Senator warns marketing options for farmers could be further reduced by $1.45 billion merger.

Krissa Welshans 1, Feedstuffs Editor

July 29, 2015

2 Min Read
Grassley presses Justice Department on JBS-Cargill merger

U.S. Senator Chuck Grassley (R., Iowa), chairman of the Senate’s Judiciary Committee, sent a letter July 27 to the U.S. Department of Justice pressing the Antitrust Division to review JBS USA’s proposed acquisition of Cargill Inc.’s pork unit.

Grassley expressed concern that the merger will increase concentration and decrease competition in the U.S. pork industry. 

“Continued mergers and acquisitions in an already consolidated pork industry could reduce competition.  And, reduced marketing opportunities for farmers and independent producers, and the subsequent impact it could have on pork prices for consumers is of great concern,” said Grassley. 

JBS USA and Cargill Inc. are currently the third and fourth largest U.S. pork processors respectively.  If the transaction is finalized, JBS USA will become the second largest pork processor behind Smithfield, with a daily slaughter capacity of around 83,000 head.  This equates to nearly 20% of U.S. daily pork processing capacity, Grassley said.   

 Grassley has long worked to ensure such mergers are carefully reviewed by the Justice Department to ensure a competitive market.  The transaction, reportedly valued at $1.45 billion, comes almost one year after Tyson Foods purchased Hillshire Farms for $7.7 billion.

Grassley also mentioned Smithfield Foods acquisition of “numerous hog production entities.”

“Today, Smithfield accounts for over 26% of U.S. pork processing and owns 880,000 sows in production.”

“If the JBS-Cargill deal is finalized, the four largest pork processors will control roughly 71% of the processing capacity in the country.  So you understand now why I sent the letter to the Department of Justice. A letter that I usually send to make sure that our Antitrust Laws are being enforced.”

If successful, Grassley warned marketing options for farmers could be further reduced by the merger, especially in Iowa and Illinois where the Cargill processing plants are located.

“The Antitrust Division should scrutinize this deal to ensure that it will not reduce market access opportunities or facilitate possible anti-competitive and predatory business practices in the industry,” he said.

JBS’ acquisition of Cargill’s pork business will include two Midwest meat processing plants, one in Ottumwa, Iowa, and the other at Beardstown, Ill. The purchase by JBS will also include five feed mills (two in Miss,, and one each in Ark., Iowa and Texas), and four hog farms (two in Ark. and one each in Okla. and Texas).

SUBSCRIBE_TO_FEEDSTUFFS

About the Author(s)

Subscribe to Our Newsletters
Feedstuffs is the news source for animal agriculture

You May Also Like