When four companies control 80 percent of the supply in a marketplace, even the most conservative economists would likely admit the potential is high for market manipulation. This is the case in the world of meatpacking, where four packers -- Tyson, Cargill, JBS and National Beef -- rule the scene. That's why, last year, the U.S. Department of Agriculture promulgated rules that would limit the ability of these companies to engage in practices that controlled the market unfairly. But the revised version of those rules recently released by USDA capitulate to packer demands and fail to make the marketplace more fair.
For years, small cow-calf producers, and the small- or mid-sized feedlots who sell much of their beef, say they have been mistreated by the giant meatpackers, who have conspired to set prices and manipulate supply. These manipulations force smaller sellers to take lower prices than packers give large ones, for meat of the same quality. Cattlemen have even taken packers like Tyson to court for price fixing. And in that case, they won $1.2 million in damages -- until a judge overturned the verdict, saying that the cattleman-protecting Packers and Stockyards Act, which he likened to an antitrust law, does not protect individual packers mistreated by Tyson's manipulations, and only protects the marketplace as whole.
The intent of the Packers and Stockyards Act is to stop price fixing by big packers who control most of the market. It was passed in 1921, when the Big Five meatpackers (now they're the Big Four) were colluding to set prices. But the USDA has never interpreted the law by passing rules clarifying what it meant. So when cattlemen took big packers like Tyson to court, even though juries were sympathetic, judges, without a USDA interpretation, made up their own. They likened the Act to other antitrust laws like Sherman and Clayton, which require that maltreatment and collusion must damage competition and the marketplace as a whole, and whether or not individuals suffered damages is irrelevant. So cattlemen lost, even though they proved meatpackers fixed prices in a way that hurt their bottom line.
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"We always lose. If we win, we still lose, because these big corporations get the final vote. They own this government," said Mike Callicrate, an independent Colorado rancher who participated in the case against Tyson and has led efforts to reform the meatpacker monopsony. "The Packers and Stockyards Act is truly dead."
http://www.hcn.org/blogs/goat/obama-sides-with-big-business-over-small-cattlemen
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