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Tyson/IBP – chronic liars and addicted to theft

by Gilles Stockton

(Thursday, April 8, 2004 -- CropChoice guest commentary) -- In February, a jury in Alabama found that Tyson/IBP had manipulated livestock markets and violated the Packers and Stockyards Act for eight years, chiseling $1.28 billion from America ’s farmers and ranchers along the way. In response, Tyson/IBP whined that the jury’s verdict will be bad for the handful of cattle feeders that have a “special” relationship with Tyson/IBP in their price-fixing scheme. Tyson’s claim – loyally echoed by the National Cattlemen’s Beef Association (NCBA) – is that packers and cattle feeders need these illegal cattle contract agreements, known as “captive supplies” to keep slaughter plants running smoothly, improve beef quality, and manage risk.

We have heard these claims about captive supplies for years, and long suspected they were lies. In the Alabama courtroom, they were exposed as lies – demolished, really. The jury didn’t buy any of it, and neither should we.

The biggest whopper of them all is the assertion by Tyson and the NCBA that there are no good alternatives to these illegal, price manipulating “captive supply” agreements. A good alternative has been around as long as the Pickett vs. Tyson/IBP lawsuit has been around – 1996, when the Western Organization of Resource Councils (WORC) first proposed a simple rule to the United States Department of Agriculture (USDA) to enforce the Packers and Stockyards Act.

WORC’s proposed captive supply reform rule would transform “captive supply” forward contract agreements into a public market for forward contracts. It is a very simple and elegant solution that would turn an illegal and larcenous practice (now condemned by a jury) into a free competitive market. This in turn would reform a beef/cattle market that is essentially dysfunctional – in that economic signals from the consumer do not reach the primary producer – to a vibrant open and competitive market that pays producers for raising the kind of cattle demanded by consumers.

Tyson/IBP lawyers, spokespersons and their flunkies in the NCBA are either chronic liars or deaf and blind, because they know full well that the WORC captive supply proposal and its derivative, the Captive Supply Reform Act introduced by Sen. Mike Enzi, R-Wyo, and Rep. Earl Pomeroy, D-N.D., is on the public table for everyone to inspect. The issue was even brought up in the trial.

Although the WORC made its captive supply reform proposal to USDA in 1996, it is still waiting for action by the Department of Agriculture, which lacks the courage to enact or reject it. Tired of waiting for USDA, Senators Enzi, Tom Daschle, D-S.D, Tim Johnson, S-N.D., Craig Thomas, R-Wyo., and Byron Dorgan, D-N.D., are behind the Captive Supply Reform Act. Like the rule proposed to USDA, the Captive Supply Reform Act would also fix the issue of “captive supply” forward contract agreements by requiring that forward contracts have a fixed price basis and are entered into through a public market mechanism. Cattlemen everywhere should ask their Representatives in Congress to support this legislation.

In addition, the Ban on Packer Feeding bill, sponsored by Sen. Charles Grassley, R-Iowa, will make it illegal for packers to directly own and feed cattle and hogs. It will take both of these proposals to fully reform the hog and cattle markets. Now that the jury has spoken in the Pickett vs. IBP case, we hope that between the federal courts, USDA, and Congress, the problem of packer concentration and captive supplies gets solved once and for all.

In all, the jury’s verdict is great for the cattle industry and I hope that Tyson/IBP will not be able to lie and cheat their way out of paying a just compensation. Cattlemen who are determined to keep their independence and freedom owe a lot to Henry Lee Pickett, Mike Callicrate, Pat Goggins, Johnny Smith, Christopher Abbott, and W. J. Rothwell. However we should not forget Sam Britt, Paul Horton, Jim Bower, Stayton Weldon, Lovell Blain, and David Smith. These men were part of the original lawsuit and had to drop out because of changes in how the class was identified. Anyway, hats off to you gentlemen and to your families and your friends that backed you up.

Gilles Stockton ranches near Grass Range , Montana , and is the Chair of WORC’s Trade Team. WORC is a network of grassroots organizations from seven states that include 8,750 members and 48 local community groups. WORC helps it members succeed by providing training and by coordinating regional issue campaigns.