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The Big "M"s on Parade: Markets, Manipulation and Martyrs. PDF Print E-mail
Written by Steve Dittmer   
Friday, 26 June 2009
AFF Sentinel Vol.6#19

Populist movements love martyrs, whether they find them - or create them. It helps embellish that little guy vs. the big guys drama thing, you see.

But real life is sometimes a lot more twisted than poetic license would allow fiction to be. So R-CALF is making a martyr out of Herman Schumacher, not explaining that Schumacher has run afoul of court orders to live up to the rules he agreed to when he decided to sue the big guys.

The real-life irony is that the case Schumacher has failed to pay court-ordered fees for, is all about the law - the Livestock Mandatory Reporting Act -- that was supposed to provide the smoking gun, to reveal the secrets proving the packers have been cheating all along. The populists were certain the packers were somehow manipulating the markets. They knew the "evidence" was there, if they could just get into the numbers. They could prove that nearly all the market economic studies over decades were wrong, that the packers were doing something bad and there was really no market competition for fed cattle.

With more information than cattlemen, statisticians and economists have ever had to work with through Mandatory Reporting, the smoking gun has not been found. A multi-million dollar study, by land grant university market economists and a whole list of Wharton Business School economists, couldn't find any smoking gun. The dark images conjured up by the populists, of big packers looming over the stage and pulling the strings on hapless marionette cattlemen have found no supporting evidence.

When the Mandatory Reporting began, it required all major packers to report data on live cattle purchased and beef sold twice daily to USDA. USDA was, in turn, to publish data, including a calculated boxed beef cutout price. In implementing the law, unbeknownst to anyone, USDA made an error in constructing their formula for the boxed beef cutout. So for the first six weeks of the program, the raw data the packers submitted was being plugged in to a faulty model and the boxed beef price USDA was reporting was lower than it should have been.

Schumacher, Mike Callicrate and Roger Koch sued the major packers, claiming they knew the formula was wrong and illegally took advantage. The District Court ruled in their favor but on appeal, the verdict was overturned because it was required to prove the packers had intentionally violated P & S law and that had not been shown. The packers reported the data accurately. It was USDA's model that was in error.

Like good demagogues, R-CALF is trying to use events to lob shrill, strident word bombs and blame some one else for things they brought on. That's why R-CALF is holding a news conference in Herman Schumacher's front yard in South Dakota. Court procedure often includes "loser pays" clauses to discourage the filing of highly unlikely to prevail or frivolous lawsuits. Plaintiffs know this going in as they decide whether to file lawsuits.

The court ordered certain court fees of the case to be paid by the losers. But Schumacher has ignored all the court's orders and U.S. Marshals have posted Schumacher's home in Herreid, S. D. with a "No Trespassing" sign. R-CALF has called a news conference to make a scene in Schumacher's yard.

R-CALF is using the opportunity to parade all the incendiary populist verbiage they are famous for: "concentrated" and "multinational" meat packers, "anti-competitive" and "antitrust" behavior plus some new expressions. They are trying to make it out that it is Tyson's fault - one of the packers they sued - that the cattlemen lost the case and that the court is enforcing the procedures. Schumacher has had six months to pay the roughly $15,000 the court said he owes. Evidently he has not.

Meanwhile, Tyson has said it values and depends on independent cattlemen to supply the cattle it needs to provide products customers demand. The court has placed the lien. Tyson has no interest in Schumacher losing his home.

R-CALF is using the episode to request donations to R-CALF's legal fund to stop "packers' anticompetitive practices and antitrust actions. " The announcement made no mention of any fund to help Schumacher directly.

Schumacher is one of a band of packer lawsuit filers who have made a career out of paying lawyers to try to prove their dark vision of the cattle markets' inner workings exists. So far, only the lawyers have made out. Their vision has not found evidence -- but they still want to keep suing.

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Last Updated ( Friday, 31 July 2009 )
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