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State Attorneys General Asked to Investigate Proposed JBS Mergers Billings, Mont. (April 30, 2008) – R-CALF USA, along with the Organization for Competitive Markets (OCM), sent formal correspondence today to several state attorneys general from major cattle-producing states, asking the officials to join with other attorneys general to investigate the competitive effects of the proposed acquisitions by JBS of National Beef Packing Co., Smithfield Beef Group and Five Rivers Ranch Cattle Feeding, the largest feeding company in the world, with an estimated 2 million head annual capacity. “The primary focus of our concern is with the market for slaughter-ready cattle that are sold in proximity to the major meatpackers and the market for lighter-weight feeder cattle that are sold in relatively large quantities in every state of the Union,” wrote R-CALF USA President/Region VI Director Max Thornsberry. “We also note that reducing the number of major beef processors from five to three is likely to have adverse competitive effects on consumers as well.” The five largest meatpackers currently are Tyson Foods, Cargill Meat Solutions, JBS Swift, National Beef Co., and Smithfield Beef Group. If the JBS merger is allowed, only three people – the head buyers employed by JBS, Tyson Foods and Cargill Meat Solutions – will make price decisions on over 80 percent of the slaughter-ready cattle each day. “The current cattle market is already suffering from reduced competition,” the letter continues. “This merger will substantially lessen competition. Cattle feeders have trouble now gaining bids for their cattle from the packers within transportation distance. If the merger is allowed, feeders will have even fewer potential buyers and fewer actual buyers…fewer buyers reduce cattle prices.” Cattle are perishable and must be sold within approximately two weeks or they degrade in quality and value, which magnifies the market power of the remaining packers. Additionally, partial vertical integration is another major market power magnification tool. This merger will substantially lessen the competition that exists and will increase the market power held by the remaining firms. “We have witnessed packer merger approvals in the past and seen the destructive results on independent livestock producers, including the astounding 90 percent reduction in the number of U.S. hog producers,” the letter concludes. “If no action is taken now to preserve competition in the cattle market, we will wish, in five years that our leaders had more forethought and vision. Competition is the best regulator and should be preserved.” Note: To view the letters sent to attorneys general in the major cattle-producing states of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Ohio, South Dakota, Texas and Wyoming, visit the “Competition Issues” link at www.r-calfusa.com , or contact R-CALF USA Communications Coordinator Shae Dodson to request a copy. # # # R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA has dozens of affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516. |
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This page was last updated on Friday, June 06, 2008. |
