| The Packers and Stockyards Act (PSA) of 1921 should - in theory - regulate competition in the livestock industry. However, in 2006, the Office of Inspector General and the Government Accountability Office both found out that - oops! - the USDA hadn't properly enforced the PSA for nearly a decade. To those who know much about the difficulties family farmers face in the livestock industry, this probably wasn't too much of a surprise. The meatpacking industry is highly consolidated (particularly the beef industry, in which 4 companies slaughter about 90% of all cattle in the U.S.) and they use a practice called captive supply (owning or controlling livestock via contracts) to keep the prices they pay to family farmers very low.
Read on, for the story of one rancher who tried to do something about this issue and ended up being retaliated against by Tyson... |
When the OIG and GAO made that finding in 2006, they found that the USDA had made what the organization R-CALF calls "a horrendous mistake" - they miscalculated beef values for a six-week period in the spring of 2001, resulting in family farmers receiving lower prices than they should have received for their cows. R-CALF says:
It was widely believed that Tyson and the other two largest meatpackers - Cargill Meat Solutions, d/b/a Excel Corporation (Excel), and Swift & Co. (Swift), now JBS Swift - knew that beef values were being underreported and were purposely underbidding the actual value of cattle. Prices paid for Schumacher's and other cattle feeders' cattle were forced lower during this period, causing producers to lose millions of dollars in income. USDA refused to take any action to correct this injustice.
When this came to light, the rancher mentioned above, Herman Schumacher of South Dakota, joined with two others and sued the beefpacking companies (Tyson, Excel, and Swift) to obtain the money lost during those six weeks. (Schumacher, by the way, has long been a thorn in the side of Big Beef, testifying on the injustice in the beef industry before the Senate Ag Committee in 1998.) The ranchers won - and then the case went to appeal and they lost. Whereas a jury sided with Schumacher (and awarded the class of cattle producers $9.25 million - about $40 per cow), according to R-CALF:
the [appeals] court decided it wasn't enough for Schumacher to prove that the packers had committed actions prohibited by the PSA. The 8th Circuit overturned the jury's verdict on the basis that "a plaintiff (Schumacher, Callicrate and Koch) must show that a packer intentionally committed unlawful conduct."
Now Schumacher is undergoing retaliation by Tyson, who demands that he pay their court costs - a hefty $15,881.38. And, according to R-CALF, the U.S. Marshals have been called in to enforce this by seizing Schumacher's home if he does not pay.
R-CALF says in a press release:
"This retaliatory action against Schumacher, who courageously did what USDA (U.S. Department of Agriculture) was supposed to do but refused to do, is an extreme injustice," said R-CALF USA President/Region VI Director Max Thornsberry. "We cannot sit back and allow Tyson to intimidate U.S. cattle producers and destroy our markets.
This recent action by the U.S. Marshals Service demonstrates that family farmers and ranchers - our U.S. food producers - have no means of protecting either their livelihoods or their industry against the anticompetitive and antitrust actions of the packers that continue to drive food-producer prices well below sustainable levels. Producers have sought relief from both the Administration and from Congress, but to no avail. And, producers and R-CALF USA have sought relief in the judicial system where, in three recent cases, they have won their cases before fact-finding juries and district court judges only to have their victories quashed by appellant courts that consistently side with the packers.
Meanwhile, U.S. cattle producers are exiting the U.S. cattle industry by the tens of thousands each year, and consumers are continuing to pay at or near record beef prices while prices paid to cattle producers have fallen well below the cost of production. This spring, while cattle producers lost hundreds of dollars on each head of cattle sold, the share of the consumer's beef dollar paid to the cattle producer has fallen to the lowest level since the third quarter of 2002, the year when cattle prices were severely depressed. The U.S. cattle industry is fast losing the critical mass of independent producers necessary to ensure the safety and security of the U.S. beef supply. |
