JBS Shortchanges Nebraska Ranchers, Violating the Packers & Stockyards Act


by Claire Kelloway, Food & Power 

Jan 3, 2018


Last month, the USDA’s Agricultural Marketing Service announced that the world’s largest meatpacker, JBS, made inaccurate and non-transparent payments during early 2018 to ranchers at its Grand Island, Nebraska plant.


For more than three months from December 2017 to March 2018, this processing facility failed to accurately record the weights and grades of beef carcasses or maintain carcass identity. This resulted in over- and underpayments to farmers and violated the rules of the Packers & Stockyards Act.


In a statement sent to Food & Power, the head of corporate affairs for JBS, Cameron Bruett, said the error was due to a software change. “We corrected the issues that led to the errors and entered into an agreement with USDA where we would … make refund payments to underpaid livestock sellers,” he said. “Less than 40 producers were negatively impacted and many have already been reimbursed,” he added. As a part of JBS’s settlement with AMS, the corporation will also pay a $50,000 civil penalty.


Critics argue, however, that this amounts to a mere slap on the wrist and is not sufficient to protect independent ranchers from future malpractice by meatpackers. Packers have amassed such buyer power and regional monopolization that they can pressure ranchers to accept unfair sales terms and opaque pricing schemes without severe consequence. In this case, any farmer that believes JBS underpaid them or they did not receive a sufficient reimbursement must rely on USDA to pursue further action; individual ranchers cannot sue JBS since Secretary Perdue withdrew the final interim Farmer Fair Practices Rules.


“This is an example where the whole system breaks down if the marketplace is not fair and transparent and there’s no incentive for the buyer to make it so,” said Joe Maxwell, Executive Director of the Organization for Competitive Markets.


Historically, ranchers sold their animals at competitive and transparent live auctions. Several bidders competed for a given animal, farmers watched their animals get weighed, and they received a clear price per pound. After the sale, the farmer walked away with money in their pocket and the buyer took all further responsibility for transport and slaughter. If animals shrunk in transit to slaughter or if packers injured or improperly trimmed animals in processing, these losses fell on the packers.


In recent decades the number of auction houses and buyers has shrunk. In 1977, the top four beef packers handled a quarter of all cattle. Today, they slaughter 82 percent of all beef. Packers either directly own feedlots or only purchase live cattle from the largest producers.


Meanwhile, packers use their increased buyer power to impose more risks of the slaughter process onto independent ranchers. Packers refuse to buy live cattle from smaller operations, making ranchers ship their live cattle to their nearest plant or put them on a packer-owned truck before knowing the price they’ll receive for the animal. Packers then process and slaughter the animal, determine its value, and pay the rancher based on the final weight and quality of the finished carcass.


Under this system, the packers have little incentive to care for the animals, and in some instances can benefit from failing to water and feed them. For instance...


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