R-CALF USA wants probe of JBS takeover of beef plants

By Jim Webster

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Oct. 24, 2012 -- The Ranchers-Cattlemen's Action Legal Fund United Stockgrowers of America (R-CALF USA) has asked for a federal investigation of JBS USA's plan to assume management of, and potentially acquire, U.S. and Canadian slaughter plants owned by XL Foods of Alberta.

 Together we can feed the Bees

JBS USA's Brazilian parent organization announced last week that a JBS Canadian subsidiary agreed to assume management of Canadian operations of XL Foods, which were shut down after a massive recall of beef this month. JBS said the agreement permits “an exclusive purchase option of these operations and of the U.S. operations of XL Foods.” The U.S. plants in Nampa, Idaho, and Omaha will continue to be operated by XL Foods during the option period.

R-CALF USA asked Attorney General Eric Holder, Secretary of Agriculture Tom Vilsack and USDA Grain Inspection Packers and Stockyards Administration head Larry Mitchell “to immediately initiate an investigation to determine the possible effects of the proposed merger on both the U.S. live cattle market and on the consumers' beef market.” CEO Bill Bullard said that “the threat to our cattle industry's fast-receding competitive marketplace is real.”

If JBS acquires XL's three Canadian plants and two U.S. operations, Bullard said in a letter to the government officials, “the Brazilian-based corporation likely will become one of the largest, if not the largest, beef packer in Canada and likely the first or second largest beef packer in the United States. We estimate the proposed acquisition of the two U.S. beef packing plants by JBS USA would increase its daily U.S. capacity to over 26,000 head of cattle per day, which would rival, if not exceed, the individual packing capacities of Tyson and Cargill - presently the first and second largest U.S. beef packers, respectively.” Its statement continued:

R-CALF USA has long held that both U.S. cattle producers and U.S. consumers already are being exploited by monopsony and monopolistic practices facilitated by the monopolistic structure of the U.S. cattle and beef markets in which JBS USA and only three other firms control approximately 82%. We strongly oppose any further mergers or acquisitions by any of the ‘big four' U.S. beef packers on the grounds that any such merger or acquisition would result in the reduction, if not elimination, of competition in the U.S. cattle market and . . . beef market.”

Jeremiah O'Callaghan, JBS investor relations officer, said Oct. 17 that JBS USA would provide management services to the XL Lakeside beef processing plant in Brooks, Alberta, with capacity for 4,000 head of cattle daily; another in Calgary, Alberta, with capacity for 1,000 head of cattle per day; a feedlot in Brooks with one-time capacity to feed 70,000 head; 6,600 acres of farmland adjacent to the feedlot in Brooks, and the two U.S. plants with combined 2,200 head capacity. If it exercises the option, JBS would pay XL Foods $100 million, half in stock and half in cash.


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