2 November 2012

3 minute read

North America

Earlier in October, JBS assumed the management of Canadian operations of XL Foods. The US operations, however, will continue to be operated by XL Foods for the time being.

R-CALF USA’s letter also calls for an investigation into the possible effects of the proposed merger on both the US live cattle market and on the consumers’ beef market.

R-CALF USA CEO Bill Bullard said within just minutes of sending the letter, he received confirmation that JBS USA has secured an option to purchase additional cattle slaughtering plants.

“It is now confirmed that the threat to our cattle industry’s fast-receding competitive marketplace is real and so our requests for an investigation and enforcement action against this threat are now in play,” Mr Bullard said.

The letter includes a copy of an article published last week that indicates JBS USA secured “an exclusive option to purchase from Canadian-based XL Foods two cattle slaughtering plants in Canada, a feedlot and farmland in Canada, and two US slaughtering plants.”

The US slaughtering plants reportedly offered to JBS USA are located in Omaha, Nebraska, and Nampa, Idaho.

R-CALF USA is requesting the US government “to immediately initiate an investigation to determine the potential effects the proposed JBS USA acquisition of both the two Canadian beef packing plants and the Canadian feedlot and the two US beef packing plants will have on competition within the US live cattle market and the consumers’ beef market.

“Based on information and belief, the two Canadian beef packing plants and the Canadian feedlot are major beef and/or cattle exporters and the US is the primary export market. To the extent that JBS USA and the other dominant beef packers in the US claim that the US cattle and beef industry and the Canadian cattle and beef industry operate in an integrated, North American market, it would be important to determine the potential effect on the US cattle market should JBS USA acquire a dominant market position in Canada and further increase its dominant market position in the United States,” the letter continues.

R-CALF USA estimates that the proposed acquisitions would result in JBS USA becoming the United States’ largest or second largest beef packer. JBS USA’s parent company, JBS SA, already is the worlds largest beef packer.

“R-CALF USA has long held that both US cattle producers and US consumers already are being exploited by monopsony and monopolistic practices facilitated by the monopolistic structure of the US cattle and beef markets in which JBS USA and only three other firms control approximately 82 per cent of the market. We strongly oppose any further mergers or acquisitions by any of the “Big Four” US beef packers on the grounds that any such merger or acquisition would result in the reduction, if not elimination, of competition in the US cattle market and in the consumers’ US beef market,” the letter states.

Mr Bullard said his group has already notified other farm and cattle groups across the country about the urgent need to alert their respective state attorneys general to this proposed merger and has requested a hearing regarding the antitrust aspects of this proposal by the US Senate Judiciary Committee.”

In 2008, R-CALF USA and its allied organizations successfully encouraged 17 state attorneys general to join with the Justice Department to block JBS’ previous attempt to acquire National Beef Packing Company.

“By working with our affiliates and friends, we succeeded in blocking that anticompetitive merger then and we will block this anticompetitive merger now,” Mr Bullard concluded.

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