THE FINAL WORD Issue 87 Feb. 20, 2004

Alan Guebert

1.) Cowboy justice clips meatpackers

In days of yore, cowboy justice involved six-shooters, a length of sturdy rope or both. Today, it involves federal courts, a gaggle of sturdy lawyers or both. On Feb. 17, a six cattlemen and their small gaggle of lawyers shook every bone in America's concentrated, collusive red meat industry when a federal jury in Montgomery, AL, ruled unanimously that Tyson Foods illegally pushed down US cattle prices. The jury awarded $1.28 billion in damages to the class of cattle sellers (estimated at 30,000) represented by the plaintiffs in the civil lawsuit and ordered the court to remedy the price-depressing affect packer-controlled livestock have on cash cattle prices. The verdict, called the most important event in the livestock industry since the passage of the Packer & Stockyards Act of 1921, was the result of an eight-year-long lawsuit that pitted the cattlemen against the meatpacking powerhouse. Tyson, easily the world's largest integrated poultry producer, became the nation's largest beef packer with its $2.9 billion, 2001 purchase of IBP. The case, named Pickett after its lead plaintiff, alleged that spot market cattle sellers received lower prices from IBP from early 1994 through late 2002 because the giant packer used its captive cattle supply to beat down cash prices. That action, alleged Pickett, violated the Packers & Stockyards Act. "We knew we could win (the lawsuit) if we got the facts before a jury of our peers," said Johnny Smith, one of the plaintiffs and a South Dakota cattleman, Tuesday. "All we did was show what every cattleman has known to be true for years--today's cattle markets are rigged." Plaintiff attorneys used cattlemen testimony to explain to the 12-person jury just how dysfunctional today's cash cattle market has become because of packer contact cattle: tiny, often less-than-an-hour per week selling windows to price market-ready beef; one-time take-it-or-leave-it bidding by single buyers; and buyer boycotts of selected sellers. "These guys are nothing but old-time gangsters, thugs and thieves," noted Mike Callicrate, a one-time Kansas cattle seller to Tyson/IBP and a Pickett plaintiff. "They beat your brains in with their market power and take your money." In trial testimony, C. Robert Taylor, an ag economist at Auburn University, hung numbers on Callicrate's claim. According to Taylor, econometric modeling suggested Tyson was able to lower spot market cattle prices $5.62 per hundredweight for every 100,000 head it controlled through contracts. Moreover, estimated Taylor, since Tyson controlled nearly half of the 9.5 million cattle it slaughtered annually, spot market sellers to it were drilled for $2.1 billion from early 1994 to late 2002. Tyson attorneys countered Taylor with experts of their own. According to sources who attended the trial, several Tyson witnesses, like IBP's cattle boss Bruce Bass, however, helped the cattlemen more than the packer. For example, when asked to explain IBP's cattle-buying regime, Bass noted that he informed IBP's 75 or so cattle buyers four times daily as to the supply of cattle IBP had on hand through it contracts and open market buys. He then advised them on the number of animals to purchase on the spot market and what price they should pay. Bass further explained that some weeks IBP owned as much as 190 percent of its kill needs--90 percent more than it could push through its beef slaughtering plant. Those vast amounts were the result of both controlled and spot market purchases. When that happened, Bass said, he told IBP buyers to lower spot market bids. Another defense witness, say sources, did equal damage after he asserted that one reason Tyson contracted cattle was to ensure ample supplies of "quality" cattle required by Tyson's meat buyers. Economist Taylor, however, refuted that assertion by using IBP meat quality data to show that Tyson had actually bought more quality cattle on the spot market than through contracts. "I thought much of the evidence supplied by Tyson witnesses showed there was no relationship between captive supplies and quality," noted Michael Stumo, general counsel at the Organization of Competitive Markets (OCM) who also advised Pickett attorneys. In fact, says Stumo, "Tyson never offered any evidence, testimony or internal studies to show captive cattle increased plant utilization, improved meat quality consistency or enhanced the company's ability to deliver a high quality product to its customers." Given that shortfall, Stumo adds, "IBP/Tyson gave it their best comprehensive shot in court after having eight years to prepare and a jury found their arguments were either contrived or not true." Plaintiff Smith was jubilant victory. "No one outside our group thought we could win, but we beat Goliath. And we beat them without help from what is supposed to be the cattlemen's best friend, the National Cattlemen's Beef Association." Indeed, says OCM executive director Steve Cady, "The NCBA--and the USDA, for that matter--never once helped the Pickett plaintiffs over the eight years this case has been around. That's pretty astounding. I mean this was the biggest trial in the cattle industry in nearly a century and neither played any role in it? Wow." Then again, as I noted in the Farm and Food File for Feb. 22, the absence of both "only proves that if you toss Tyson--or, for that matter, any meatpacker--in a sack with USDA and NCBA and then roll it down a hill, there would be a chicken on the top all the way down."

