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JBS Mergers Would Cause Additional Feedlot Integration, Billings, Mont. (May 29, 2008) – R-CALF USA has obtained evidence that demonstrates the proposed acquisitions of U.S. Premium Beef’s National Beef Packing Co., the Smithfield Beef Group and Five Rivers Ranch Cattle Feeding would result in direct harm to cow/calf producers, backgrounders and stockers due to a lessening of competition in the feeder cattle market, a market dispersed across all 48 contiguous states. This evidence was submitted to the U.S. Department of Justice on Wednesday. “Because the JBS mergers fold the exclusive U.S. Premium Beef/National Beef Packing relationship under the same ownership of Five Rivers, feeder cattle markets dispersed across the U.S. would experience a reduction in the number of competitive feeder cattle buyers,” explained R-CALF USA CEO Bill Bullard. “Post-merger, all competing order buyers who are now filling orders for Five Rivers and National Beef would be filling orders for the same company – JBS-Brazil. R-CALF USA provided the Justice Department with evidence showing that U.S. Premium Beef functions as a feedlot company, much in the same way as Five Rivers Ranch Cattle Feeding functions, and U.S. Premium Beef is a captive supply source to National Beef Packing. According to R-CALF USA, these two feedlots – U.S. Premium Beef and Five Rivers Ranch Cattle Feeding – are separate competitors that compete for nearly 10 percent of the feeder cattle sold annually in the United States. Following the merger, both of these important competitors would be controlled by JBS. “In some, and perhaps many, feeder cattle markets, this would significantly reduce competition for a significant number of feeder cattle, resulting in lower prices paid to cow/calf producers, backgrounders and stockers,” he continued. “This direct harm would adversely affect many states and would result in a substantial lessening of competition within the entire feeder cattle market, resulting from the loss of one or more competitive feeder cattle buyers in various regions across the country.” R-CALF USA believes another – indirect – harm to the U.S. feeder cattle market would be caused by the lessening of competition in the market for slaughter-ready steers and heifers – the market that essentially sets the price for all classes of cattle sold, including feeder cattle. R-CALF USA stated that combined and singularly, these two harms would substantially extend the geographic reach of the JBS mergers’ negative impacts, far beyond the U.S. cattle feeding sector concentrated primarily in the Plain Region, as the two harms would permeate feeder cattle markets all across the U.S., with all markets impacted by the indirect harm, and potentially many markets impacted by the direct harm. “We are recommending that the Justice Department consider conducting a national survey, perhaps with the assistance of state attorneys general, to better determine the effect that the merger of Five Rivers and U.S. Premium Beef/National Beef Packing, under the auspices of JBS-Brazil, would have on the competitiveness of each state’s market outlets for feeder cattle,” said Bullard. R-CALF USA has now provided the U.S. Justice Department with five separate submissions, and has met personally with the agency to help it better understand how the U.S. cattle market functions and how the proposed merger would have a detrimental impact on the competitiveness of the entire U.S. cattle industry. R-CALF USA’s members also are working with state attorneys general in a dozen states to urge them to stand up for independent cattle producers. Note: To view R-CALF USA’s fifth submission to the Justice Department regarding the proposed JBS acquisitions, visit the “Competition Issues” link at www.r-calfusa.com. # # # 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. |
