Big Mac Bites Big Meat Over Alleged ‘Artificially Higher Prices’

By ALAN GUEBERT

If you buy nearly two billion pounds of beef a year–an on-the-hoof equivalent of seven million cattle–you’d think you’d get the best deal ever from your suppliers. You are, after all, the world’s largest red meat buyer.

Think again, says McDonald’s.

On Oct. 4, it sued the big four meatpackers–JBS, Tyson Foods, Cargill and National Beef Packing–“for allegedly conspiring for years to limit beef supplies, boosting their profits while causing the fast food giant to pay artificially higher prices,” reported Reuters.

So Big Mac wants a bite out of Big Meat who, the suit claims, “collectively reduced their output to drive up industry prices since 2015.”

They were able to do so, the juicy, 100-page filing alleges, because the four packers “Collectively … controlled approximately 81-85% of the domestic market-ready fed cattle processed (or slaughtered) during the conspiracy period. The next largest non-Defendant meatpacker had only a 2-3% market share.”

Welcome to the jungle, Ronald McDonald, where thousands of U.S. cattlemen, bold enough to risk their livelihoods, have been complaining about meatpacker market power for decades.

Their woes, however, have been on the cattle-selling side of the market. Dominant packers, the cowboys allege, have managed slaughter numbers to move live cattle prices–often lower–more than market conditions justify. But proof remains elusive.

Still, in 2004, an Alabama jury awarded cattlemen $1.28 billion in a years-long class action lawsuit (known as Pickett) brought against then-beef packer IBP for using its market clout to undermine live cattle prices.

The decision, however, was thrown out after Tyson Foods, which bought IBP in 2001, asked the court for a “judgment as a matter of law” to challenge the jury’s implication that the meatpacker had acted illegally in the market. The judge agreed with Tyson.

In the 20 years since, Tyson, like many of its competitors, has spent millions defending its business practices in both civil court and in settlements of federal charges for alleged price fixing.

According to Accountable.US, a non-partisan special interest watchdog in Washington, D.C., two of the packer giants, Tyson and JBS, “were involved with at least $384 million in fines and settlements over alleged price-fixing… during the [COVID-19] pandemic.”

McDonald’s lawsuit builds on the same theme, alleging “that the world’s largest meat processors have been conspiring since at least 2015 to limit beef supplies,” reported the Washington Post, “leading to elevated prices for the meat they sold McDonalds and others.”

Specifically, the Post continued, McDonald’s alleged that beef prices “had stayed within $20 to $40 of the average price per hundred pound of wholesale beef.” Then, around 2015, the correlation changed and by “2021, the difference had ballooned to $156.50.” That cost Big Mac, and its customers, big bucks.

“The goal of their conspiracy,” McDonald’s alleged in its lawsuit, sounds eerily similar to what cattlemen have been saying for decades from the opposite side of the cattle market: “...to fix, raise, stabilize and/or maintain the price of beef sold to Plaintiff and others at supra-competitive levels–that is, prices artificially higher than beef prices would have been in the absence of their conspiracy.”

Congress, too, noted the change. In 2021, recalls the Post, nearly 30 of its members sent the Justice Department a letter pointing out the “price of live cattle in the U.S. market has plummeted while… the major packing companies realized significant profits…”

After decades of complaining by cowboys, the courts, and Congress, maybe a corporate mascot in oversized red shoes and a plastic grin can finally get justice in the costly clown show known as U.S. meatpacking.

Alan Guebert is an agricultural journalist who was raised on an Illinois dairy farm and worked as a writer and senior editor at Professional Farmers of America and Successful Farming magazine and is now a contributing editor to Farm Journal magazine. Guebert and his daughter Mary Grace Foxwell co-wrote “The Land of Milk and Uncle Honey: Memories from the Farm of My Youth” [University of Illinois Press, 2015]. See past columns, supporting documents, and contact information at farmandfoodfile.com

From The Progressive Populist, November 15, 2024

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