By Jennifer Rockne
First published in the spring 2004 Insurgent
In a potentially transformative federal court decision, ranchers won a class-action lawsuit against the meatpacking giant, Tyson Foods, Inc., for violating the Packers and Stockyards Act of 1921 — created to protect farmers from the tyranny of that era’s meat giants. The suit was filed in 1996, when Tyson was known as IBP Inc. Tyson was ordered to pay $1.28 billion, spread among up to 35,000 ranchers. The corporation’s attorneys vowed to appeal the Alabama jury’s decision.
The system of regional meatpackers and competitive markets has given way to one in which producers sell, usually by pre-arranged contract, to any of four massive corporations — Cargill/Excel, Tyson/IBP, Farmland National Beef, and Swift/ConAgra, which jointly control nearly 85% of the market.
The Tyson case, and others pending against Cargill/Excel and Swift/ConAgra, stems from a practice in which cattle buyers contract for cattle ahead of the time of sale, then “store” the cattle to drop the bidding price. The Tyson verdict is the largest to date against anti-trust law abuse known as monopsony (or oligopsony), the opposite of monopoly. In a monopoly, the seller raises prices paid by buyers, while in a monopsony, a dominant company uses its market power to depress the prices it pays suppliers below what they would receive in a competitive market.
Though the meat processing industry is an oligopsony nationally (Tyson controls about a third of the market), a single company often enjoys a monopsony in a particular region.
Increased corporate concentration and lack of federal enforcement of anti-trust law across several industries is sparking a wave of civil litigation. The Tyson verdict is an encouraging sign that some courts may enforce laws that industry-coopted regulators are failing to uphold.
Meanwhile, on Feb. 24, the 3rd Circuit U.S. Appeals Court ruled a national milk “check-off” fee unconstitutional on grounds that it violates First Amendment rights. The plaintiffs in Cochran v. Veneman (Ann Veneman, U.S. Secretary of Agriculture) were family farmers who raised free-range, hormone-free cows. They believed the mandatory fee, collected by the federal government to promote milk as a generic commodity, undermined their product and amounted to forced speech with which they disagreed.
Federally-mandated commodity checkoffs are now 0 for 3 in recent appeals court rulings. Pork and beef check-offs (the beef case is under appeal to the U.S. Supreme Court) also were ruled unconstitutional for the same reasons as the milk fee.