Judge drops price-fixing case against packers

In one of the most complex antitrust cases against the country’s largest packers, a federal court judge in Minnesota ruled on claims brought forth by several major retailers and wholesalers against the packers, along with similar complaints filed by livestock and agricultural groups.

On May 28, a U.S. federal judge ruled against the small group of cow/calf producers in the case against the country’s largest packers over a drop in fed cattle prices in 2015.

Minnesota District Judge John Tunheim ruled the group of producers from Kansas, Missouri, Nebraska and Tennessee who filed claims against Tyson Foods, JBS S.A., Cargill and National Beef Packing Co. did not show how they were directly hurt or how the packers specifically conspired to bring down fed cattle prices in 2015.

The producers brought the class-action status for all who sold cattle in 2015 directly to the packers, and producers who sold cattle upstream to feedyards at lower prices.

This was the second ruling in the past nine months from Tunheim dismissing the cattle producers’ claims.

According to a Progressive Farmer article written by Ag Policy Editor Chris Clayton, the cattle producers argued the four largest packers conspired in 2015 to use their purchase power to bring down fed cattle prices and limit live trade in the fed cattle markets.

The producers declared the coordinated efforts caused a collapse in fed cattle prices in 2015, which also caused feeder cattle prices to collapse. 

They also argued they were indirectly affected by lower fed cattle prices because they typically sell cattle to feedyards or at auction.

Case details

According to the lawsuit, the conspiracy to suppress fed cattle prices has been running in the U.S. from at least January 2015, harming domestic producers of fed cattle. 

The producers in the case argued packers violated antitrust laws, including the Packers and Stockyards Act, when the companies conspired to suppress fed cattle prices, which in turn caused the prices of cows and calves to collapse.

While meatpackers have experienced record profits in recent years, U.S. ranchers have suffered, and this lawsuit argues ranchers have not mutually shared in the profits because the prices they receive for selling live fed cattle to packers are suppressed, due to collusion.

Fed cattle slaughter averages more than 25 million head a year, states the U.S. Department of Agriculture, and the leading packing companies process about 85 percent of those cattle, roughly 21.5 million head annually.

In November 2014, fed cattle prices peaked at $170 per hundredweight (cwt), but fell to around $125 per cwt by November 2015. 

Fed cattle prices bottomed out at $103 per cwt in September 2019. When COVID-19 hit in March 2020, fed cattle prices dropped to $99 per cwt.

The facts in this case were similar to claims Tunheim ruled against in August 2023 where JBS agreed to pay $52 million to settle claims by wholesalers in January. However, the cattle producers refiled their claims in October 2023.

More details

The Progressive Farmer article notes the cattle producers are just one set of plaintiffs in what is known as “Re: Cattle and Beef Antitrust Litigation,” No. 20-cv-1319 in the U.S. District Court of Minnesota, but there is a similar case in the U.S. District Court for Northern Illinois which was filed last year. 

The Minnesota court docket is full of reports from the packers detailing they have settled with other companies, individuals or have been dropped as defendants from other cases.

Tunheim states in his ruling cow/calf producers had essentially “relabeled themselves” as producers of feeder cattle who indirectly sold to one or more of the large packers. 

By going from cow/calf producers to producers of feeder cattle, it expands the case to include all “indirect sellers, including cow/calf entities, ranchers and backgrounders,” the judge concludes.

Tunheim further states only one of the producer-plaintiffs could possibly be considered a producer of feeder cattle, but all of the other producers have not demonstrated they are producers of feeder cattle and allege they were the target of an alleged conspiracy.

Feeder calves are inherently different than full-grown cattle the defendants process, he adds. 

The plaintiffs’ cattle are several steps removed from the packers’ alleged market manipulation, even if there is a tie between changes in fed cattle prices and changes in the feeder cattle market, Tunheim states.

Tunheim dismissed the cow/calf producers from the cattle and beef antitrust litigation case, which continues due to lawsuits from purchasers of beef, arguing the packers increased the margins between what they paid producers and what they charged for their processed products.

In addition, the federal government is wading into another antitrust fight, where Tunheim resides.

Last September, the U.S. Department of Justice filed a civil lawsuit against AgriStats, a defunct Indiana agricultural data firm who shared “anticompetitive” market reports and even encouraged meat processors to raise prices and reduce supply.

Melissa Anderson is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.