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Grassley seeks DOJ review of pork sale

By Staff | Aug 6, 2015

kersh@farm-news.com

WASHINGTON – Sen. Chuck Grassley, R-Iowa, sent a letter Tuesday to the 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 the industry’s concentration and decrease competition in the U.S. pork industry.

“If the JBS-Cargill deal is finalized,” Grassley said, “the four largest pork processors will control roughly 71 percent of the processing capacity in the country.

“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.”

In joint news releases issued July 1, JBS and Cargill announced the sale promising “to offer enhanced service to customers and more opportunities for employees and hog producers, while providing an important source of protein to consumers around the world,” said Todd Hall, Cargill senior vice president.

JBS USA and Cargill Inc. are currently the third and fourth largest U.S. pork processors respectively.

If the transaction is finalized, Grassley’s letter said, JBS USA will become the second largest pork processor with a daily slaughter capacity of around 83,000 head. This equates to nearly 20 percent of U.S. daily pork processing capacity.

Grassley has always been critical of such mergers and seeks the Justice Department to ensure there will be a competitive pork market after the purchase is completed.

This transaction, Grassley said, comes almost one year after Tyson Foods purchased Hillshire Farms.

Grassley’s letter said, “I am concerned that continued mergers and acquisitions in an already consolidated pork industry will frustrate competition”

He said he foresees that farmers could see their marketing options reduced, especially in Iowa and Illinois.

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

According to Cameron Bruett, a media contact with JBS, told The Messenger, “We’ve made the appropriate filings with the U.S. Department of Justice, which is standard procedure for a transaction of this type. We look forward to their review.”

Mike Martin, Cargill’s director of communications, filed the exact written statement with The Messenger.

In their July 1 announcement, JBS and Cargill confirmed the sale is subject to regulatory review and approval.

JBS USA has a plant located in Marshalltown, and Cargill Inc. has a plant located in Ottumwa.

Martin Dooley, president and chief operations officer for JBS, said his company is pursuing the acquisition to enhance its ability to serve a diverse, global customer base.

It “will strengthen our position as a producer and supplier of all major animal proteins around the world,” Dooley said.

Included in JBS’ acquisition of Cargill’s pork business are two Midwest meat processing plants, one in Ottumwa, and the other at Beardstown, Illinois.

Both plants were acquired by Cargill in 1987, and in 2014 they processed a total of 9.3 million hogs.

The purchase by JBS also includes five feed mills – two in Missouri, and one each in Arkansas, Iowa and Texas- and four hog farms – two in Arkansas and one each in Oklahoma and Texas.

JBS first entered the U.S. pork market with the acquisition of Swift & Company in 2007 and has steadily improved performance ever since.

The company has more than 6,000 team members and the total daily capacity to process more than 50,000 hogs at processing facilities in Marshalltown, Worthington, Minnesota; and Louisville, Kentucky.

JBS brands include Swift and Swift Premium. The announced transaction will enhance its ability to meet increasing global demand for fresh and frozen pork products, the release said.

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