On Tuesday, April 23, Ranchers-Cattlemen Action Legal Fund (R-CALF) announced a class action suit against the “Big 4” beef packing companies and 10 unnamed cattle futures and options traders, alleging an ongoing “conspiracy to manipulate the fed cattle market” since 2015.
“R-CALF USA is taking this historic action to fulfill its promise to its members to prevent the Big 4 packers from capturing the U.S. cattle market from independent U.S. cattle producers,” said R-CALF CEO Bill Bullard in the group’s announcement of the case. He added that R-CALF has “exhausted all other remedies” and hopes that “U.S. cattle ranchers can be compensated for years of significant losses.”
Though the specifics of the accusations are numerous and detailed, in general, the suit makes the following assertions:
• The packing defendants (Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC) violated U.S. antitrust laws, the Packers and Stockyards Act, and the Commodity Exchange Act. Specifically, they conspired to depress fed cattle prices. This included agreements between the companies to reduce slaughter volumes and fed cattle purchasing, as well as having “coordinated their procurement practices for cash cattle,” imported fed cattle for the purposes of depressing domestic prices, and reduced slaughter capacity or didn’t expand or utilize it to artificially restrict processing abilities and the corresponding need for fed cattle.
• Their actions caused the “2015 price collapse” in fed cattle and kept them low since then.
• The nature of the fed cattle market (i.e., low levels of price discovery) allows for this sort of behavior, and consolidation among the packers exploits the situation.
• The packing defendants traded CME live cattle futures and options, manipulating them in such a way as to impact the cash fed cattle prices to their benefit.
The suit was filed in the U.S. District Court for the District of Northern Illinois and demands a jury trial.
“The impact of the packers’ conduct on American cattle ranchers has been catastrophic,” said David Scott, managing partner of Scott+Scott, which is representing R-CALF, in the group’s announcement of the suit.
“The health and integrity of the American cattle industry is being permanently and irrevocably damaged, independent ranchers are systematically being driven out of business, and consumers are losing the ability to buy high-quality American beef with confidence.”
According to reporting by DTN’s Todd Neeley, Tyson denied allegations and expressed disappointment that the “baseless case” was filed.
“As with similar lawsuits concerning chicken and pork, there’s simply no merit to the allegations that Tyson colluded with competitors,” the company said in a response to DTN. “This complaint is nothing more than another transparent and opportunistic attempt by attorneys to make money for themselves at the expense of consumers.” — WLJ