After the fraud at Easterday Ranches was discovered, owner Gale Easterday steered his pickup onto the off-ramp of the highway and drove head-on into a semi-truck that was delivering his farm’s potatoes.

The afternoon of December 10 was cloudy but clear, the roads unencumbered. And Easterday, who was 79, had been making his usual rounds in an industrial part of Pasco, Washington. He was at the helm of four generations of farming and ranching, a multimillion-dollar operation that grew, packed, and shipped a massive amount of onions and potatoes, plus raised beef on feedlots outside of town.

His family owned nearby facilities—huge operations involving conveyor belts and forklifts that hoisted pallets onto delivery trucks. Several of the company’s contractors were based in the corrugated metal shops nearby. He often ran errands there, or stopped to chat with the dozens of mechanics employed to tinker with the part of the business he loved best: the farm machines.

But on his way out of town, Easterday steered his Dodge Ram onto a highway off-ramp. It was a particularly confusing stretch, and not an uncommon error for the spot. Police records show as much. He ascended the exit ramp, past signs that warned “wrong way,” and rounded the bend onto the interstate, colliding with a vehicle driven by his own delivery man. It happened very fast. The semi driver could not have avoided it. When he tried, too late, to swerve, the truck and its potato haul screamed across the highway, crossed the center median, and came to a jolting rest on the opposite side, blocking all of the lanes.

Officers who questioned the driver found him badly shaken. Another truck had broadsided the semi on its course across the asphalt, and he had scarcely avoided driving over the top of it. Two more cars were struck by flying debris, their occupants mostly unscathed.

Easterday, however, was dead; his Ram decimated. State troopers had the grim task of contacting his family and puzzling over the scene. There were no tire marks where he might have braked, no sign that he had attempted to avoid the crash.

Afterward, along with heartbreak, there was bewilderment and disbelief. Conjecture in the metal shops and on ranches ran the gamut from illness to injury to suicide. But within two weeks of his death, everyone would know what Gale Easterday likely knew that day: Tyson Fresh Meats—one of the nation’s largest meat distributors—was investigating Easterday Ranches and slowly discovering that Gale’s son, Cody, had sold them hundreds of thousands of cattle that never existed.

The deceit that soon unspooled may seem like a one-off fraud. But while it is indeed an anomaly—an expansive hoodwinking far from normal by ranching standards—it exposed a problem widespread in the beef business, which is that the price of a steak has increasingly little to do with the cost of fattening a steer. That circumstance requires ranchers to shoulder tremendous financial risks. And while it has made corporations the beneficiaries of declining rural wealth, it has also wrought awful wreckage for ranching communities and rural families.

Gale’s son tried to outplay this system and lost. Maybe he was never going to win.

Before the matter of the nonexistent cattle, Easterday was a name of distinction. Easterday Farms had been a part of Washington’s Tri-Cities—the agricultural trifecta of Richland, Pasco, and Kennewick—since 1958, back when Ervine Easterday, Gale’s father, saw his fortune in the new freshwater from the Grand Coulee Dam and purchased land in the Columbia Basin. Four generations in, the Easterdays were a powerhouse of ranching and farming. The farm, at a sweeping 18,000 acres, was 60 times its original size, dominated by the potatoes and onions. The family had launched Easterday Ranches along the way, a “finishing operation” that raised cattle from weaning to the slaughterhouse after four or five months of fattening.

The ranch was mammoth by Northwest standards. By the end of 2020, it was producing 2 percent of the cattle supplied to Tyson, which is a lot. A multinational monolith, Tyson produced one out of every five pounds of chicken, beef, and pork in the United States and made $43.2 billion in sales every year. As beef industry heavyweights go, Tyson has few equals. Cody, the youngest of Gale’s children with his wife, Karen, eventually held the reins of the family’s partnership with Tyson. In 1989, he joined the business with his wife, Debby, when he was barely 18, and the couple became co-owners with his parents.

In the daily hum of this meat-making venture and on the farm, Cody was described by one worker as the embodiment of its bustle.

“He is on the go all the time, trying to see what he can come up with or buy,” said Johnny Gamino, who worked as a mechanic on Easterday’s many tractors, trailers, trucks and machines for 15 years. “He was almost like anxious—anxious to do something, get something accomplished. He’s always on the run.”

“He was almost like anxious—anxious to do something, get something accomplished. He’s always on the run.”

Working with him and his father was easy to enjoy, Gamino said. Both Cody and Gale treated their staff like equals and looked after them like they looked after their own. When they recruited Gamino, for example, the Easterdays doubled his salary and afterward advanced him $6,000 to buy the land on which he made his home. To work with the Easterdays was to be part of a circuit of father-and-son pitstops, check-ins, and brainstorms. Cody was frequently at top efficiency, and Gale was often toting Cody’s three boys in his pickup, the next generation in training. The duo were industrious, driven, and often on the hunt for opportunities and deals, angling to better the farm and ranch.

