Feedlot owner files lawsuit against KC-based meat packer

Tue, Dec. 17, 2002

Feedlot owner files lawsuit against KC-based meat packer
By ERIC PALMER
The Kansas City Star
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Kansas City-based Farmland National Beef used its market power to punish a small Kansas cattle feeder that publicly criticized the giant meat packing operation, according to a lawsuit filed in Kansas City.

The lawsuit in U.S. District Court alleges Farmland National Beef quit buying cattle from Callicrate Feedyards in St. Francis, Kan., because Mike Callicrate publicly criticized Farmland and other large meat packers for having too much market power.

The lawsuit seeks actual damages of $5,345,000, as well as punitive damages and attorney’s fees.
Callicrate’s lawsuit is similar to a complaint filed by the U.S. Department of Agriculture against National Beef in 1999. The USDA alleged National Beef used its market muscle to retaliate against Callicrate. The USDA dropped that complaint last year after National Beef agreed to repay the government the cost of the investigation.

That administrative action did not keep Farmland from continuing to refuse to buy cattle from him at competitive prices, Callicrate said. The result, he said, is that he must now close his feed yard.
“None of the meat packers will buy from me,” Callicrate said. “I have already let 12 people go that worked in the feed yard.”

John Miller, chief executive of Farmland National Beef, said Callicrate’s lawsuit was without merit.
“National Beef’s conduct with respect to Mr. Callicrate has always been fair and lawful,” Miller said in a prepared statement.

Miller said that when Farmland National Beef settled the complaint with the USDA, the agency’s order found that National Beef was not required to buy from any particular producer.
“National Beef owes an obligation to its customers and owners to buy the highest-quality cattle at the lowest possible price,” Miller said.

Farmland National Beef is a partnership of Kansas City-based Farmland Industries Inc. and U.S. Premium Beef Ltd. It operates beef processing plants in Dodge City and Liberal, Kan.
Farmland Industries, the country’s largest farmer-owned cooperative, has been operating under bankruptcy court protection since May 31. But the National Beef partnership is not part of the bankruptcy proceedings.

Callicrate has been an active critic of the consolidation in the meat processing industry, which has concentrated about 80 percent of that business in the hands of four major companies. Farmland National Beef is the country’s fourth-largest beef processing company.

The lawsuit points out Callicrate was a plaintiff in a class-action lawsuit against meat packer IBP for allegedly uncompetitive practices at the time Farmland began its boycott.

Callicrate said Farmland National Beef has the closest meat processing plant to his feed yard and does most of the cattle buying in the area. The company was his main customer for 12 years before it essentially stopped buying from him in 1998 after he and an employee spoke out against the prices National Beef was offering to cattle ranchers who sold direct to the company.

The new lawsuit alleges National Beef violated the Packers & Stockyards Act of 1921 and the Kansas Consumer Protection Act. The suit says both acts forbid retaliating against a critic, boycotting a cattle feeder and engaging in any act or practice to promote a monopoly “including a local or regional monopoly.”

The fact the federal government settled the USDA complaint without a finding of fault does not preclude Callicrate from filing his own action, said David Domina, the Omaha, Neb., attorney who filed the suit.

Callicrate believes there has been no political will for years to enforce federal laws against anti-competitive practices in the meat industry.

“This is why other people won’t speak out,” Callicrate said. “As result we are going to lose our markets and our domestic cattle industry. So much for free speech.”

To reach Eric Palmer, regional business editor, call (816) 234-4335 or send e-mail to epalmer@kcstar.com.
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Mike Callicrate