R-CALF Sues Tyson, Cargill, JBS and National

Fri, 20 Nov 2020 05:24:19 GMT

Seeking to “prevent the big four packers from capturing the U.S. cattle market from independent U.S. cattle producers,” a class action lawsuit was filed in Chicago on behalf of R-CALF USA and four cattle-feeding ranchers against America’s four largest packing companies. The suit alleges violations of U.S. antitrust laws, the Packers and Stockyards Act, and the Commodity Exchange Act by unlawfully depressing the prices paid to American ranchers.

The suit, filed Tuesday, April 23, 2019, was filed against Tyson Foods, Inc., JBS S.A., Cargill, Inc., and National Beef Packing Company, LLC, and certain of their affiliates, who collectively purchase and process over 80% of the U.S.’s fed cattle annually. R-CALF and the four ranchers are represented by Scott+Scott Attorneys at Law LLP, a national antitrust and securities litigation firm, along with Cafferty Clobes Meriwether & Sprengel LLP. The four cattle feeders are from Iowa, Nebraska, Kansas, and Wyoming.

In a statement from Scott+Scott, the suit alleges that from at least January 1, 2015 through the present, the big four packers conspired to depress the price of fed cattle they purchased from American ranchers, thereby inflating their own margins and profits.

The class action lawsuit seeks to recover the losses suffered by two classes believed harmed by the packing companies’ alleged conduct. The first class includes cattle producers who sold fed cattle to any one of the firms from January 2015 to the present. The second class consists of traders who transacted live cattle futures or options contracts on the Chicago Mercantile Exchange (“CME”) from January 2015 to the present. The complaint, which plaintiffs claim is supported by witness accounts, including a former employee of one of the packers, trade records, and economic evidence, alleges that the packers conspired to artificially depress fed cattle prices through various means, including:

collectively reducing their slaughter volumes and purchases of cattle sold on the cash market in order to create a glut of slaughter-weight fed cattle;
manipulating the cash cattle trade to reduce price competition amongst themselves, including by enforcing an antiquated queuing convention through threats of boycott and agreeing to conduct substantially all their weekly cash market purchases during a narrow 30-minute window on Fridays;
transporting cattle over uneconomically long distances, including from Canada and Mexico, in order to depress U.S. fed cattle prices; and
deliberately closing slaughter plants to ensure the underutilization of available U.S. beef packing capacity.

The plaintiffs allege these practices are estimated to have depressed fed cattle prices by an average of 7.9% since January 2015, causing significant harm to U.S. ranchers.

A statement was issued by Tyson spokesman Gary Mickelson:

“We’re disappointed this baseless case was filed. As with similar lawsuits concerning chicken and pork, there’s simply no merit to the allegations that Tyson colluded with competitors. This complaint is nothing more than another transparent and opportunistic attempt by attorneys to make money for themselves at the expense of consumers. Tyson operates with integrity every day. We welcome competition, which makes us a better company, enhances the quality of our products and provides more choices at greater value to our customers. We depend on thousands of independent cattle, pig and chicken farmers and ranchers as a vital part of our supply chain. Contrary to the assertions in this lawsuit, Tyson wants its suppliers to succeed. Tyson will vigorously defend itself and its proud heritage of supporting America’s farmers and ranchers.”

R-CALF USA CEO Bill Bullard said, “We have exhausted all other remedies but now, with the expert help of Scott+Scott and Cafferty Clobes, our members’ concerns will be addressed and we hope U.S. cattle ranchers can be compensated for years of significant losses.”

“The impact of the packers’ conduct on American cattle ranchers has been catastrophic,” said David Scott, managing partner, Scott+Scott. “The health and integrity of the American cattle industry is being permanently and irrevocably damaged, independent ranchers are systematically being driven out of business, and consumers are losing the ability to buy high-quality American beef with confidence.”

“The packers’ alleged conduct has had a direct and significant impact on the commodities underlying CME live cattle futures and options contracts,” said Anthony Fata, partner, Cafferty Clobes. “It is imperative for investors to maintain confidence in this vital financial market, relied upon by ranchers, traders and others to manage the risks associated with their businesses.”

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R-CALF Asks DOJ To Block National Beef Merger

Industry Needs More Insurance for FMD Response

Fri, 20 Nov 2020 05:23:01 GMT

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The following commentary does not necessarily reflect the views of AgWeb or Farm Journal. The opinions expressed below are the author’s own.

No one enjoys paying insurance premiums, but we like even less the prospect of paying mountainous uncovered bills for a hospital visit or vehicle accident. When investing in insurance, we conduct a basic risk-reward analysis, and generally decide the risks of catastrophic expenses justifies spending smaller amounts for the safety net an insurance policy provides.

