Posted on Sat, Apr. 08, 2006
Official: Errors had little impact
Packer employees say USDA flaws not exploited
By Scott Waltman
American News Writer
Erroneous U.S. Department of Agriculture boxed beef cutout reports had little or no impact on what meat packers paid for live cattle, a host of witnesses who work for the companies testified Friday in a federal court case.
Three cattlemen who filed suit against the nation's four largest packers, however, claim the reports cost farmers and ranchers as much as $42.8 million.
Between April 2 and May 11, 2001, the USDA issued reports containing faulty boxed beef cutout prices. The plaintiffs contend the packers knowingly used the bad reports to pay farmers and ranchers less for livestock. Attorneys and employees of the packers deny that. The case started March 31 at the federal courthouse in Aberdeen.
The bad reports were the result of a flawed computer program developed by a government contractor. When calculating cutouts for choice and select cuts, a lesser quality of beef was also used. As a result, the choice and select cutouts were too low.
Cutout prices are an average of what 56 different individual cuts of meat are sold by packers to their customers, generally grocery stores and restaurants.
It's probably true that cattle producers who sold high-quality livestock during the time the USDA issued erroneous reports didn't get as much money as they could have, said Tim Schiefelbein, a Swift official who lives in Minnesota. Correct USDA cutout prices would have been higher and may have meant more income for cattlemen. But, he said, the cutouts don't directly impact cattle prices. Plus, he said, Swift didn't know about the USDA error, so it couldn't have used the wrong prices to its advantage.
Employees of other meat packers have given similar testimony.
Earlier in the week, the cattle producers who filed the case testified that cutout prices are vital as a tool that allows them to know how much their live cattle are worth. But, the packer defendants contend, the number of cattle available for purchase from farmers and ranchers has a bigger impact. They also say there are many other factors.
One reason the boxed beef cutouts can't be relied on more is that they're incomplete, according to a variety of witnesses. A USDA official testified that the reports only reflect about 35 percent of meat sold by packers.
Several packer employees testified this week that their internal cutout numbers are much more meaningful than cutout numbers reported by the USDA.
Dale Peterson, a Nebraska cattleman, testified by video deposition Friday. He said that USDA boxed beef cutouts are important to cattlemen who are deciding when to sell their animals. He said the faulty reports were significant. But, he said, cutout trends - whether cutouts are moving up or down - are more important than a specific cutout average.
The defendants are being sued individually, not as a group. Each rested its case Friday. Next, the plaintiffs have a chance to present what's called rebuttal evidence. If there is any, it will be introduced at 9 a.m. Monday. The packers are also expected to ask Judge Charles Kornmann for what's called summary judgment Monday. The standard but rarely granted request means they don't think enough evidence has been presented against them, so they want the judge to rule on the case without sending it to the eight-person jury.
Closing arguments will most likely be Tuesday morning. Then the jury should get the case.
Aside from Swift, the defendants are Tyson, Excel/Cargill and National Beef. The plaintiffs in the class-action suit are Herman Schumacher of Herreid, Michael Callicrate of Kansas and Roger Koch of Nebraska.
Official: Errors had little impact
Packer employees say USDA flaws not exploited
By Scott Waltman
American News Writer
Erroneous U.S. Department of Agriculture boxed beef cutout reports had little or no impact on what meat packers paid for live cattle, a host of witnesses who work for the companies testified Friday in a federal court case.
Three cattlemen who filed suit against the nation's four largest packers, however, claim the reports cost farmers and ranchers as much as $42.8 million.
Between April 2 and May 11, 2001, the USDA issued reports containing faulty boxed beef cutout prices. The plaintiffs contend the packers knowingly used the bad reports to pay farmers and ranchers less for livestock. Attorneys and employees of the packers deny that. The case started March 31 at the federal courthouse in Aberdeen.
The bad reports were the result of a flawed computer program developed by a government contractor. When calculating cutouts for choice and select cuts, a lesser quality of beef was also used. As a result, the choice and select cutouts were too low.
Cutout prices are an average of what 56 different individual cuts of meat are sold by packers to their customers, generally grocery stores and restaurants.
It's probably true that cattle producers who sold high-quality livestock during the time the USDA issued erroneous reports didn't get as much money as they could have, said Tim Schiefelbein, a Swift official who lives in Minnesota. Correct USDA cutout prices would have been higher and may have meant more income for cattlemen. But, he said, the cutouts don't directly impact cattle prices. Plus, he said, Swift didn't know about the USDA error, so it couldn't have used the wrong prices to its advantage.
Employees of other meat packers have given similar testimony.
Earlier in the week, the cattle producers who filed the case testified that cutout prices are vital as a tool that allows them to know how much their live cattle are worth. But, the packer defendants contend, the number of cattle available for purchase from farmers and ranchers has a bigger impact. They also say there are many other factors.
One reason the boxed beef cutouts can't be relied on more is that they're incomplete, according to a variety of witnesses. A USDA official testified that the reports only reflect about 35 percent of meat sold by packers.
Several packer employees testified this week that their internal cutout numbers are much more meaningful than cutout numbers reported by the USDA.
Dale Peterson, a Nebraska cattleman, testified by video deposition Friday. He said that USDA boxed beef cutouts are important to cattlemen who are deciding when to sell their animals. He said the faulty reports were significant. But, he said, cutout trends - whether cutouts are moving up or down - are more important than a specific cutout average.
The defendants are being sued individually, not as a group. Each rested its case Friday. Next, the plaintiffs have a chance to present what's called rebuttal evidence. If there is any, it will be introduced at 9 a.m. Monday. The packers are also expected to ask Judge Charles Kornmann for what's called summary judgment Monday. The standard but rarely granted request means they don't think enough evidence has been presented against them, so they want the judge to rule on the case without sending it to the eight-person jury.
Closing arguments will most likely be Tuesday morning. Then the jury should get the case.
Aside from Swift, the defendants are Tyson, Excel/Cargill and National Beef. The plaintiffs in the class-action suit are Herman Schumacher of Herreid, Michael Callicrate of Kansas and Roger Koch of Nebraska.