“What I liked about him was that if anybody wanted to talk to him . . . he would make time for us,” Gamino said.

By all outward appearances in the fall of 2020, the Easterdays looked better than good. They employed hundreds of workers in their packing plants and on the ranch and farm, and contracted crews for seasonal labor. They were donors and boosters for Republican candidates and campaigns, gifted livestock to fairs in three counties, and sponsored one of the region’s biggest rodeos, the Pendleton Round-Up. From steer wrestling to barrel races, they were fixtures in arena box seats and in the community, too.

But there was trouble.

Over the fiscal year ending in 2020, Easterday Ranches’ gross revenues had declined by almost half from the previous year, from $111 million to $65 million. And the ranches’ investments had been wiped out entirely. The farm was similarly failing, with gross revenues falling from $82 million to $52 million and interest income on investments diving even as the stock market was booming.

Coronavirus slowdowns at meatpackers surely accounted for some of the loss—cattle were hard to sell in 2020 while plants sputtered, labor was scarce and the supply chain shifted from restaurants to grocery stores. But a longstanding problem was also threatening the businesses: For years, Cody Easterday had been piling up staggering debts gambling on the future price of beef. To cover his losses, he invented whole herds of cattle on paper, then sold them to Tyson while pretending to raise them on the ranch. In November, after a Tyson worker came to take stock of its herd, Easterday confessed the phony invoicing—for the cattle that didn’t exist, and feed for the nonexistent animals. One particularly eye-catching invoice charged $5.3 million for eight lots of cattle that couldn’t be found anywhere other than on paper.

Cody Easterday, through an attorney, declined to be interviewed for this story. Court records explained much of the rest. Maybe the daily ingenuity involved in running the farm and ranch—the deal-hunting and the thirst for productivity—explains a little of why Cody Easterday fell prey to the allure of betting everything his family built. But personal predilection this was not, not entirely.

To understand how the Easterdays unraveled in this system, first you have to know that the system is rigged. And that to be a rancher is to be a gambler—at least in a business sense—because the market for beef is more about enriching corporations than paying ranchers a fair share.

The primary challenge is that 73 percent of the beef in the U.S. is controlled by four corporations. That’s it. Despite the array of colorfully packaged this-and-that in the grocery store, the corporations either create or acquire the brands that give consumers a fairly anemic range of choice. The meat inside might come from different farms, be raised in different ways, or vary in quality. But at the end of the day, it is bought, packaged, and shipped by the same few actors. And because of their market heft, these corporations increasingly influence how the products are made and the prices paid to ranchers to make them. Tyson is among these market heavyweights, along with JBS, Cargill, and Marfrig.

Ranchers have long complained about lowball prices from these companies. Nationwide, data from the United States Department of Agriculture shows they have reason to. Profits for ranchers have trended slimmer almost every year since the late 1980s, when those prices were first tracked. By 2020, the same year the Easterday empire began to crumble, a rancher’s share of the value of boxed beef shipped to retailers was 37.3 percent, down nearly 27 percent since 2015, when it was 51.5 percent. This while the consumer price of beef soared higher than ever.

These disappearing earnings were captured by the corporations. They’ve made enormous gains by pulling profits from both sides of the business: pushing pay for ranchers down while also benefiting from the rising price of beef for consumers. Tyson disputes that the company has this much influence over consumer costs, or that consolidation has been a factor. Feeding America requires scale, its officials say. But this capitalistic pursuit—scale—is a primary reason why so many ranchers are going out of business, especially when drought and the high price of hay add other pressures. It’s also why the beef business is consolidating among ranchers like the Easterdays, who instead of raising a few hundred head of cattle on rangeland, raised them by the tens of thousands in feedlots. That industry parlance—feedlots—is shorthand for saying the cattle are raised in pen after pen after pen on dirt squares that look from the sky like enormous bingo cards.

Inside this system, Easterday was playing an impossible game. As cattle prices steadily declined, his negotiating power diminished. That’s because while meatpackers like Tyson were buying up all the brands and slaughterhouses, they eliminated his ability to shop around. There were only two corporations operating near enough his ranch to buy his herds. He was already selling to both, including Tyson.

When he entered into his most recent contract with Tyson in 2014, the corporation offered him a deal that’s increasingly common: Tyson agreed to front Easterday the cash to buy weaned calves and to feed them, and to buy the cattle back from Easterday at market rates when they were grown. Tyson would pay premiums for beef quality, and discounts for deficiencies. But while that might seem like a sound arrangement, one with clear expectations and guarantees, it isn’t. That’s because once the cattle were grown, Easterday had to repay Tyson the money the company had loaned him to buy and feed them.

Source link

Share this post

Leave a Reply

Your email address will not be published.