Mega Meat Merger Meets Suspicion

WASHINGTON, D.C., US – The proposed meat merger of three of the United States largest beef packers and processors was always going to cause controversy for its likely impact on the whole industry, but now the move has caught the full attention of the American Farm Bureau Federation (AFBF).

12 March 2008

2 minute read

North America

AFBF President Bob Stallman expressed farmers’ and ranchers’ concerns about the proposed deal by Brazil-based JBS Swift in a letter sent to Douglas Ross, the special counsel for agriculture in the Justice Department’s antitrust division.

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"Farm Bureau understands and appreciates that beef packers operate within a tight profit margin environment just like cattle feeders, stocker operators and cow-calf producers"

AFBF President Bob Stallman

“Our farmers and ranchers, especially our beef producers, expect a thorough review and analysis by the Department of Justice (DOJ) to determine what impact this will have at the producer level and the cattle markets,” Stallman wrote. “The proposed $1.5 billion transaction would combine the nation’s third-, fourth-, and fifth-largest beef packers with the nation’s largest cattle feeder. It would make JBS Swift the largest American beef processor by a significant margin and remove an important independent bidder from the fed cattle market.”

Stallman asked Ross to work closely with Agriculture Department officials to analyze the proposed acquisition of Smithfield beef assets, National Beef and Five Rivers Ranch Cattle Feeding by JBS Swift. Only last summer, Stallman wrote, JBS acquired Swift and Company, making JBS Swift the world’s largest beef processor.

“Farm Bureau understands and appreciates that beef packers operate within a tight profit margin environment just like cattle feeders, stocker operators and cow-calf producers,” Stallman wrote. “However, livestock producers are faced with a rapidly concentrating market as it is. Our farmers and ranchers are questioning the potential for market manipulation and further downward pressure on prices received by the producer.”

In addition, Stallman requested Ross to inform AFBF of the “potential challenges as you consider this or any other proposed agribusiness merger or acquisition.”