Packers Use USDA to Hide Behind Frauds to Producers

[Econ101]

USDA error changed prices

Prosecution says meat packers knew of mistake



By Scott Waltman

American News Writer

Aberdeen News

Apr. 01, 2006



A jury of four men and four women from northeast South Dakota will decide whether meat packers cost cattle producers as much as $42.79 million during the spring of 2001.



The federal court case started with jury selection and opening arguments Friday in Aberdeen. Three cattlemen filed the suit two and a half years ago. It alleges that the nation's four largest meat packers knowingly took advantage of a U.S. Department of Agriculture error to lower the amounts paid to farmers and ranchers for their live cattle.



All of the meat packers named in the case say they didn't know about the USDA error so it couldn't have impacted live cattle prices.



That there was an error is not in dispute. Nor is the fact that it was not the fault of the packers. From April 2 to May 11, 2001, the USDA incorrectly reported the prices of what are called cutout averages for some beef. Cutout reports, which the USDA is in charge of issuing twice each market day, contain average prices of various cuts of meat.



During the time frame in question, cutout averages for choice and select meat were too low because a lower quality of meat was used, in part, to figure them. The mistake was the result of an error in computer software provided by a federal government contractor.



Tom White, an attorney for the cattlemen who filed the suit, said each of the meat packers profited handsomely as a result of the report. He said that:



• Tyson Fresh Meats, formerly IBP Inc., knowingly used the erroneous reports to make an extra $16.38 million between April 2 and May 11.



• Excel Corp., also known as Cargill Meat Solution, made $12.71 million extra.



• Swift & Co., formerly known as ConAgra Beef Co., made $9.23 million extra.



• National Beef Packing, formerly known as Farmland National Beef Packing Co., made $4.47 million extra.



White said meat packers follow to the penny a variety of market prices, so they certainly knew about the USDA's reporting error.



And, he said, because the four packers control 80 percent of the live beef market, they were able to use the information to pay less to cattle producers.



Not so, said attorneys for the packers.



Even with the incorrect information, the cutout reports were 99.4 percent accurate for select meat and 97.8 percent correct for choice meat, one attorney said.



Choice meat is of a higher quality than is select, according to USDA grades.



The packers say they didn't know about the error in cutout reports until it was announced by the federal government. They said that cattle producers knew what prices they were getting when they sold their livestock to packers, so there's no reason they should be able to claim damages - especially since the packers didn't make the mistake.



Beyond that, the attorneys for packers said, cutout report prices are only one of many factors that influence the prices paid for live cattle.



The first witness is expected to be called Monday at 9 a.m. at the federal courthouse, 102 Fourth Ave. S.E. The trial is expected to last two weeks. Judge Charles Kornmann is presiding.



Herman Schumacher, who operates Herreid Livestock Market, is one of the cattle producers who filed the suit. The others are Mike Callicrate of Kansas and Roger Koch of Nebraska.



All jury decisions in federal court cases must be unanimous. Federal juries can contain as few as six or as many as 12 people.





aberdeennews.com

 

[T3023]

What an "EXCELLENT" find.

Kudo's to ECON101

:lol:

 

[agman]

What an "EXCELLENT" find.

Kudo's to ECON101

:lol:

What is excellent about CLAIMING packers knew the results or data entered into a totally blind pool? Await the outcome of the trial when the eveidence is presented.

 

[T3023]

What an "EXCELLENT" find.

Kudo's to ECON101

:lol:

What is excellent about CLAIMING packers knew the results or data entered into a totally blind pool? Await the outcome of the trial when the eveidence is presented.

Do you work for the USDA?

 

[the chief]

What an "EXCELLENT" find.

Kudo's to ECON101

:lol:

What is excellent about CLAIMING packers knew the results or data entered into a totally blind pool? Await the outcome of the trial when the eveidence is presented.

Do you work for the USDA?

No, he works for corporate america, the very people who "allegedly" stole from producers because of a government error.

I wonder how long it would have taken the packers to notice the error had the mistake worked in the producers favor. :wink: And do you suppose that if you had sold cattle to Tyson or others that day that they would have asked for their check back if a mistake had been made in our favor?

 

[Anonymous]

Truth will win in the end, not baseless unsupported allegations by packer blamers in need of someone or something to blame.



