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By David Bowser LA JUNTA, Colo. — During questioning here at a debate between Terry Stokes of the National Cattlemen's Beef Association and Bill Bullard of R-CALF USA, Stokes was confronted by cattlemen fresh from their court victory over IBP in a class action lawsuit heard in Montgomery, Ala. Styled Pickett v. IBP (Pickett is Henry Lee Pickett, one of the plaintiffs who lives in Alabama), cattlemen’s suit against the world's largest beef packer accused it of using captive supplies to manipulate the cattle market. R-CALF supported the lawsuit. NCBA elected not to take a policy position because it had members on both sides of the issue and could not come to a consensus. "My question for you, Mr. Stokes, is who are you for, the cattlemen or the packers?" asked Sam Britt, a rancher from Grenville, N.M., and one of the original plaintiffs in the IBP suit. "I work for the cattlemen," Stokes said without hesitation. But he added there is no rule that to be a member of NCBA, a cattleman can't sell cattle to IBP. "Just because they're a member and they desire to sell the cattle the way that they want to, that's part of free enterprise in America for you to be able to sell cattle the way you want to," Stokes said. "Whether IBP did an injustice to you, I don't have the details of the case, but clearly when you look at our people, the cattlemen you see sitting here today, they're cattlemen just like you." "This case was the most significant event in the industry for 80 years," Bullard said. "The cattle industry has an obligation and responsibility to understand what went on in that case. "What that case said with respect to IBP was that having the ability to sell your cattle any way you want to doesn't include the packer's ability to depress cattle prices, to lower cash cattle prices, and then come to you and say the only way to beat that suppressed cattle price is with some kind of alliance, marketing agreement or forward contract." What the jury found is that IBP manipulated cattle prices, Bullard said, pushed them down, then came in and offered contracts to capture cattle that they could use strategically to continually depress prices. "It's unlawful," Bullard said. "It's been going on for a long time. Finally, the United States live cattle industry has begun to put a stop to it." Bullard said R-CALF wants to represent the cattle industry and take it back from those who have been trying to interfere with the otherwise free enterprise, open marketplace. Bob Rothwell of Hyannis, Neb., and one of the six plaintiffs in the IBP case, wanted to know NCBA's opinion on the case. Stokes said NCBA has no policy concerning the case, leaving the issues between the parties involved. Rothwell quoted Chandler Keys, NCBA's Washington lobbyist, as saying that the judge still has the opportunity to overturn the jury's decision and that he instructed the jury that the case was shaky to begin with. "Do you realize that statement is false?" Rothwell asked. "The judge never did that." (Editor’s note: The judge actually called the case "thin" in talking to the lawyers outside the presence of the jury. Beef magazine also quoted Keys as calling the ruling "a wakeup call to the beef industry," particularly those "involved or trying to get involved in a value-based marketing system.") Stokes said he's not familiar with the specifics in the case, but that there clearly are still more steps to come before it's resolved. "That's typical of all litigation," Stokes added. Bullard said the case was a matter of economic survival. "Because prices have been depressed by anti-competitive forces for at least a decade," Bullard said, "we can see that since 1998, when beef demand began to grow, you should have been drawing the economic benefits of that, but you do not." Captive supply issues have long been a point of contention among cattlemen. "We have been working to try and address the captive supply issue for a long time," Bullard said. "USDA has done studies and come back and said, 'You know, we realize there's a negative correlation between the volume of captive supplies and prices for cattle.'" The larger the captive supplies, the lower the prices. Bullard said, however, that USDA can't find a causation. "There's not cause and effect that they can prove," Bullard said. "The jurors did that." One of the most significant issues affecting the cattle industry, Bullard said, is whether or not the markets are functioning competitively. He said that issue was addressed in Pickett v. IBP, which he termed a landmark case. "A cattle organization has an absolute obligation to take a position," Bullard said. "Our position is that we value, above all else, open and competitive markets, fairness in trade. This case addresses the very heart of that." Pickett v. IBP, he continued, addresses whether or not independent producers can determine the value of their livestock through a competitive marketplace. "There could be nothing more important than that," Bullard insisted. He said the cattle industry is extremely important to the nation, and the cattle industry must rely on a competitive marketplace. The cattle industry, Bullard said, is unique for a major commodity because is derives its income from a competitive marketplace and does not rely on government price supports. If the cattle industry continues to support cases like Pickett v. IBP, cattlemen will never have to rely on government subsidies, he opined. A competitive market, Bullard said, will reward ranchers for improved management, improved genetics and improved quality of the cattle produced. "Pickett v. IBP represents the first time that the Packers and Stockyards Act, which is 80 years old, was used as a basis for litigation like this in a class-action lawsuit," Bullard said. There are two parts to the case, he pointed out. "There were the damages, which was headline news," Bullard said, "but the other part was injunctive relief. The plaintiffs had enough foresight when they went in this case to recognize that they weren't in it for the money. What was going on was a cancer that was starting within the industry that was minimizing, reducing the profitability of producers. So they are in the process now of devising the legal remedies, the structural remedies, to prohibit Tyson-IBP from continuing those price manipulative practices that have been depressing prices." He said the options include limiting Tyson's ability to engage in captive supply arrangements and requiring them to go into the cash spot market to obtain their livestock. "That's one possibility," Bullard said. There is also the possibility of repeating what happened in 1921, when the concentrated packing industry was broken up. "It was far less concentrated in 1921 than it is today," Bullard pointed out. "Tyson and three other packers control over 80 percent of all steer and heifer slaughter." These highly concentrated packers, Bullard contended, have been exerting their buying power all the way down the supply chain and affecting prices for each segment. "Now, it's been proven," he said. The next step is to prevent a recurrence in the marketplace. "If there is a positive benefit to what this case would do, it is a revision of the Packers and Stockyards Act," Stokes said, "which is what we've been advocating. We've got an antiquated law, just as Bill alluded to earlier, that needs to be revised." There don't need to be a lot of restrictions, Stokes said, and everybody should be able to market their cattle the way they want to, but the market needs to be monitored under the Packers and Stockyards Act so producers have the freedom to get greater profitability. |
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