Garden City — There's mixed reaction in Kansas to the class-action status that a federal judge in Alabama has granted for a lawsuit accusing IBP Inc. of depressing prices for cattle producers.
Ten cattlemen filled the lawsuit five years ago. Last week's ruling in Montgomery by Senior U.S. District Judge Lyle Strom means that an estimated 30,000 producers who sold cattle to IBP since February 1994 could be included in the suit.
In Kansas, some cattle producers consider the class-action ruling a victory, but others say it could mean more government control in their business, hampering their ability to respond to consumer demand.
IBP, based in Dakota Dunes, S.D., controls more than a third of the U.S. beef packing industry. The suit claims it illegally cornered the beef market and conspired to fix prices paid on the open market.
The lawsuit addresses the issue of whether forward contracting and special deals in buying livestock squeezes profits from producers who still sell by taking bids from buyers on a weekly basis.
"I think this is the greatest thing for the cattle producer since the passage of the Packers and Stockyards Act of 1921," said Luke Schwieterman, a Garden City commodities broker. "It was adopted to ensure fair play in a meatpacking industry that was becoming a monopoly for just a few. Now, we're going to be heard and let a jury decide whether we've been hurt by captive cattle supply."
Responding to the suggestion the lawsuit is not supported by all cattlemen, nor by the Kansas Livestock Assn., Schwieterman said, "KLA no longer represents the average cattle feeder."
Don Hineman of Dighton, a past president of KLA, disagreed.
"The majority of Kansas feedlots are KLA members," Hineman said. "The plaintiffs in this suit are ignoring the studies done by universities and government agencies that have failed to turn up any cases of packer concentration or that livestock marketing agreements have an adverse effect on price. Instead, the studies indicated the prices move in response to changes in basic supply and demand.
"The plaintiffs also have ignored the fact that the beef industry has been dealing with a burdensome supply situation for the period in question."
Larry Jones of Holcomb agreed with Hineman, noting that the present market has been influenced by excellent feeding weather and cheap grain, with carcass weights now running 20 pounds heavier than a year ago.
"You can't compare our business today to the cattle market of 1921," Jones said. "Our business has changed, and the only way to get value is to market our cattle with the grids and formulas of today's market."
Jim Danley, manager of the Finney County Feedyard, agrees with the lawsuit.
"If there is no competition, the market goes down," he said. "We need to get rid of captive supply and open up a more competitive market."
IBP spokesman Gary Mickelson said last week's ruling was just another round in a long-running legal battle that he believes IBP will win.
"All this is nothing new," he said. "The same judge certified the class-action status in 1999. We appealed and the 11th Circuit Court of Appeals subsequently overturned the ruling."
He said IBP still was reviewing the latest ruling to determine whether to appeal.
l Farmers feeling pinch, commodity index shows. Page 8B.
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