Economist made the winning case against Tyson

AgricultureOnline

02/17/2004 03:35 p.m.CDT

Economist made the winning case against Tyson

By Dan Looker

Business Editor

Successful Farming magazine

Lawyers tend to get the glory in any historic court case, which the Pickett case could be if it survives appeals. But in the verdict reached against Tyson Fresh Meats in Montgomery, Alabama today, it may have been an economist who made all the difference.

The plaintiffs’ expert witness, Auburn University economist Robert Taylor, showed that Tyson and its predecessor, IBP, used captive supplies of cattle to depress prices paid to producers in the open market by between 3% and 7.6%. The jury chose the lowest estimate of damages, 3%, which comes out to $1.28 billion in lost revenue for some 30,000 producers who sold cattle to the company only on the cash market from early 1994 and through October, 2002.

Michael Stumo, an attorney for the Organization for Competitive Markets who worked with the plaintiffs_ lawyers, said that Taylor is the only economist who has seen eight years of internal price records from IBP and Tyson. The company had to disclose that information during the lawsuit.

In the end, all of the justification often used for captive supply, such as assuring better beef quality or increasing efficiency in the marketplace, didn’t convince the jury, Stumo said.

“The jury said it was pretext, it was contrived, it wasn’t true,” Stumo said.

“Everything that the American Meat Institute and all the economists on the packer payroll have said, finally, when they had to prove it, they couldn’t,” Stumo said.

Taylor had the beef packer’s internal records on prices paid to producers for eight years, “everyone else was just working off of the claims of packer executives and aggregate, publicly reported data,” Stumo said.

This entry was posted in Cattlemen's Legal Fund. Bookmark the permalink.