990743 U.S. Says Kansas Beef Co-Op Broke Bidding Rules

Washington - A powerful Kansas beef cooperative broke federal rules when it stopped buying animals from a cattle feed yard that had brought the co-op negative publicity, USDA has alleged.

The government charged Farmland National Beef Packing Co. of Liberal, Kansas, of violating the Packers and Stockyards Act after it allegedly stopped accepting bids from Callicrate Company Feed yard of St. Francis, Kansas. Farmland is one of the largest meatpackers in the United States.

According to the complaint filed by the Agriculture Department, Callicrate's sales manager wrote an article for a livestock journal that was critical of Farmland. Farmland then stopped making bids on or purchases from Callicrate.

The government called the practice “unfair and possibly unjustly discriminatory.”

“This case goes to the heart of the concerns that every small- and medium- sized producer has about possible retaliation, discrimination and denial of market access in the livestock industry,” said James Baker, head of the USDA's Grain Inspection, Packers and Stockyards Administration.

A Farmland spokeswoman said the cooperative did nothing wrong and that its bidding with Callicrate was consistent with company and industry-wide policy.

“We believe the allegations are unfounded and we intend to vigorously defend our position,” Sherlyn Manson said.

Ranchers have repeatedly said that intense concentration in the meat packing industry is hurting competition, lowering prices and putting them at the mercy of bigger and bigger companies.

Farmland National Beef, IBP Inc., ConAgra Inc. and Cargill Inc. unit Excel control about 80% of the U.S. beef market. The same companies plus Smithfield Foods Inc. also control more than half of the U.S. pork market.

The Agriculture Department has vowed to crack down on any illegal practices by meatpackers and has set up a toll-free hotline for ranchers to report any potential violations.

“I am concerned about the trend toward larger and fewer agricultural operations, especially in the livestock industry,” Agriculture Secretary Dan Glickman told the Congressional Economic Leadership Institute on Wednesday, saying concentration can lead to a “modern form of feudalism.”

“That is something that we also have to address and do what we can to make it viable for smaller and medium-sized family farms to exist,” he said.

Last week, the department said it was sending “rapid response teams” to South Dakota to study if meat packers in the state were illegally refusing to buy livestock from some ranchers because of a new state law that requires companies to pay uniform prices.

In April, the Agriculture Department alleged that Excel underpaid 1,250 farmers by an average of about 91 cents per hog after it changed its method for calculating the percentage of leanness in hogs. Excel has volunteered to pay $1.8 million to the farmers although it says it did nothing wrong.

In the Farmland case, the cooperative will have an opportunity to respond to the complaint and can request a hearing before an administrative law judge.

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