~SH~

 

[fedup2]

If I was called up for jury duty for this trial, I would refuse to go. Why the hell should anyone waste their time listening to hours & hours of testimony when their verdict-decision doesn't mean a damn thing anyway? Why don't they just send this case straight to the appellate judge? If these judges have no more faith in the jury system, why waste the jurors time with a mock trial. :roll:

 

[agman]

If I was called up for jury duty for this trial, I would refuse to go. Why the hell should anyone waste their time listening to hours & hours of testimony when their verdict-decision doesn't mean a damn thing anyway? Why don't they just send this case straight to the appellate judge? If these judges have no more faith in the jury system, why waste the jurors time with a mock trial. :roll:

Would you want to be charged as "guilty" if the testimony did not support that conclusion? I believe you would answer "no". The reason the law provides a legal means to overturn a jury verdict is that sometimes juries do get it wrong. They got it wrong in the Pickett case and the judge did what he was LEGALLY bound to do. He overturned the verdict

Judge Strom is an expert in such cases and dealing with such expert witness testimony. He knew the plaintiff's expert witness could not back up his own opinion and that the jury made a finding that was never corroborated by any testimony by the plaintiffs or their many witnesses. In fact the plaintiff's witnesses were the best witnesses the defense could have as they corroberated the defense's position. While you may chose to dismiss my comments that will not alter my comments as facts, clearly evident in the testimony, involving the outcome of this case. ALL the judges who reviewed this case were NOT wrong. There were more judges who reviewed and ruled on this case then there were jurors.

Putting all bias aside, I don't think you would want to have a jury find you guilty if the testimony did not support that conclusion. Nor would you or I want a guilty party to have a verdict dimissed if the testimony ACTUALLY SUPPORTED such a verdict. I believe you and I can agree on that.

 

[Anonymous]

Fedup: "If I was called up for jury duty for this trial, I would refuse to go. Why the hell should anyone waste their time listening to hours & hours of testimony when their verdict-decision doesn't mean a damn thing anyway? Why don't they just send this case straight to the appellate judge? If these judges have no more faith in the jury system, why waste the jurors time with a mock trial."

With all due respect Mr. Fedup kind sir, If a jury always got the decision right, you wouldn't need a judge or an appeals process. Our judicial system has checks and balances in place for good reason.

The Pickett plaintiffs convinced a jury that dropping your price in the cash market to reflect your purchases in the formula market was market manipulation. The Judge knew enough about law to know that dropping your price in the cash market to reflect your purchases in the formula market was nothing more than a normal supply and demand reaction.

No disrespect intended my dear friend. LOL!

You like that style better? Either way, you're still wrong!


~SH~

 

[Sandhusker]

How can packers lower their prices with all the competition for the cattle you claim exists?

 

[Anonymous]

Sandbag: "How can packers lower their prices with all the competition for the cattle you claim exists?"

I read a question like this and I sit in absolute amazement that you lend people money. Were you the only one who applied for your job?

The largest packers are fairly equal in their efficiency and there is a minimal difference in what the receive for their beef and beef by products. That is why the bids are usually the same, not because of any "alleged" collusion. If boxed beef prices are falling, all the packers will lower their bids accordingly. That doesn't mean they don't still need a certain number of cattle to fill their slaughtering schedule. Did you think they should just lose money if boxed beef prices fall?

I'm just curious, is competition between large companies like rocket science for someone like you?


~SH~

 

[Sandhusker]

Sandbag: "How can packers lower their prices with all the competition for the cattle you claim exists?"

I read a question like this and I sit in absolute amazement that you lend people money. Were you the only one who applied for your job?

The largest packers are fairly equal in their efficiency and there is a minimal difference in what the receive for their beef and beef by products. That is why the bids are usually the same, not because of any "alleged" collusion. If boxed beef prices are falling, all the packers will lower their bids accordingly. That doesn't mean they don't still need a certain number of cattle to fill their slaughtering schedule. Did you think they should just lose money if boxed beef prices fall?

I'm just curious, is competition between large companies like rocket science for someone like you?


~SH~

Crap, here I go on a pig wreslting match again. Sorry, guys.

You completely didn't answer the question. Lets try a specific scenario; Tyson contracts half of the cattle they need. According to you, they can then simply lower their prices they pay for cattle on the cash market because their needs are half met. However, also according to you, there is competition between the packers for the same cattle and prices can't simply be lowered or they won't get the cattle bought.