2.) Cowboys 1, Tyson 0; now what?

The cowboy-favoring Pickett decision is but the first step to restoring fair, transparent markets to US livestock producers, says Michael Stumo, OCM general counsel. The next step means going back to court. According to Stumo, Pickett plaintiffs sued Tyson with two specific goals. First, they wanted Tyson to reimburse them for the losses they felt Tyson had imposed on them in the cash cattle market. The jury agreed, awarding $1.2 billion in damaged to cash cattle sellers who dealt exclusively with IBP/Tyson. The jury also awarded the plaintiffs injunctive relief. In short, explains Stumo, the jury told the court to fix the broken system. "That's a more difficult problem," he says. What could injunctive relief look like? In a Feb. 19 Wall Street Journal story, plaintiff attorney David Domina gave this view: "to limit significantly the ability of the nation's biggest meatpacker to use contractual arrangements to control cattle before they are ready to be slaughtered ..." If the trial judge agrees, notes the Journal story, "The nation's meatpacking giants could be forced to return to the way they did business two decades ago--scrambling each day to buy enough cattle to keep their plants busy." Domina hinted that he might be willing to settle for Tyson having to buy 90% of its slaughter requirements in the open market. Presently, it's guessed that Tyson buys more than 50% of needs through previously negotiated contracts. At this point, however, explains Stumo, both Tyson and the winning plaintiffs will submit their injunctive relief ideas to the judge, U.S. District Judge Lyle Strom who--despite being from Omaha--was assigned the Alabama case because of his cattle market knowledge. Additionally, Strom is also on senior status--basically, semi-retired. As such, explains Stumo, he can devote more time to difficult and potentially lengthy trials. And he will. In addition to presiding over the injunctive phase of the Pickett case, Strom also is the judge of record for two more Packers & Stockyards lawsuits similar to Pickett. Both allege market monkey business by packers--one suit names Cargill's Excel as defendant; the other names Swift--who use captive supplies. Additionally, Tyson says it plans to appeal the Pickett decision.

