Posted on: Wednesday, February 18, 2004

Jury finds packer skewed beef price

By Margaret Webb Pressler
Washington Post

A federal jury in Alabama awarded $1.28 billion to cattle farmers yesterday, deciding that a beef-processing giant used its dominance of the $70 billion beef industry to manipulate prices for cattle on the open market.

Tyson Foods Inc. said it intends to appeal the verdict in the case filed against IBP Inc., which Tyson now owns. The judge has yet to decide on a possible injunction.

The jury's decision could be a first step toward reversing the kind of power that big businesses gained by consolidation in the cattle and beef industries. Smaller cattle operations are pitted against corporate ranches and the few, but powerful, packing plants.

The class-action suit was filed in 1996 against IBP, which Tyson bought in 2001.

At issue are long-term contracts that Tyson and other packers are using. The contracts allow Tyson to order cattle to be delivered at a future date, to be paid for upon delivery.

The plaintiffs argued that Tyson used long-term contracts for days or weeks at a time, staying out of the open market. The long stretches of inactivity by the industry's biggest buyer would cause the price of cattle to fall, sometimes precipitously, plaintiffs argued, at which point the company would buy again, benefiting from the lower prices.

The jury found that such practices violated the Packers and Stockyards Act of 1921, which forbids meatpackers to depress prices.