Please try to explain this as I'm sure there are a few readers who are considering joining R-CALF and need just one more nudge.

 

[T3023]

If I was called up for jury duty for this trial, I would refuse to go. Why the hell should anyone waste their time listening to hours & hours of testimony when their verdict-decision doesn't mean a damn thing anyway? Why don't they just send this case straight to the appellate judge? If these judges have no more faith in the jury system, why waste the jurors time with a mock trial. :roll:

Would you want to be charged as "guilty" if the testimony did not support that conclusion? I believe you would answer "no". The reason the law provides a legal means to overturn a jury verdict is that sometimes juries do get it wrong. They got it wrong in the Pickett case and the judge did what he was LEGALLY bound to do. He overturned the verdict

Judge Strom is an expert in such cases and dealing with such expert witness testimony. He knew the plaintiff's expert witness could not back up his own opinion and that the jury made a finding that was never corroborated by any testimony by the plaintiffs or their many witnesses. In fact the plaintiff's witnesses were the best witnesses the defense could have as they corroberated the defense's position. While you may chose to dismiss my comments that will not alter my comments as facts, clearly evident in the testimony, involving the outcome of this case. ALL the judges who reviewed this case were NOT wrong. There were more judges who reviewed and ruled on this case then there were jurors.

Putting all bias aside, I don't think you would want to have a jury find you guilty if the testimony did not support that conclusion. Nor would you or I want a guilty party to have a verdict dimissed if the testimony ACTUALLY SUPPORTED such a verdict. I believe you and I can agree on that.

Jury Instructions

Most jurors do not read the jury book, they do not know the jury's job is judge the law as well as the case. Judges dictate the law in jury instruction. It is a simple case of judging or dictating law at the bench. The jury has responsibility to throw out all the laws not pertaining to the case as well as judge the case.

All jurors must know there job before judging the case.

 

[Anonymous]

Sandbag: "Lets try a specific scenario; Tyson contracts half of the cattle they need. According to you, they can then simply lower their prices they pay for cattle on the cash market because their needs are half met. However, also according to you, there is competition between the packers for the same cattle and prices can't simply be lowered or they won't get the cattle bought. "

Naturally the competition decreases as their needs are met. Just like Tyson said in court and the packer blamers sunk their teeth into it, "as the number of captive supply goes up, the cash price goes down". Supply and demand. Competition is highest when the needs are highest. As the needs are fulfilled, competition for the remaining cattle decreases just like it does with feeder cattle and breeding stock.

When the supply exceeds the demand, competition BY ALL PACKERS decreases. When the demand exceeds supply, competition BY ALL PACKERS increases. When supplies are tight and Tyson's supply is met through formula cattle and forward contract cattle, competition between Excel and Swift increases for the remaining cattle. Tyson is "A MARKET", not "THE MARKET".

This isn't an EITHER THERE IS ALWAYS COMPETITION or THERE IS NEVER COMPETITION situation.

NEXT!



~SH~

 

[Sandhusker]

Sandbag: "Lets try a specific scenario; Tyson contracts half of the cattle they need. According to you, they can then simply lower their prices they pay for cattle on the cash market because their needs are half met. However, also according to you, there is competition between the packers for the same cattle and prices can't simply be lowered or they won't get the cattle bought. "

Naturally the competition decreases as their needs are met. Just like Tyson said in court and the packer blamers sunk their teeth into it, "as the number of captive supply goes up, the cash price goes down". Supply and demand. Competition is highest when the needs are highest. As the needs are fulfilled, competition for the remaining cattle decreases just like it does with feeder cattle and breeding stock.

When the supply exceeds the demand, competition BY ALL PACKERS decreases. When the demand exceeds supply, competition BY ALL PACKERS increases. When supplies are tight and Tyson's supply is met through formula cattle and forward contract cattle, competition between Excel and Swift increases for the remaining cattle. Tyson is "A MARKET", not "THE MARKET".

This isn't an EITHER THERE IS ALWAYS COMPETITION or THERE IS NEVER COMPETITION situation.

NEXT!



~SH~

You're talking in circles again. You justify lower prices with "Naturally the competition decreases as their needs are met." But then contradict yourself with a situation that pushes prices up "Competition between Excel and Swift increases for the remaining cattle."

