- The Ranchers Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF) and other cattle ranchers filed a class action lawsuit Tuesday against major U.S. meatpackers — including Tyson Foods, Cargill, JBS USA and National Beef Packing Co. — accusing them of a conspiracy to minimize prices paid to ranchers for cattle in order to inflate their own margins and profits.
- The complaint, filed in U.S. District Court in Northern Illinois, seeks compensatory and punitive damages.
- According to the complaint, the "Big Four" beef companies started their scheme in 2015, when beef prices reached a record high. They worked together to keep the price of fed cattle low, artificially reducing supply while boosting their own profits. According to a release from the law firms representing R-CALF, these practices depressed cattle prices by an average of 7.9% during the last four years.
The animal protein industry has faced many accusations of price fixing in recent years. This latest case accuses Tyson, Cargill, JBS and other meat companies of importing foreign cattle at a loss, closing slaughter plants and reducing purchase volumes to fix prices.
These four beef-packing companies hold big influence over the industry since they buy and process more than 80% of fed cattle in the U.S., according to a release. This lawsuit says they used that power to violate federal antitrust laws, as well as laws designed to ensure fair competition in meat markets and fairness on commodity exchanges.
These accusations aren't rare in the food industry. Price-fixing lawsuits have also been filed about dairy, tuna, pork and chicken. Tyson and JBS could be especially feeling the pressure, since they have also been accused of conspiring to fix prices of chickens and pork. Some of those cases are still pending, but others have settled. Fieldale Farms, a chicken producer in Georgia, agreed to fork over $2.2 million last year to release itself from a class-action lawsuit for its role in a price fixing scandal in the broiler chicken industry.
Price fixing can be difficult to definitively prove. Justin G. Gardner, associate professor of agribusiness at Middle Tennessee State University, previously told Food Dive that raising prices is a cycle that companies fall into, and can be a complicit act that might not leave a paper trail of evidence.
The meatpackers targeted in this lawsuit will surely fight hard against these accusations to protect their reputations and relationships with other ranchers. In a written statement, Tyson told New Food Economy the lawsuit was "baseless."
"This complaint is nothing more than another transparent and opportunistic attempt by attorneys to make money for themselves at the expense of consumers,” the statement said. “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."
But this lawsuit could be different because it claims to back up its argument with witness accounts, trade records and economic evidence — including comments from a former employee of one of the Big Four firms.
In 2004, Tyson lost a case in which it was accused of price fixing in the cattle industry and lost. Although the company denied the accusations, a federal jury in Alabama delivered a $1.28 billion guilty verdict — setting a rather expensive precedent.
Although this case may not ultimately see trial, another price fixing lawsuit hitting big meat companies can only lead to more reputational damage. Regardless of what happens here, the pile up of price-fixing cases facing the meat industry could hurt bottom lines if consumers and suppliers lose trust in the large producers.