Chuck Grassley Asks for Justice Department Review of JBS- Cargill Pork DealThu, 30 Jul 2015 05:43:23 CDT
Sen. Chuck Grassley of Iowa sent a letter earlier this week to the Department of Justice pressing the Antitrust Division to review JBS USA's proposed acquisition of Cargill Inc.'s pork unit.
Grassley expressed concern that the merger will increase concentration and decrease competition in the U.S. pork industry.
"If the JBS-Cargill deal is finalized, the four largest pork processors will control roughly 71 percent of the processing capacity in the country. Continued mergers and acquisitions in an already consolidated pork industry could reduce competition. And, reduced marketing opportunities for farmers and independent producers, and the subsequent impact it could have on pork prices for consumers is of great concern," said Grassley.
JBS USA and Cargill Inc. are currently the third and fourth largest U.S. pork processors respectively. If the transaction is finalized, JBS USA will become the second largest pork processor with a daily slaughter capacity of around 83,000 head. This equates to nearly 20 percent of U.S. daily pork processing capacity.
Grassley has long worked to ensure such mergers are carefully reviewed by the Justice Department to ensure a competitive market. This transaction, reportedly valued at $1.45 billion, comes almost one year after Tyson Foods purchased Hillshire Farms for over seven billion dollars.
If the JBS-Cargill deal is consumated, it will also mean that JBS will become more vertically integrated in the pork industry in the US. The Cargill pork unit includes several sow units- including one in eastern Oklahoma between Poteau and Ft. Smith, Arkansas, as well as the old Premium Standard Sow Farms in the Dalhart, Texas area. Cargill had acquired the Dalhart operations of Premium Standard Farms LLC in the spring of 2011.
To read the full letter that Senator Grassley sent to the Justice Department, click here.
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