Livestock group voices opinion on potential JBS deal to government

KANSAS CITY, Mo. — Members of the Livestock Marketing Association brought marketing’s concerns over a proposed mega-merger in the packing industry to a recent meeting with officials of the U.S. Department of Justice.

The subject was the proposed acquisition by Brazilian-owned JBS of National Beef Packing Co., Smithfield Beef Group and Smithfield’s Five Rivers Ranch Cattle Feeding, the largest cattle-feeding company in the world.

Effects

The department is currently reviewing the competitive effects of the proposed acquisitions. If allowed, the current “Big Five” packers would become the “Big Three,” and JBS “would control about 80 percent of the U.S. fed cattle market,” said Livestock Marketing Association President Jim Santomaso.

He said the meeting with U.S. Department of Justice attorneys and other staff “was a learning experience for both sides.

For their part, Santomaso said, the U.S. Department of Justice staff members “helped us understand what they’re considering during their review: whether there are sufficient facts showing the acquisition would lead to anticompetitive practices, or if the resulting level of concentration would be enough to inhibit competition.”

“Competition is something America’s livestock markets understand well,” he said.

“Our businesses are founded on the principle that the best way to get the best price is put a seller’s livestock before several potential buyers, and we told the Justice officials we are very concerned that the merger would put fewer buyers on the seats at our markets.”

Captive supply

Captive supply — cattle owned by the packers who slaughter them — is a continuing industry concern, Santomaso said.

“That’s why an important consideration in this proposed merger is that JBS’s acquisition of Five Rivers would put the nation’s largest packer in control of the nation’s largest cattle feeding operation — and do we know what impact that would have on prices paid, both to producers and by consumers?”

Association representatives also told U.S. Department of Justice officials they should factor in, as part of their review, the broad implications of foreign ownership of such a large part of the livestock and meat industry.

Bottom line

The bottom line, Santomaso said, is that the Livestock Marketing Association wants this proposed acquisition “thoroughly scrutinized, and the interests of both producers and consumers protected” as the U.S. Department of Justice moves forward in making its final determination.

The meeting, held April 29, came during the Livestock Marketing Association’s fourth annual Washington, D.C., fly-in.