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Farm, Consumer and Competition Groups Oppose JBS-Cargill Pork Merger

31 July 2015

US - The American Antitrust Institute, Food & Water Watch, Iowa Farmers Union, Missouri Rural Crisis Center and National Farmers Union have demanded that the US Department of Justice (DOJ) investigate the proposed JBS-Cargill pork packing acquisition, arguing that the deal would concentrate buyer and seller power in the pork industry.

The proposed $1.45 billion acquisition would create the second largest pork processing company in the US. The groups are concerned that increased concentration in the pork packing industry would harm hog farmers and consumers.

“The wave of mega-mergers sweeping the food and agribusiness industries encourages a cascade of consolidation throughout the supply chain,” said Wenonah Hauter, Food & Water Watch executive director.

“The rampant consolidation is raising consumer prices, reducing consumer choices and undermining the economic livelihood of farmers.”

Food & Water Watch, Iowa Farmers Union, Missouri Rural Crisis Center and National Farmers Union also submitted a joint white paper documenting the anticompetitive effects of the proposed JBS-Cargill acquisition. The proposed deal would significantly increase the pork packing industry’s power over hog farmers.

A combined JBS and Cargill would accelerate vertical integration and reliance on hog production contracts. It would also, the white paper concludes, concentrate the wholesale pork product market, disadvantaging grocery stores and restaurants and ultimately raising pork prices for consumers. Post-merger, the largest two pork packing firms operating in the U.S. — Smithfield and JBS — would be controlled by foreign companies.

“The JBS-Cargill merger would combine the third and fourth largest pork packing companies in the United States, further concentrating an industry that is already run by just a handful of firms,” said National Farmers Union President Roger Johnson.

“The rapid consolidation of market power in the hands of just a few pork processors has resulted in the loss of more than 90 percent of all hog farms since 1980. The JBS-Cargill merger certainly warrants further investigation by the Department of Justice and should be stopped.”

If the proposed acquisition were approved, the four largest pork packers would slaughter about three-quarters of hogs, up from about two-thirds today. The white paper extensively examines how the proposed acquisition would increase the economic market power of pork packers over farmers in the Midwestern hog belt. The proposed merger would reduce the number of hog buyers and marketing options for hog farmers. After the proposed acquisition, the top four pork packers would control 94.5 percent of the market in Iowa alone, 85.5 per cent in Iowa and surrounding states and 82.3 percent in Illinois-Indiana and surrounding states.

“The JBS-Cargill merger would reduce the number of hog buyers in the Midwest and allow the pork packers to further depress the prices farmers receive for their hogs,” said Rhonda Perry, Program Director at Missouri Rural Crisis Center and livestock and grain farmer in Howard County, Missouri.

“The pork packing monopoly has already driven almost all of the independent hog farmers out of business. The Justice Department has to stand up for America’s farmers and rural communities and block this merger.”

Rapid consolidation in the food and agriculture sectors has been of rising concern to farmers, consumers and federal regulators. Since the economy began to recover from the recession, the pace of mergers has accelerated and threatens to increase concentration in the already over-consolidated food and agriculture sectors.

AAI's President, Diana Moss, explained: “This merger could also create ripple effects throughout the food chain by spurring additional mergers to push back against the greater market power of JBS and Cargill. With less and less competition, we should be gravely concerned about the safety and stability of our important food supply chain.”

ThePigSite News Desk

Top image via Shutterstock



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