“Farmers buy retail, sell wholesale, and pay the freight both ways”

— JFK

On October 16 a class action lawsuit was filed by Pacific-Agri Products, a beef distributor, against the four largest beef packers accusing them of collusion and violating Anti-trust laws. These packers/crooks accused in the suit controled 81-85% of all beef sold from 2015-2018. The lawsuit says that Tyson, Cargill, National, and JBS worked together from 2015-2018 to reduce the number of cattle slaughtered which created, "artificial Beef supply restraints." Reducing the slaughter numbers works to fill packer pockets on both ends. They are able to put the squeaze on ranchers because there are too many cattle. Ranchers can't feed them forever and have to take what they can get. The packers are then able to charge more for beef, because wholesalers, like Pacific-Agri Products, are under supplied and have to pay through the nose for the beef they can get. Fortunately for the wholesalers, they are able to pass the costs of their screw job on to the consumer. Unfortunately for the ranchers raising cattle they have to take what they can get. There is no one to pass their screwing onto, and they, "pay the freight both ways."

Cartoon from 1912. This is not a new problem. Beef trusts were one of the main reasons Anti-Trust laws were first enacted.

Can I get a witness?

Yes, you got a witness. The lawsuit is based on the first hand accounts of an employee that worked as a Quality Assurance officer for one of the packers. This witness worked with a Fabrication manager at the plant. The manager made it clear to the witness that all 4 packers had an, "agreement" about reducing the number of cattle slaughtered when prices got too high. According to the lawsuit, "Witness 1 reports that he was in the Fabrication Manager’s office when the Fabrication Manager received an angry phone call from his immediate supervisor, who worked out of Defendant(packer) 1’s central office. After the call concluded, Witness 1 reports that he asked the Fabrication Manager how “many are we [Slaughter Plant 1] cutting [i.e., fabricating]?” Witness 1 reports that the Fabrication Manager replied the “cut” was going to be steady that day, but that the “kills are getting cut back, [because the] price is getting too high” (or words to that effect). Witness 1 then reports asking the Fabrication Manager whether other Defendants’ plants were also cutting back their kill. Witness 1 reports he recalls that the Fabrication Manager answered Witness 1’s question as follows: “Yes, they are. We have had that agreement that we don’t kill while prices are up for a while” (or words to that effect).” Get a rope.

Seems pretty cut and dried, if it was up to me we could just go ahead and string the corporate thieves right up. Too bad that’s not how it works, but there is a lot more evidence to back up what good ol' witness 1 is saying. The witness claims that this manager had previously worked for another of the big 4 packers and was still in contact with his replacement. Also that the manager had contacts with all the other packing companies in what the suit refers to as the, "cartel," which seems appropriate. Not pulling any punches, they're just letting everyone know this is a criminal organization we are dealing with here.

Shutting down plants, shutting down towns

To back up the claims they list the number of packing plants that were shut down as a lead up to the reducing of slaughter numbers in the plants that were left. There was plenty to list. 12 total packing plants shut down in about 30 months. According to the suit, "Defendants’ plant closures, even excluding the continued idling of the Nampa plant, stripped out approximately two million head from the industry’s annual slaughter capacity." If the cartel works together they can agree to increase their margins to increase profits. If they weren't working together wouldn’t they be competing for cattle and trying to increase profits by increasing their share of the market by processing and selling more.

What they don't get into is the impact that the closures had on these small towns and the people in them. Most of the closures happened in towns whose economies relied on the plants and the folks that worked in them. Folks whose families rely on them. The lawsuit looks at the impact on the market. What it doesn't go into is the number of peoples lives that were impacted by what seems to be a concentrated effort by corporate crooks to manipulate the beef market.

Always about the money

Ranchers will always remember 2014. That is when cattle prices peaked and they were living high on the hog(cow.) Around November of that year the prices took a nose dive and didn't stop for a while. The funny thing was that beef prices didn't drop, and since then there hasn't been the same correlation in cattle and beef prices as there always was before. As the lawsuit states, "Prior to 2015, the prices of cattle and Beef generally moved in tandem with a reasonably constant relationship (or margin) between them....In a competitive market, lower cattle prices would lead to correspondingly lower wholesale Beef prices. But once the conspiracy was initiated, the spread between cattle and Beef prices diverged significantly."

