Group Asks State Attorneys General to Help Block JBS/ Pilgrim's Pride Merger
Billings, Mont. - R-CALF USA has contacted the 17 state attorneys general who, last year, helped to block JBS S.A.'s (JBS') acquisition of National Beef Packing Co. (National Beef), to request they step in to prevent the merger of JBS and Pilgrim's Pride Corp. (Pilgrim's Pride). The group will contact the remaining 33 state attorneys general later this week to request the same assistance.
"To protect both the farmers and ranchers within your state whose economic viability is wholly dependent on robust competition, and to protect the consumers within your state who deserve both choice and competitively priced meat products, we urge you to encourage the Department of Justice to take enforcement action to block the proposed JBS/Pilgrim's Pride merger," wrote R-CALF USA President/Region IV Director Max Thornsberry. "We also encourage you to join with the Department of Justice to ensure that this anticompetitive merger does not take place.
"Today, we are faced with a new merger proposal by JBS that, like its proposal in 2008, would further reduce competition in U.S. meat and cattle markets and harm U.S. consumers and U.S. producers," he continued. "JBS now proposes to acquire Pilgrim's Pride, the largest poultry broiler company in the United States, and we are once again seeking your assistance to prevent the further loss of competition, as well as to protect both consumers and producers against anticompetitive trade practices.
"The foundation for our concern is that beef and poultry are competing, substitute protein products in the consumer market and that the merger would allow JBS to arbitrarily increase and decrease poultry production and/or raise and lower poultry prices within its fully integrated poultry division to manipulate both the demand for beef and the price for live cattle," Thornsberry pointed out.
R-CALF USA believes the merger of JBS and Pilgrim's Pride would violate U.S. antitrust laws, as it would reduce competition between the competing proteins - beef and poultry - and enable JBS to greatly increase its exercise of market power to the detriment of both U.S. cattle producers and U.S. meat consumers," he said.
To substantiate its concerns, R-CALF USA has sent two separate submissions to the U.S. Department of Justice, which urge the Justice Department to take enforcement action against the merger.
"In addition to lower cattle prices paid to U.S. cattle producers, we are concerned that the savings to JBS resulting from lower cattle prices (which we have estimated to be as high as $2.4 billion annually) likely would not be passed on to consumers as evidenced by the current disconnect between live cattle prices received by U.S. cattle producers and retail beef prices paid by consumers," the letter states. "This disconnect is itself evidenced both by the growing spread between live cattle prices and retail beef prices, as well as the fact that cattle feeders have been experiencing long-run financial losses while beef prices have risen to record highs and remain at near record levels."
Background: JBS, based in Brazil, is the world's largest beef packer. In mid-2007, JBS acquired Swift & Co., then the third-largest beef packer in the United States. In late-2008, JBS acquired Smithfield Beef Group Inc., then the fifth-largest U.S. beef packer. This 2008 acquisition enabled JBS to gain control of approximately 25 percent of all the fed cattle slaughter in the United States. In addition, it put in the hands of JBS control of the largest U.S. cattle feeding company, Five Rivers Ranch Cattle Feeding, representing an unprecedented level of vertical integration for JBS in particular, and for the U.S. cattle industry as a whole. Also in late-2008, the U.S. Department of Justice, 17 state attorneys general initiated enforcement action that successfully blocked JBS' attempt to acquire National Beef, the fourth-largest beef packer in the United States. Presently, JBS and three other beef packers control over 85 percent of all the fed cattle slaughter in the United States.
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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 directors and committee chairs are extremely active unpaid volunteers. 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.
