Letter to Herb Kohl, Chair of the Antitrust Subcommittee, Re: Proposed JBS Acquisition
Letter
Letter to Herb Kohl, Chair of the Antitrust Subcommittee, Re: Proposed JBS Acquisition
Johnson Calls For Senate Hearing on Proposed JBS Acquisition
Expresses the concerns of ranchers to Subcommittee Chairman
U.S. Senator Tim Johnson (D-SD) today expressed the concerns of ranchers and producers regarding JBS' proposed acquisition of National Beef Packing Company and Smithfield Food's beef processing division to Antitrust Subcommittee Chairman Herb Kohl (D-WI) and called for a hearing to examine the deal. In a letter to Kohl, Johnson highlighted the effects the proposal would have on the livestock sector.
"A growing number of South Dakotans have expressed their reservations about this proposal, and I share those concerns," Johnson said. "Our producers and ranchers are already struggling with ever-increasing consolidation, and I am deeply concerned that this deal would present them with additional challenges."
National Beef and Smithfield Food are the fourth and fifth-largest beef packing operations in the country. The deal would also include the largest cattle feeding operation in the nation, Five Rivers Cattle Feeding. If approved, this deal would give JBS roughly 30 percent of the beef market in the United States.
"A deal of this magnitude requires careful consideration, especially considering its potential impact on our beef and livestock sectors, and I hope the subcommittee will give this proposal the scrutiny it deserves," continued Johnson.
In March, Johnson also urged the Department of Justice to conduct a thorough review of the proposal in a letter to Attorney General Thomas Barnett. In the letter, Johnson reiterated his concern for ranchers across the nation's Heartland.
A Copy of the Letter is Below:
Dear Chairman Kohl:
I write to urge the Senate Judiciary Committee's Antitrust, Competition Policy and Consumer Rights Subcommittee to hold a hearing on the proposed acquisition of Smithfield Food Inc.'s beef division and National Beef Packing Co. by Brazilian-based JBS S.A. JBS currently holds an astonishing share of the beef processing sector both nationally and internationally, ranking third with respect to the U.S. market and is the leader on a global basis. I have heard from ranchers across South Dakota who are incredibly concerned for the impacts of these proposed purchases and I share in their concern for JBS's proposal.
National Beef, which has agreed to sell to JBS for approximately $970 million, and Smithfield Food Inc.'s beef division, which would be purchased for $565 million, are the fourth and fifth-largest beef packing operations in the United States, respectively. Five Rivers Cattle Feeding LLC is the largest cattle feeding operation in the nation, and would also be purchased by JBS under this agreement. Approval of the pending acquisitions would make the Brazilian-based company the leader with respect to domestic market share, as the company just last year purchased a major beef processing entity in the United States. Moreover, these agreements would leave only three major players in the packing industry.
According to data from the United States Department of Agriculture, the top four beef packing firms' market share has risen from about 26% in 1963 to an astonishing 80% in 2003. Ranchers are facing ever-increasing consolidation in the livestock sector. I am very concerned for the impact that these proposed agreements will have on our nation's producers, compounding problems with packer ownership of livestock and captive supply. Price discovery options are nothing short of critically important and independent ranchers must be kept in the fold. I strongly urge you to conduct a hearing on these proposed acquisitions so that the impacts on our nation's beef producers and effect on competition in our livestock sector can be completely understood and discussed.
Thank you for your prompt attention to this critically important matter.
Sincerely,
Tim Johnson
United States Senate
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