Justice Department Seeks to Block JBS Purchase of National Beef

Release Date: 



John Crabtree, johnc@cfra.org, (402) 687-2103 ext. 1010
LYONS, NE – The U.S. Justice Department and 13 state attorneys general filed a lawsuit with the U.S District Court in Chicago on October 20, 2008 seeking to stop the Brazilian meatpacker JBS’s proposed acquisition of National Beef Packing.
"I commend the Justice Department and the Attorneys General for standing up to JBS.  Thousands of farmers, ranchers and other concerned citizens - rural and urban -have voiced their concern and opposition to JBS acquiring National Beef and Smithfield Beef.  Their voices have been heard and, at least in part, responded to by Justice and the Attorneys General," said John Crabtree of the Center for Rural Affairs.
The Justice Department's antitrust suit was joined by the states of Colorado, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Texas and Wyoming. 

Missouri Attorney General Jay Nixon said. "Beef is a key contributor to our state's status as an agricultural powerhouse. This significant elimination of competition among the packing companies that buy beef would hit our farmers and ranchers at a time when they are already facing crippling increases in the cost of feed and fuel."

In March 2008 JBS, the largest beef packer in the world, announced their intention to purchase National Beef and the Smithfield Beef group.  Those acquisitions would have reduced the U.S. cattle market from five major packers to just three and would have made JBS the largest U.S. beef packer with nearly 35% of the cattle slaughter market, followed closely by Tyson and Cargill.  The top four packers JBS, Tyson, Cargill and National together slaughter more than 85% of U.S. cattle.

"Allowing five major packers to become three, with 35% of national beef slaughter held by JBS at the top, would be irresponsible and would further damage an already fragile market and leave it wide open for manipulation, anti-competitive behaviors and price discrimination by packers against family farmers and ranchers," Crabtree continued.  "Family farmers, ranchers and rural communities would pay the ultimate price for such consolidation - both in prices paid to producers and in the economic benefit retained by rural communities."

According to Thomas Barnett, Assistant U.S. Attorney General for Antitrust, the transaction was likely to lead to lower prices for cattle producers and to higher prices for consumers on the output side.
Justice also announced that they will approve the JBS purchase of Smithfield Beef Group, including Five Rivers Cattle Feeding with the one-time capacity to feed 800,000 head of cattle in several states.  JBS and National Beef announced it will vigorously oppose the government’s suit.

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