Class action lawsuit touching Montana beef industry sees $83 million settlement from JBS Foods

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a day ago

A USDA employee at work at Cargill Meat Solutions is pictured in Friona, Texas, on Sept. 20, 2022. (USDA Photo /Preston Keres)
An $83 million settlement in a large class action lawsuit led in part by a Montana nonprofit against JBS Foods and other meat processing companies is accepting claims from cattle producers.
The lawsuit alleged price fixing among four companies that control almost 85% of the meat processing industry in the country — including JBS Foods, a U.S. subsidiary of a Brazilian firm. The lawsuit also names Tyson Foods, Cargill and National Beef.
In court documents, JBS denied wrongdoing.
'JBS denies Cattle Plaintiffs' allegations, denies any and all wrongdoing in connection with the facts and claims that have been or could have been alleged against it in the Action, and asserts that it has a number of valid defenses to Cattle Plaintiffs' claims,' a court filing stated.
The lawsuit was brought by the Farmers Union and the Ranchers Cattlemen Action Legal Fund United Stockgrowers of America, which is known as RCALF-USA. The legal fund, RCALF-USA, is a Montana-based nonprofit.
The legal battle with the companies in the suit is likely not over, said Walt Schweitzer, the president of the Montana Farmers Union. Tyson, Cargill and National Beef have yet to conclude their parts of the suit in court.
'I do anticipate more developments with the other three (defendants), but it's in the court system, and it's anybody's guess how quickly it'll proceed,' Schweitzer said.
The suit covers those who sold cattle to JBS Foods and its subsidiaries between June 1, 2015, to Feb. 29, 2020. A website, www.cattleantitrustsettlement.com, has been set up to handle the claims, which have to be filed by Sept. 15, 2025.
'We filed this case after witnessing the inexplicable collapse of fed cattle prices beginning in 2015,' R-CALF USA CEO Bill Bullard said in a press release, 'Our case has been working its way through the court for six years now, and we will continue in our effort to recover as much as we can for American cattlemen.'
Montana is a beef producing state and there are currently about 1.2 million beef cattle in the state. Including calves, that totals more than 2 million head.
Schweitzer said the monopolization of the cattle industry was the biggest issue facing it.
'Price gouging, not just the producers, but the consumers, has been an ongoing issue for really decades, and Farmers Union has facilitated other lawsuits against the big four in the past. This is the farthest we've gotten, as far as settlement and discovery documents,' Schweitzer said. 'So we're getting to the bottom of it, but there's still a lot of discovery left to be made.'
The class action lawsuit alleges the defendants 'conspired to fix and suppress' prices of fed cattle, or beef cows that are fed a concentrated diet to add weight before slaughter.
Companies like JBS Foods and other meatpackers make their money on the 'meat margin,' or the difference between what they buy the cattle for and what they sell the processed meat for.
Because it takes time for cattle to be old and large enough to be slaughtered, the price of meat does not move very fast.
'Beef demand is also relatively insensitive to changes in price (and) the meat margin is very sensitive to changes in aggregate industry slaughter levels,' the complaint states. 'Consequently, Packing Defendants can increase the meat margin, and thus their profitability, by working cooperatively to reduce their respective slaughter volumes, thereby depressing the price of fed cattle.'
Using a system of complex contracts, the JBS Foods lawsuit alleges the companies artificially lowered the price of beef. The contract system and the formulas to set the sale price are relatively new, Schweitzer said, noting they were essentially unheard of 40 years ago.
The packing companies get most of their meat — about 70% — through contracts at a price to be determined at delivery. Those prices in part come from the 'weekly cash cattle market,' which represents about 25% of beef sales.
The contracts are also dated, meaning companies could manipulate the cash price of cattle on days when cattle on contract are brought in to be slaughtered. The companies named in the suit 'cratered' the cash cattle trade, the complaint alleges.
'Defendants used their market power and the relatively small cash cattle trade to their advantage and embarked upon a conspiracy to depress fed cattle prices that began no later than January 2015 and continues through to this day,' the suit alleges.
The suit also says the companies let meatpacking plants go idle and that the defendants imported foreign beef cattle, 'after it became uneconomical for them to do so.'
Cattle production is big business in America, and more than 2.5 million cows are slaughtered every month, according to the U.S. Department of Agriculture. It takes about 15 to 24 months for a cow to go from birth to slaughter.
JBS is also politically active. The company donated $5 million to Trump's inauguration, Forbes reported, far more than Meta, Amazon, Uber and even Nvidia.
JBS, the largest meatpacking company in the world, was recently tagged with a $64 million fine in Brazil for raising cattle on illegally deforested land in the Amazon, although it did not admit wrongdoing in the case.
The company has been beset by other legal woes and two billionaire shareholders went to jail in Brazil after bribing 1,800 politicians.