Home » Brazilian company to be largest U.S. beef packer?

Brazilian company to be largest U.S. beef packer?

Mar 28, 2008 9:39 AM

Seventy-two cattle-producer associations and various agricultural, consumer and religious groups are asking U.S. Department of Justice officials to consider blocking JBS SA’s plan to purchase National Beef Packing, Smithfield Foods’ beef operations and Five Rivers Ranch Cattle Feeding.

The signatories, including R-CALF USA, assert that the JBS purchases would “harm price, choice, innovation and competition in the beef industry.” A letter to the U.S. Department of Justice urges officials to “scrutinize the merger, issue a second request for more information from JBS SA and strongly consider blocking it.”

A news release from R-CALF USA (United Stockgrowers of America) stated, “Last year, JBS SA acquired Greeley, Colo.-based Swift & Co., to form JBS USA, making the Brazilian-owned JBS the third largest U.S. beef packer. If the above-mentioned deal goes through, it easily would make JBS the largest beef packer in the United States and in the world, followed by Tyson Foods and Cargill Meat Solutions.

“The primary focus of our concern is with the buying market for cattle, although we believe that reducing the number of major beef processors from five to three is likely to have adverse effects on consumers as well,” the letter states.

R-CALF USA says that at the current level of market concentration, “there already is a diminished volume of cash market purchases due to the ongoing vertical integration achieved through packer-owned cattle, contracted cattle, and relationship cattle.

The merger “would constrict access to the cash market more than it already is, as limited access to the cash market already impacts the prices received for all classes of cattle because the cash market continues to set the base price for all transactions,” said R-CALF USA Vice President/Region II Director Randy Stevenson, who also co-chairs the group’s marketing committee.

“The signatories state that they believe the open market, competitive bid percentage of cattle, industrywide, is less than 35 percent today.”