For years, the U.S. livestock industry has realized we need a better insurance policy against the risk of devastating foreign animal diseases, and particularly foot and mouth disease (FMD). While FMD hasn’t appeared in the United States since 1929, the disease is highly virulent and endemic to much of the world.

Clearly, the United States has made wise insurance investments in domestic and global surveillance, policy and biosecurity at our borders. Those systems though, are increasingly stressed by growth in international travel and opportunities for the FMD virus to enter the country either intentionally or not. Simply put, we need to update out insurance policy. It’s like when your teenage son or daughter obtains a driver’s license – your insurance premiums will increase, but the coverage is almost definitely worth the expense.

This week, we see another reminder of this need for expanding our FMD insurance to include a more ready supply of FMD vaccines. A new report from the U.S. Government Accounting Office (GAO) again reminds us of a deficiency of our FMD insurance – inadequate supplies and production capabilities for FMD vaccines. “An FMD outbreak in the U.S. could have serious economic impacts, in part because trade partners would likely halt all imports of U.S. livestock and livestock products until the disease was eradicated,” the GAO said in the report.

Current thinking has shifted away from mass culling or “stamping out” as the primary strategy for responding to most FMD outbreaks. Instead, today’s plans place more emphasis on large-scale vaccination as a means of containing the disease while allowing carefully regulated movement of cattle and continuation of commerce.

The volume of vaccine needed would depend on the type and scope of an outbreak. Dr. James Roth, director of Iowa State University’s Center for Food Security & Public Health (CFSPH), has defined six types of potential FMD outbreaks, ranging from Type 1, a focal outbreak, to Type 6, a catastrophic North American outbreak. At the lower end of the scale, the response likely would focus on culling all infected or exposed animals in the affected zone. But as the outbreak spreads to a larger regional or national scale, stamping out becomes unrealistic, and the response would shift toward alternative strategies including vaccination that could involve millions of animals.

The USDA, with input from industry, has developed a detailed “ Foreign Animal Disease Preparedness and Response Plan ,” which focuses on FMD along with other foreign animal diseases. As a component of that plan, the CFSPH, in cooperation with Kansas State University, University of Minnesota, and University of California-Davis, have developed the Secure Milk Supply (SMS) and Secure Beef Supply (SBS) Plans, which focus on maintaining business continuity while aggressively mitigating an FMD outbreak. Vaccination plays a key role in these plans, along with culling, managing livestock movement, sanitation, biosecurity, surveillance and other components.

The 2018 Farm Bill signed into law in December by President Trump included more funding for USDA’s animal health and disease preparedness programs, such as money for an expanded animal vaccine bank for FMD. The National Cattlemen’s Beef Association (NCBA) and the National Pork Producers (NPPC) Council, among others, supported authorization of a new FMD vaccine bank.

The GAO report faulted the USDA’s APHIS agency for failing to complete certain corrective actions that it said were identified multiple times, including “developing a process for prioritizing and allocating the limited supply of FMD vaccine. Because of the limited supply of vaccine and the potentially high demand for it, USDA would likely face the challenge of deciding how to allocate it in an FMD outbreak.”

The report notes the challenges in developing a vaccine bank for a virus with at least 10 major subtypes. The GAO authors say that if a vaccine is matched to the appropriate FMD subtype, a single dose can protect cattle for six months, while two doses provide the same protection to swine. According to the report, USDA’s Animal and Plant Health Inspection Service (APHIS) estimates 25 million doses for each subtype as an appropriate minimum target. However, the U.S. currently has access to only 1.75 million doses of each subtype available in the vaccine bank.

In a 2014, CFSPH white paper titled “ FMD Vaccine Surge Capacity for Emergency Use in the United States ,” Dr. Roth estimated the cost of funding adequate surge capacity at $150 million per year for five years — a relatively small price to protect a livestock industry that generates $100 billion per year in cash receipts. Budgets are naturally tight though, and foreign animal diseases compete with numerous other priorities and a seemingly endless series of natural disasters affecting agriculture.

So, while the USDA and the livestock industry have made great progress in preparing for FMD, continued industry support and encouragement will be necessary for further investments in upgrading our insurance policy.

For more on this topic, see these articles on BovineVetOnline:

Low FMD Vaccine Bank Leaves U.S. Pigs and Cattle Vulnerable to Disease

AVMA Wants Expanded FMD Vaccine Bank

Threat of Foreign Animal Disease Deserves Attention, Funding

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R-CALF Sues Tyson, Cargill, JBS and National

Industry Needs More Insurance for FMD Response