You might be asking now, "If cattle ranchers are getting screwed the worst, and the evidence is this obvious, why aren't they suing?" Well, they are. In May of 2019 a group of cattlemen along with a cattle producing organization called R-Calf, Ranchers-Cattlemans Action Legal Fund, filed a very similar lawsuit against the packing cartel. Not much attention has been paid to this lawsuit so far because of a problem that all cattlemen have, and that, is that the much larger, most well funded cattle ranching organization, also represents... beef packers.

The Cattle Con

The National Cattlemans Beef Association, NCBA, is the nations largest cattle producer organization. They would be the perfect organization to bring attention to the screwing that the packers are giving everybody. They have lobbyists that could take it to lawmakers and enforcers. They have PR that could bring it to the public. But they don’t because they also represent the cartel. What's amazing is that both lawsuits give the NCBA's annual convention, what they call CattleCon, as "opportunities for beef packing defendents to meet and collude." This convention is something that packers attend and where they are free to discuss just how exactly they can put the screws to the other attendees. I guess this gives a whole new meaning to the term CattleCon.

The real cattle con is the fact that cattle producers actually have to pay to promote beef packer products and also, help pay for these, "opportunities to collude," through the beef checkoff. The beef checkoff is a program where every time cattle sell, one dollar per head is taken out of the check. That money is supposed to be used to promote beef, which would be alright except now beef prices seem to have nothing to do with the price of cattle. The NCBA gets the majority of this checkoff money, and meetings of the Beef Checkoff program are also listed as an, opportunity to collude, because they are also attended by the beef packing cartel. So while the beef packing cartel is screwing everybody, the ones who are definitely getting the worst of it are the cattle producers. Ranchers are quite literally paying to give the cartel "opportunities to collude."

Another problem with the NCBA representing beef packers is that they are also a major advertiser for agriculuture media companies. Which means no one working in ag media wants to piss them off. So, much of what the packers are doing is going unnoticed. While these lawsuits have been reported on in ag media publications the details, like the witness testimony, and the NCBAs involvement, for the most part have not been reported. Meaning many ranchers have been left in the dark, but thanks to some ranchers who are also becoming media members there is some light shining through. Jerod McDaniel is a farmer and rancher in Oklahoma and on his, (completely independent) podcast Ag Uncensored he was able to ask the NCBA's VP of Communication John Robinson some real questions, the answers shed a lot of light on who the NCBA is truly representing. When asked about the increasing margin for packers part of his response was, "There wasn't a lot of sympathy for the packer in 2014 when the cow calf producer was making a pretty good margin." And when asked about packer collusion, Robinson said, "The fact that they are working together is just a fundamental misunderstanding of really what the packer sector is in this country." So who does the NCBA represent again?

I know that there are great people who are members and who work for the NCBA. I know the NCBA does some great things for the cattle industry. When I started writing about the beef industry, I had no opinion about the beef packers, the NCBA or Ag media. I just love cows. Always have. Loved raising them, working with them, eating them. Love the beautiful goods they leave behind. My whole life I've read about the history of the cattle industry, and then I started writing myself. I just started doing what I have always thought good writers do, search for truth. That is what brought me here. I didn't read these lawsuits excited to find anything. I read through them with complete disappointment. It is depressing to find the lengths that are gone to.

The Bedfellows

They are bedfellows. Not just the packing cartel of Tyson, Cargill, JBS, and National, but also the rest of them. The media that turns a blind eye. The NCBA and the checkoff that covers up and makes excuses. The USDA and government agencies that are supposed to investigate and enforce Anti-Trust laws. I'm sure that they will say it is all a conspiracy, but I don't think two incredibly detailed lawsuits on both ends of the packing cartel business is a conspiracy. If you do you haven't read them.

Pacific Agri-Products Complaint Click Here

Ranchers and R-Calf Complaint Click Here

I'm sure the bedfellows would say, that I am a nobody. Just a hired man who has a "fundamental misunderstanding" of the cattle business. And they would be exactly right. I don't understand. I don't understand the amount of greed it would take to become partners with your competitors, just to screw over everyone else. I don't understand how packers could work together, so they can sit back and watch massive profits roll in, while ranchers struggle and go broke. I don't understand how the media can ignore and refuse to report on what the packers are doing and the details of these lawsuits. I don't understand how an organization that is supposed to represent ranchers can also represent and make excuses for companies that work to put ranchers out of business. I don't understand how ranchers can be forced to pay money into the checkoff for beef promotion, when beef prices only increase profits for packers. The more I learn the more I realize...I don't understand any of it.

P.S. This is the start of a series on the bedfellows. There is more coming about, captive supply, the Tyson fire, and Tyson and Cargill’s continued financing of the fake meat industry. Stay tuned.