The USDA flexes its antitrust muscle

 

The Farmer's Union is not the only organization concerned about the concentration of a few companies in the meatpacking industry. The Department of Agriculture recently charged IBP Inc., one of the nation's largest meatpackers, with breaking antitrust laws by guaranteeing higher prices to one group of Kansas feedlot operators. The same agreement was never offered to other suppliers in the area.

If the USDA wins the case it could reverse a growing trend toward guaranteed price agreements, known as "captive supply." Such agreements accounted for 21 percent of the four largest meatpackers' business in 1994, reports the USDA.

This is one of the most divisive issues among cattle ranchers, says Chuck Lambert, staff economist with the National Cattlemen's Association. "It often comes down to philosophy. You have those who enter into contracts and those who don't."

Those who do, say the contracts allow both parties some stability. They give packers a steady supply of quality beef and ranchers a certain buyer. Those who don't sign such contracts want the industry to operate solely on the old system of auctions, where packers buy cattle on an open market.

The grumbling over captive supplies has become far more vocal since cattle prices have plummeted due to oversupply. "These are the biggest beef supplies since the 1970s," says Lambert. "The competition is ruthless. If a packer is running at full capacity because of prior agreements, then you have little or no choice than to sell your cattle at basement prices."

Some suppliers say packers have timed the slaughter of their cows or contract cattle to drive down prices. Critics of the captive supply system say it allows meatpackers to exercise unfair leverage in the market.

Marty Strange of the Center for Rural Affairs, a national rural advocacy group, says the case against IBP Inc. will hinge on whether the USDA can prove that the company gave "undue and unreasonable" preference to the one feedlot group. IBP denies its agreement with Kansas suppliers broke the Packers and Stockyards Act - the meatpacking industry's antitrust law - because other suppliers were not "similarly situated." IBP Inc. will likely argue that it needed the arrangement to ensure a steady flow of quality beef to its kill floors and to compete with other packers who fill in market slumps with their own cattle, says Strange.

This is the first antitrust case in the packing industry in decades, says Strange, adding that this particular section of the Packers and Stockyards Act is largely untested. But just by filing the complaint with IBP Inc., the USDA has taken the unprecedented position that captive supplies can violate antitrust law, he says.

Strange believes it will be a difficult case - especially for an agency that doesn't have much practice in litigation. "I would be pleasantly surprised if they had the moxie and manpower to do it."

Meanwhile, Congress has asked the Agriculture Department to look into how consolidation affects overall cattle prices. Its study, due this December, will examine the process by which prices are determined at regional cattle markets and how prior agreements affect overall cattle prices.

Elizabeth Manning, HCN staff reporter

High Country News Classifieds
  • COMMUNICATIONS & DEVELOPMENT COORDINATOR
    Position Type: Full time, exempt Location: Bozeman, MT Compensation: $42,000 - $47,000 Benefits: Major Medical Insurance, up to 5% match on a 401k, PTO, flexible...
  • PARTNERSHIP & COLLABORATION DIRECTOR
    WEST REGION WILDFIRE COUNCIL- RIDGWAY, CO The partnership & collaboration director will provide leadership and/or assistance with all initiatives that create and enhance connections between...
  • 2 FIELD PROJECT SPECIALISTS (POSITION FORMERLY TITLED TRAIL CREW TECHNICAL ADVISOR)
    Are you passionate about environmental conservation and connecting people to the outdoors? The Pacific Crest Trail Association (PCTA) is looking for someone with outdoor leadership...
  • WATER STEWARD
    The Blackfoot Challenge is seeking a full-time Water Steward to coordinate and deliver a variety of partnerships and projects aimed at conserving and enhancing water...
  • SMALL FARM AT BASE OF MOUNT SHASTA, CALIF.
    Fruit/berry/veggie/flower farm in the mountain town of Mount Shasta. Small home, 2 barns (one with apartment), and more. Famously pure air and water.
  • CUSTOMER SERVICE ASSISTANT - (PART-TIME)
    High Country News, an award-winning media organization covering the communities and environment of the Western United States, seeks a part-time Customer Service Assistant, based at...
  • POLICY & PLANNING SPECIALIST
    Position Type: Full time, exempt Location: Bozeman, MT highly preferred, remote negotiable Compensation: $50,000-54,000 Benefits: Major Medical Insurance, up to 5% match on a 401k,...
  • CONSERVATION PROGRAM MANAGER
    Illinois Valley SWCD is offering an incredible career opportunity in beautiful SW Oregon. .8+ FTE, plus benefits. Visit our website for full details.
  • DEVELOPMENT MANAGER
    Formed in 1980, Western Colorado Alliance for Community Action brings people together to build grassroots power through community organizing and leadership development. The Alliance works...
  • LITIGATION ASSISTANT, NORTHERN ROCKIES OFFICE - FULL-TIME BOZEMAN | REMOTE OPTION
    Visit our website to apply: earthjustice.org/about/jobs
  • BUFFALO NATIONS GRASSLANDS ALLIANCE SEEKING AN ASSESSMENT CONSULTANT
    ASSESSMENT OF THE SCOPE OF CONSERVATION PLANNING AND ACTIVITIES IN NATIVE NATIONS IN THE NORTHERN GREAT PLAINS Buffalo Nations Grasslands Alliance Buffalo Nations Grasslands Alliance...
  • CHIEF FINANCIAL OFFICER
    Rural Community Assistance Corporation seeks experienced CFO.
  • EXECUTIVE DIRECTOR
    The Friends of Arches and Canyonlands Parks, the official philanthropic non-profit partner with the National Park Service Southeast Utah Group, is seeking an Executive Director....
  • GRAND CANYON MANAGER
    Application deadline: May 9, 2022 Anticipated start date: June 15, 2022 About the position Are you passionate about building authentic relationships, supporting tribally led initiatives,...
  • LAND CONSERVATION PROGRAM DIRECTOR
    Eastern Sierra Land Trust (ESLT) is seeking a Land Conservation Program Director to join our nationally accredited land trust. This is a full-time position based...
  • OUTREACH AND COMMUNICATIONS COORDINATOR
    Reports to: Communications and Outreach Director Location: Ashton, Idaho (partial remote schedule possible) Status: Full-time, 40 hours per week Timing and Duration: Position open until...
  • CHIEF OPERATING OFFICER
    The Western Landowners Alliance (WLA) was founded in 2012 by landowners and managers to increase the wellbeing of working lands in the American West and...
  • WILDERNESS STEWARDSHIP CREW MEMBER
    The San Juan Mountains Association (SJMA) wilderness crew members work in partnership with the U.S. Forest Service to monitor wilderness characteristics, conduct trail work, and...
  • OUTDOOR PROGRAM - ASSISTANT DIRECTOR (TEMPORARY, FULL-TIME POSITION)
    St. Lawrence University seeks to fill a temporary, full time, Assistant Director position in the Outdoor Program. The Outdoor Program provides professional outdoor recreational and...
  • ENVIRONMENTAL GEOPHYSICS
    We find groundwater, reduce excavation costs and determine your IBC site class for a fraction of drilling costs.