, and they manipulate the market, so it’s harder for the small family operations to survive."
Despite the antitrust law, with recent mergers and buyouts, the nation’s three biggest meatpackers have taken over handling 75 percent of all "fed cattle" (which become steaks and other quality cuts). "No other manufacturing industry showed as large an increase in concentration" in modern times, according to Congress’ General Accounting Office.
The meatpackers use their growing economic muscle to take an increasing cut of every consumer dollar spent on beef. They tap a supply of cheap imports from South America and elsewhere, and secure the cooperation of the U.S. Department of Agriculture and Congress with about $1 million per year in campaign contributions and lobbying.
The lawsuit challenged one tactic, "captive-supply contracts," in which meatpackers buy cattle up to a year in advance of slaughter. The contracts provide tremendous leverage: When prices in the spot market rise, meatpackers merely tap their captive supply, forcing everyone else’s prices down. They can even force down the price on captive-supply herds.
Squeezed like that, cattle producers now get just 45 cents of every consumer dollar spent on beef (down from 65 cents a decade ago), and the number of U.S. ranchers has declined by 200,000 to 1 million.
With the jury’s verdict, many ranchers may get retribution. U.S. District Judge Lyle Strom will either approve or adjust the $1.28 billion finding. He’ll also determine which of the estimated 30,000 cattle producers harmed by Tyson deserve compensation, and possibly how to keep it from happening again.
Reform makes strange bedfellows
Across the country, lawsuits are taking on the other giant meatpackers — Swift/ConAgra and Excel/Cargill — and the whole corporate agricultural hierarchy faces challenges.
The reformers are a mix of independent ranchers and feedlot owners, and environmentalists who work with them on ag issues and on classic green issues such as oil and gas drilling.
They’re seeking to prohibit meatpackers from owning cattle, or changing the terms of "captive supply" contracts. They also call for "country of origin labeling" on ag products, which would identify imports. And many are challenging "checkoff" programs, in which the USDA imposes fees on sales of livestock and crops, with the proceeds going to promote processed products and even imported beef (HCN, 9/30/02: Independent ranchers fight corporate control).
Elsewhere on the political spectrum, ranchers and environmentalists battle each other over wolves and grazing, but the essential issue is corporate power, says Gilles Stockton, a Montana rancher and member of the grassroots Northern Plains Resource Council, who was lobbying Congress last week. "I’ve lost a hell of a lot more money to two-legged wolves than to four-legged wolves."
Also among the strange bedfellows are Republican senators Mike Enzi of Wyoming and Chuck Grassley of Iowa, who join Democratic senators from the Dakotas in sponsoring reform bills in Congress.
"We operate in a highly complex business," counters Jay Truitt, a lobbyist for the National Cattlemen’s Beef Association, which says it represents the interests of several hundred thousand cattle producers, but often aligns with the big corporations. "Simple populist answers" ignore the complexities, and might lead to even lower earnings for cattle producers, he says.
Mabel Dobbs scoffs at that notion. She says the local sale barn used to host eight to 12 cattle buyers, and now ranchers deal with no more than three, and sometimes only one buyer: "There is just no competition."
The author is HCN editor in the field.