R-CALF USA sent a formal request to U.S. Attorney General William P. Barr urging him to block the proposed acquisition of Iowa beef packer Iowa Premium by National Beef Packing Co., which is now majority owned by Brazil-based Marfrig Global Foods.
In its nine-page letter, R-CALF USA wrote that National Beef’s acquisition of Iowa Premium will substantially reduce competition for fed cattle regionally as well as nationally, thus harming independent U.S. cattle producers, and will also likely substantially reduce competition for boxed beef, which will harm American consumers.
The letter points out that National Beef is a member of the “Big 4,” which the group identifies as controlling 85% of the nation’s fed cattle market. National Beef slaughters 12,000 fed cattle per day, and Iowa Premium slaughters 1,100 fed cattle per day, making Iowa Premium the nation’s 20th-largest beef packer.
The group argues that allowing National Beef to roll Iowa Premium into the Big 4 will accelerate the already shrinking price discovering cash market, will accelerate the decline of smaller to mid-sized beef packing plants and will allow the Brazilian beef packing cartel to weaken the U.S. cattle industry.
The letter states that the Iowa/Minnesota fed cattle procurement region “is the U.S. cattle industry’s last bastion of robust regional competition for fed cattle.” The Iowa/Minnesota fed cattle region is the only region in which more than 50% of fed cattle are still purchased in the competitive cash market.
R-CALF USA argues that this will likely change if the acquisition is allowed to occur because small to mid-sized beef packers like Iowa Premium operate differently from the Big 4. Among the differences the group cites are that smaller packers are not inclined to refuse to buy cattle on a live-weight basis by offering bids only on a carcass-weight basis, which then subjects cattle producers to shipping costs, and smaller packers are more inclined to “step out” of the narrow, one- to two-day, late-week trading window established by the Big 4 to offer more competitive bids earlier in the week.
According to the letter, National Beef’s new owner, Marfrig, had been cited for antitrust violations in Brazil and was implicated in the widespread Brazilian food safety scandal that caused the U.S. to close its border to fresh Brazilian beef in 2017.
“The U.S. Department of Justice should take decisive action to prevent Marfrig-owned National Beef from acquiring Iowa Premium on the grounds that Marfrig demonstrates an unrepentant propensity for: (1) exploiting cattle producers through anticompetitive buying practices; (2) exploiting consumers through the production and sales of unsafe beef; (3) violating basic food safety standards, and (4) engaging in cartel behavior with JBS," the group wrote.
In its conclusion, R-CALF USA urged the U.S. Department of Justice’s Antitrust Division to aggressively enforce U.S. antitrust laws to block the proposed acquisition of Iowa Premium by National Beef.