Cattlemen win case over Tyson


SALEM, Ohio – A Montgomery, Ala., jury awarded nearly $1.3 billion to cattlemen suing Tyson Fresh Meats for using marketing agreements to push down market prices.

The verdict in Pickett vs. Tyson Fresh Meats was announced Feb. 17 in the U.S. 11th Circuit Court of Appeals.

The 1996 complaint originally cited Iowa Beef Processors, or IBP, now known as Tyson Fresh Meats.

The class action suit represented cattlemen who sold cash cattle to IBP exclusively between Feb. 1, 1994, and Sept. 30, 2002.

The issue. The plaintiffs said Tyson’s forward contracts and marketing agreements let the packer “depress the market at strategic times in order to force producers to accept artificially low prices … “

Because Tyson controls a large quantity of cattle, the plaintiffs contended, it can slaughter, or threaten to slaughter, the cattle it controls, forcing producers to choose between selling cattle at low prices or being left without a buyer for their cattle.

“The plaintiffs’ experts showed that Tyson depressed prices by an average of 5.1 percent over the eight-year class period,” said Michael Stumo, general counsel for the Organization for Competitive Markets.

Stumo assisted the plaintiffs’ counsel during the trial.

Tyson will appeal. The packer said it will appeal if the judge does not set aside the verdict.

Tyson’s prepared statement called the verdict a “disappointment” and “only a temporary legal setback.”

Marketing debate. The statement said Tyson was just “caught in the middle” of opposing views over marketing agreements.

The packer lashed out at the plaintiffs, calling them “activists who oppose marketing agreements.”

“We rely on independent cattle operations of all sizes to provide a steady supply,” Tyson’s verdict response said.

The statement pointed out the company buys approximately three of every 10 market-ready cattle sold in the United States.

Economists disagree. Auburn University ag economist Robert Taylor testified for the plaintiffs, saying basically IBP used captive supplies to bid lower for cattle on cash markets.

Kansas State University’s Ted Schroeder refuted Taylor’s models, saying basic supply and demand factors accounted for low price cycles.

‘Captive supply.’ When buyers purchase fed cattle by captive supply methods, the supply of cattle that can be purchased by other buyers is reduced.

That by itself should increase prices for the remaining cattle. Other buyers, without captive supplies, need to bid more aggressively for a smaller supply of fed cattle.

It also means, however, that buyers with captive supply cattle need not be as aggressive in the cash market because they already have a portion of their cattle requirements met.


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