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Beef industry merger draws criticism from American Farm Bureau Federation.

A possible mega-merger of three of the USA's five largest beef packers with the largest beef processor has drawn the attention of the American Farm Bureau Federation (AFBF) because of its likely impact on all segments of the U.S. beef industry. AFBF president Bob Stallman expressed farmers' and ranchers' concerns about the proposed deal by Brazil-based JBS Swift in a letter to Douglas Ross, the special counsel for agriculture in the U.S. justice department's antitrust division. "Our farmers and ranchers, especially our beef producers, expect a thorough review and analysis by the Department of Justice (DOJ) to determine what impact this will have at the producer level and the cattle markets," Stallman wrote. "The proposed $1.5 billion transaction would combine the nation's third-, fourth-, and fifth-largest beef packers with the nation's largest cattle feeder. It would make JBS Swift the largest American beef processor by a significant margin and remove an important independent bidder from the fed cattle market."

Stallman asked Ross to work closely with agriculture department officials to analyze the proposed acquisition of Smithfield beef assets, National Beef and Five Rivers Ranch Cattle Feeding by JBS Swift. Only last year, JBS acquired Swift & Co, making JBS Swift the world's largest beef processor, he pointed out.

"Farm Bureau understands and appreciates that beef packers operate within a tight profit margin environment just like cattle feeders, stocker operators and cow-calf producers," Stallman wrote. "However, livestock producers are faced with a rapidly concentrating market as it is. Our farmers and ranchers are questioning the potential for market manipulation and further downward pressure on prices received by the producer." In addition, Stallman asked Ross to inform AFBF of the "potential challenges as you consider this or any other proposed agribusiness merger or acquisition."
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Publication:Food & Drink Weekly
Date:Mar 24, 2008
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