Source:  Lisa M. Keefe, MEATINGPLACE.COM, 10/14/10

The Grain Inspection, Packers and Stockyards Administration (GIPSA) has found evidence that JBS USA, LLC underpaid hog suppliers by a total of $350,000 over 11 months in 2007, the USDA agency said in a press release.

In the complaint filed at the end of September, GIPSA noted that JBS used a Fat-O-Meat’er to calculate the lean percent of processed hogs in order to adjust carcass merit payment to hog sellers. The instrument, however, sometimes failed to obtain the proper data for a particular carcass or for the carcasses in a lot, and lean percent was not calculated for carcasses with missing data.

JBS bought hogs on a carcass merit basis, and when the lean percent data were missing, JBS substituted an arbitrary value of 49 percent, a substitution that was not disclosed to the sellers, the complaint alleges. Furthermore, hog sellers to JBS’s plants were paid an automatic discount of $1 to $2 per hundredweight for carcasses with missing Fat-O-Meat’er data, GIPSA says, and weren’t eligible for possible premiums of up to $5.30 hundredweight for those carcasses.

The difference between JBS’s lean percent value of 49 percent and the amounts it would have had to pay if it had substituted data based on the lean percent equal to the average of the remainder of the lot was an estimated $350,000 between Jan. 1, 2007, and Nov. 30, 2007.

If the allegations are admitted, or proven in an oral hearing, JBS may be ordered to cease and desist from violating the P&S Act and assessed a civil penalty. JBS has 20 days from the date the complaint was filed to respond.

To read the complaint in its entirety, click here. 

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