The Prairie Star: Montana Ag Newspaper

BILLINGS, Mont. - Montana Cattlemen’s Association is concerned with the proposed purchase of National Beef Packing Co., Smithfield Beef Group and Five Rivers Ranch Cattle Feeding LLC by the Brazilian group JBS.

Currently JBS is the world’s largest beef packer and the third largest beef processor in the U.S. since it acquired Swift and Company in May 2007. If this proposed merger is completed, 80 percent of the U.S. beef processing will be left to only three companies: JBS, Cargill and Tyson, with JBS becoming the largest.

Board members of the Montana Cattlemen’s Association (MCA) expressed concern on the further consolidation of the packing industry during a recent conference call. There is a serious lack of competition in the beef industry, said MCA District 6 Director Bruce Lee. Last week, we had five major packing companies—now it looks like we will be down to just three.

To protect producers from cost manipulation in the packing industry, a ban on packer ownership of cattle prior to slaughter has been proposed in the Senate version of the Farm Bill.

The packer ban is a great idea, but if these companies continue to merge—we will be at the mercy of a monopolistic industry, Lee said

This further concentration will inevitably lead to less competition in the beef industry and is troubling for U.S. cattle producers. Further, with the acquisition of Five Rivers, JBS will control 800,000 feeders (one-time feeding capacity) and increase the effect of captive supplies. Ranchers will once again be the losers.

The estimated value of this acquisition is $1.5 billion in cash, stock and debt assumption. If the consolidation is approved, JBS will control 32 percent of the beef processing market share. The transaction will reduce rancher's options to sell cattle, potentially decrease product choice, and increase beef prices for consumers.

Montana cattle producers are concerned about reduced market opportunities, possible anti-competitive and predatory business practices, and increasing agribusiness consolidation.

We have seen the lengths packers will go to make a few bucks with that mess down in California. I am afraid that the producer will end up with the short end of stick with this deal, Lee continued. As cattle producers we just want some sort of assurance that we will receive a fair price for our product.

For more information about the Montana Cattlemen's Association, please call 406-259-5433, e-mail js@montanacattlemen.org, or visit the Web site at www.montanacattlemen.org.

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