The Canadian cattle industry showed no interest last week in supporting
American cattle producers who say they were victims of insider trading
by four major United States meat packing companies.
The group of American cattle producers and feedlot operators alleges
that for over a month in the spring of 2001, the four slaughter houses
bought millions of head of cattle from producers while knowingly using
false and deceptive pricing reports that caused live cattle prices to
be below market value.
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The group has launched a class action suit to get compensation. The
companies named in the lawsuit have denied the allegations against them.
Dennis Laycraft, executive vice-president of the Canadian Cattlemen’s
Association, said July 4 that the issue was not under discussion by his
association.
He made it clear that the CCA is more interested in co-operation than
litigation when it comes to its relationship with packers.
“We find that if we work together, we find solutions faster than if we
work against each other.”
The American lawsuit is against Tyson Foods, Inc., which recently
bought IBP Inc.; Excel Corp., a division of Cargill; ConAgra Beef Co.;
and Farmland National Beef Packing Co.
IBP and Cargill also own the two largest cattle packing plants in
Western Canada. Both are in Alberta.
Due to the political nature of the issue, Anne Dunford of Canfax, the
market analysis arm of the CCA, declined comment on whether there is
any basis for the lawsuit lodged in the U.S. and, if price distortion
is found, whether it might have affected cattle prices in Western
Canada.
The plaintiffs named as class representatives in the suit include:
Herman Schumacher, a livestock market operator and cattle producer from
Herreid, South Dakota; Mike Callicrate, a cattle producer and feedlot
operator from St. Francis, Kansas; and Roger Koch, a cattle feeder from
Omaha, Nebraska.
They launched the suit on behalf of all American cattle owners who sold
cattle to the four packers in April and May 2001.
The plaintiffs claim the packers used faulty price reports to drive
down live cattle prices at that time. They say that for nearly a month
in the spring of 2001, the United States Department of Agriculture
reported the price of boxed beef was falling sharply when prices were
actually rising.
The plaintiffs allege that the packers were aware of USDA’s mistake,
but instead of correcting the error, they took advantage of it by
basing their bids for live cattle on the faulty data.
The packers pocketed an extra $40 million US because of the flawed
price reporting, according to the plaintiffs, who argue that money
should be paid to producers who sold cattle to the packers during the
period in question.
“When the price reporting error was discovered, live cattle prices
jumped immediately $40 to $50 per head,” said Schumaker, one of the
plaintiffs.
Mike Callicrate, another of the plaintiffs, said the lawsuit is about
holding the big meat packers accountable.
“In a tacit meeting of the minds, our nation’s four biggest packers
agreed to say nothing when they all knew the boxed beef prices, which
they reported to USDA, and upon which cattlemen relied for negotiating
their cattle prices, were misreported and incorrect.”