How can Tyson lower their cash prices with Excel and Swift having increased competition for the remaining cattle? It can't happen in this world. You're giving us a scenario with increased competition and lower prices. I think you've trapped yourself again.

 

[RobertMac]

If a jury always got the decision right, you wouldn't need a judge or an appeals process. Our judicial system has checks and balances in place for good reason.

In a jury trial, the judge is there to manage the proceedings and the jury is there to return a verdict. If the jury verdict was allowed to stand, the Appellate Court over turned it, and the Supreme Court refused to hear the case, I would have no problem with the case because due process would have played out the way it should have. The excuse of Judge Strom overturning the jury verdict because of HIS concern for HIS judicial record doesn't appear right, even if it is legal.

Agman, do you or SH agree with the Supreme Court eminent domain decision?

 

[Anonymous]

Sandbag:

"You're talking in circles again. You justify lower prices with "Naturally the competition decreases as their needs are met." But then contradict yourself with a situation that pushes prices up "Competition between Excel and Swift increases for the remaining cattle."

There is no contradiction, you have combined two different statements. Another of the typical twisting spin jobs you are so fond of.

When any packer fills their needs, their aggressiveness in the market is reduced. Supply and demand. If Tyson has their needs met, that doesn't mean Swift and Excel did and it doesn't change the competitiveness between Swift and Excel to procure their own cattle needs.

One packer dropping their price to reflect their needs does not change the competitiveness of the remaining packers until they have all filled their needs which is usually close to the available supply.

The exception does not make the rule.

Sandbag: "How can Tyson lower their cash prices with Excel and Swift having increased competition for the remaining cattle?"

Tyson lowered their cash bids because they already met their needs in the formula market. That doesn't have a damn thing to do with the competitiveness between Excel and Swift.



~SH~

 

[Anonymous]

RM: "Agman, do you or SH agree with the Supreme Court eminent domain decision?"

If you are referring to the forced sale of private property for the good of a corporation? No, I don't agree with that decision and individual states are taking a different position on that issue.



~SH~

 

[Sandhusker]

SH, "Tyson lowered their cash bids because they already met their needs in the formula market. That doesn't have a damn thing to do with the competitiveness between Excel and Swift."

How can Tyson get their remaining needs met by lowering prices if Excel and Swift are still competing? If there was true competition, wouldn't the competition between Swift and Excel disallow Tyson from getting any cattle bought at lower prices? You STILL have not answered the question.

 

[agman]

If a jury always got the decision right, you wouldn't need a judge or an appeals process. Our judicial system has checks and balances in place for good reason.

In a jury trial, the judge is there to manage the proceedings and the jury is there to return a verdict. If the jury verdict was allowed to stand, the Appellate Court over turned it, and the Supreme Court refused to hear the case, I would have no problem with the case because due process would have played out the way it should have. The excuse of Judge Strom overturning the jury verdict because of HIS concern for HIS judicial record doesn't appear right, even if it is legal.

Agman, do you or SH agree with the Supreme Court eminent domain decision?

RM, you know better. Juries do not always get it right. The JUDGE, is given the right and obligation to see the verdict was consistent with the testimony. If not, he has a legal obligation to void the verdict. That is what the judge did. The judge has that responsibility, not the Appellate Court. He acted properly and within the confines of the law.

He overturned the case because the verdict had no merit. How foolish would he have looked to allow the verdict to stand. His concern for how it might appear was down the list to his legal obligation which he rightfully exercised and his decision was upheld UNANIMOUSLY. Are you suggesting it would be right for the judge to forgo his legal obligation and let an unjustified verdict stand-yes or no?

You have to be kidding to suggest if he let the verdict stand and the Appellate Court overturned the decision you could buy that process. I submit after seeing all your posts you would just find something else to complain about. To suggest otherwise is a cop-out.

Do you feed cattle and have you ever sold cattle on contract? I am just curious. For me the answer is "yes".

The Eminent Domain case is quite different then the Pickett case. There are two issues. One is the legality and the other involves execution of the law. I believe the ruling was legally correct. However, the execution of that EM law is very questionable and that will be ironed out in future legal cases. The limits to that right will be refined and that process is already underway. Personally, I believe old Nelly's house should be saved and the courts will refine and define that process. I believe most cases will be ruled in her favor; that will be a good thing.