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4’ Packers and Misreported Boxed Beef Prices

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HAY MAKER

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Jury Trial Begins April 3 in Cattle Producers’ Class Action Suit Against ‘Big 4’ Packers and Misreported Boxed Beef Prices



(Aberdeen, S.D.) – A federal jury trial will begin here April 3 to consider claims made against the four largest United States beef packers arising out of the misreporting of the U.S. Department of Agriculture’s (USDA’s) boxed beef prices that occurred between April 2 and May 11, 2001.



The lawsuit was filed two and one-half years ago by three cattle producer-plaintiffs – Herman Schumacher, Michael Callicrate and Roger Koch – all of whom are proud members and staunch supporters of R-CALF USA. Each of these men sold cattle to the defendant-packing companies during the misreporting period. In June 2004, U.S. District Court Judge Charles Kornmann certified the case as a class action on behalf of all cattle producers who sold fed cattle on the cash market, or a basis affected by it, during the misreporting period to any of the four packer defendants: Tyson Fresh Meats Inc., formerly IBP Inc.; Cargill Meat Solutions, d/b/a Excel Corporation; Swift & Co., formerly known as ConAgra Beef Co.; and National Beef Packing Co., formerly known as Farmland National Beef Packing Co. The defendants control about 80 percent of the market for beef products in this country. The trial, expected to last two weeks, follows motions by the defendants to have the case dismissed, which Judge Kornmann denied in January.



The misreporting of boxed beef prices occurred at the start of mandatory reporting of boxed beef prices, which took effect April 2, 2001. Under the mandatory reporting law, the packers must report twice daily to USDA certain cattle-price information, including prices being received by the packers for boxed beef cuts. USDA duty was to then release the price information to the public so cattle producers and other market players have accurate, up-to-date information on cattle prices to inform their business operations. During the misreporting period, the prices the packers reported contained substantial errors that actually underreported the price the packers were receiving for boxed beef, which had the effect of depressing the prices cattle producers received for fed cattle sold to the packers during the same time period.

The reporting errors occurred in Choice and Select USDA boxed beef prices, with Choice prices underreported by between $1 per hundredweight (cwt) to more than $6 cwt during the period, and Select prices generally were underreported by about $1 cwt for most of the period. The lawsuit alleges the packer defendants violated the federal Packers and Stockyard Act (PSA), which prohibits unfair and deceptive practices by packers and stockyards. The suit claims that the packers’ conduct was unlawful because they knew from their internal records what prices they were receiving for boxed beef, while the sellers of fed cattle accepted lower prices for their cattle because of the inaccurately reported USDA boxed beef prices.

“These packing companies were trading on inside information to reap a windfall profit at the expense of cattle producers,” said plaintiff Mike Callicrate. “The packers knew both the real prices they were getting for their beef products, and the falsely lower prices being reported by USDA. Fed cattle sellers only had access to the false price information, and so were short-changed by the packers who had the true price information from their own records.”

Callicrate and the other plaintiffs intend to prove at trial that the four packer-defendants caused total damages to cattle-producer class members exceeding $40 million.

The April trial follows on the heels of a U.S. Government Accountability Office report released in December, which shows more than half of the government’s meatpacker audits revealed inaccuracies, omissions or undocumented transactions.

“That particular report raised serious questions in my mind as to whether the published price reports accurately represented true market conditions,” said Schumacher, another plaintiff. “Market conditions affect how much money producers receive for their cattle.”

Additionally, a January report released by USDA’s Office of Inspector General (OIG) concluded agency administrators had prevented employees from conducting investigations into complaints of anti-competitive activities and price manipulation by packers, and that USDA staff were falsely inflating the numbers of such investigations.

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R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) represents thousands of U.S. cattle producers on domestic and international trade and marketing issues. R-CALF USA, a national, non-profit organization, is dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA’s membership consists primarily of cow/calf operators, cattle backgrounders, and feedlot owners. Its members – over 18,000 strong – are located in 47 states, and the organization has over 60 local and state association affiliates, from both cattle and farm organizations. Various main street businesses are associate members of R-CALF USA. For more information, visit www.r-calfusa.com or, call 406-252-2516.
 

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