3.) USDA mad cow miracle: Downer cows that walk

And now for the latest ricochet from the gang that has yet shoot straight. Contrary to ardent claims made by USDA, three eyewitnesses at the Moses Lake, WA slaughter plant where America's single mad cow was discovered say the animal walked to its demise Dec. 9. In short, the tallwalker USDA has repeatedly labeled as a downer was, in fact, walking tall when it was put down, according to the trucker who hauled the cow to the plant, the plant technician that actually killed the animal and the plant's co-manager. If true, the information means one of two things: either USDA covered up the actual events surrounding the BSE cow or the Washington state downer cow pulled off the greatest comeback since the 1969 New York Mets. The news of the Lazarus-like downer, reported by the Associated Press and the Washington Post Feb. 18, first surfaced in an 18-page affidavit from Tom Ellestad, co-manager of Vern's Moses Lake Meats, to the Government Accountability Project, a Washington, D.C. watchdog group. According to Ellestad affidavit, "The BSE-positive cow was not a downer." Before the affidavit landed on page 2 of the Post, however, it landed at the House Committee on Government Reform, Congress's government watchdog. Committee Chairman Tom Davis, R-VA, and Ranking Minority Member Henry Waxman, D-CA, said the new information, if accurate, means "USDA's (BSE) surveillance system may need to be significantly expanded." In an 11-page, highly detailed Feb. 17 letter to USDA boss Ann Veneman, the congressmen noted that the affidavit held "serious implications for both the adequacy of the national BSE surveillance system and the credibility of the USDA." It then listed three points it said the committee would investigate. First, "Three eyewitnesses say that the BSE-infected cow was not a downer." Second, "The BSE-infected cow was not tested because it was a downer cow." And, third, "USDA had information stating that the BSE-infected cow was not a downer cow." The Davis-Waxman letter notes that co-manager Ellestad "faxed a handwritten letter to USDA's Boulder District office (on Jan 6, 2004) regarding his observations. Mr. Ellestad's fax disputed the assertion that the BSE-infected cow was sampled because it was a downer. The fax stated, 'the brain sample was not taken because this animal was non-ambulatory.' USDA has not released this information to Congress or the public." What's going on here? First, more evidence has now surfaced that USDA simply was lucky--or unlucky, given your point of view--in catching the Washington State BSE-cow. The animal wasn't tested because it was a downer; it was tested out of pure chance. In fact, Ellestad's affidavit claims the Moses Lake slaughterer had stopped accepting downer cows in Feb. 2003. Moreover, according to Ellestad, a Washington state official told him on Jan. 19, 2004, that the cow had never been a downer cow. Indeed, claimed the meatpacker, the official had noted the cow had "walked through the milking barn 3 or 4 days ..." after calving in late November. It now appears that the cow was tested, according to the Davis-Waxman letter, because the Ellestad slaughterhouse "was initially asked to participate in USDA's BSE surveillance program around June 2003. USDA offered ten dollars for every sample taken from downer cattle up to a total of 1,000 samples." However, Ellestad declined the generous USDA offer because--quite simply--the slaughterhouse did not accept downer cows. But USDA was insistent, Ellestad is quoted in the Davis-Waxman letter, because "they were having real difficulty getting plants to sample and that they were having difficulty getting the number of brain stem samples that they were expected to get." According to Ellestad, "USDA was so needful of getting samples, that they backed away from the requirement that tested animals be downers and eventually, a modified contract was offered to us." (Emphasis added by Davis and Waxman in the letter to USDA's Veneman.) Holy cow. According to Ellestad, not only did the Moses Lake plant not take downer cows, USDA knew it didn't take downer cows. And even after USDA knew the plant didn't take downer cows, it altered its lucrative BSE-testing offer to Ellestad because it was "so needful of getting samples" to prove that it was doing some--and, evidently, any was fine by it--testing. Even more remarkable--and against unfathomable odds--a BSE-positive animal walks into the Moses Lake slaughterhouse Dec. 9 and is tested before ascending to hamburger heaven. Two weeks later, USDA claims the animal was a downer despite an already clear line of established evidence to the contrary. Ever loyal Annie, however, stuck to her guns. On Feb. 19, Veneman maintained the cow was a downer. This is not at all surprising. The current gang at USDA, like the gang at the White House, seem almost pathological in their belief that the public and the press must disprove their lies before they admit the truth. More importantly, they believe, if we let their words, actions and ideas go unchallenged or if we fail to completely rout their white lies, half-lies and bald-faced lies, well, then it's our own dumb fault that we then are misled. It's gutter government at it worst, and USDA's mad cow madness takes it--really you and me--even deeper into the gutter. Once upon a time not so long ago, truth was the coin of the realm in American government. Today, with this USDA and White House at least, truth is just another downer to be disassembled, like so many cow parts, and tossed into the meat grinder.

C 2004 ag comm The Final Word comes to you each Friday by special arrangement. Alan Guebert's regular column, the Farm and Food File, is published weekly in more than 70 newspapers around the US and Canada. Contact him at AGuebert@worldnet.att.net.