Betting the Ranch

Betting the Ranch examined beef pricing through the lens of the bankruptcy of the prominent Easterday Ranches in Pasco, Washington, where owner Cody Easterday had lost more than $200 million in the cattle futures market. Easterday was being prosecuted for wire fraud for lying to Tyson Foods about his trading losses, since he had gambled with money advanced to him by Tyson. He was also being prosecuted civilly.
FIJ Grantee, Lee Van der Voo, pitched a story about the debacle to High Country News last summer because the bankruptcy and associated criminal and civil cases offered a rare glimpse into the contracting practices of Tyson Foods, one of four meat packing corporations controlling 73 percent of the protein market in America. She was interested in looking closer at the Easterday saga because ranchers have long said their contracts are unfair, getting worse, and causing them increasing hardship. Deep consolidation in the meatpacking industry has left them with little recourse but to play along with large companies or get out of the business, since there are few competitors to sell cattle to.
Betting the Ranch showed as much. Court documents available through the multiple legal matters involving Easterday detailed how Tyson was increasingly shifting risk onto ranchers through a practice called formula contracting. The practice advances money to ranchers to feed cattle, but then requires ranchers to pay that money back, plus interest, when the cattle are grown. Tyson then purchases the cattle. Because the purchase rate of the cattle is determined by the market, formula pricing puts ranchers at risk of owing Tyson more money then they made on the cattle sale. And it’s easy for a company like Tyson to win in that exchange, because the company can increase market prices through market power. Over the last 15 years, as formula contracts have become the norm, ranching has become a game of pennies that has caused the industry to consolidate deeply. Ranchers have also increasingly relied on trading cattle futures to lock in prices. This is how Easterday had lost such outrageous sums.


While Easterday’s losses were exceptional and the fraud he deployed to cover them an anomaly, the case against him surfaced contracts that are typical of Tyson’s dealings. These served as the backbone of the piece to highlight how the increase in formula pricing was correlating with diving profits for ranchers, which hit an all-time low during the height of the pandemic. That pricing has not fully rebounded and has since spurred the Biden administration to investigate meatpacking corporations and the manner in which they can control the price of beef. The White House recently determined that Tyson and the other three largest meatpacking corporations (JBS, Cargill and Marfrig) were also using market power to raise prices on consumers and grow profits. Combined with drought, the price of hay, and other obstacles to cattle ranching, ranchers interviewed for the story said they were forced to sell herds and the industry was in decline in drought-stricken areas, where it once was a mainstay. Left unchecked, these trends could lead to long-term shifts in the industry and escalating prices for consumers, while pay for ranchers continues to fall.
When Van der Voo began reporting in April 2021, these issues were little observed or understood, just of interest to me because of past reporting on food markets. By the time Betting the Ranch published in December 2021 in High Country News, the issue of beef pricing and overall food inflation had become a subject of national import. Van der Voo was glad to be on the cutting edge of the reporting, and to have been able to provide critical context to the national conversation about beef pricing and equity in food systems.