JBS Merger Could Impact Oklahoma Cattle Producers

05/29/2008 -- The proposed acquisition of National Beef Packing Company and Smithfield Beef Group by Brazilian meat company JBS could have implications for Oklahoma cattle producers, OKlahoma Attorney General Drew Edmondson said today.

Oklahoma cattle: Photo by Wade (CC)

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In a letter to U.S. Attorney General Michael Mukasey, Edmondson said by taking over National Beef and Smithfield, JBS will become the largest beef processor in the nation and the new company could have a significant impact on the feedlot segment of the beef industry.

“Smithfield currently owns Five Rivers Ranch Cattle Feeding, LLC, which is believed to be the largest cattle feeder in the United States,” Edmondson said. “If the merger is approved, the country’s largest meat processor will control the country’s largest feedlot operation.”

In his letter, Edmondson says beef processing “is already a highly concentrated industry. The top five processors exercise an 85% market share and this merger will result in the consolidation of three of these processors into one.”

Edmondson’s letter says Oklahoma is the fifth largest cattle producing state in the nation and could see more of an impact because Five Rivers operates five feedlots in southwest Kansas and the Oklahoma and Texas panhandles.

“After the merger, Oklahoma producers could see a packing market with fewer buyers, and one of these buyers may have a limited need to buy cattle because it owns the feedlots,” Edmondson said.

The attorney general assigned his top antitrust attorney to review JBS’s plan.

“We have been looking at this for a few months,” Edmondson said. “We’ve consulted with feedlot owners, cattle producers and other attorneys. Our analysis shows this merger could have harmful effects.”

Source: Oklahoma Attorney General