When is the marketplace too thin? And who should be the rightful owners of U.S. packing plants? For R-CALF, the answers are “already” and “not Brazilian companies.”
Late on Thursday, March 28, the Ranchers-Cattlemen Action Legal Fund (R-CALF) sent a letter to U.S. Attorney General William Barr urging him to block the proposed acquisition of Iowa Premium by National Beef Packing. The letter voices the group’s concern that the acquisition would reduce competition in the nation’s strongest cash discovery market for fed cattle, as well as turn over more of the U.S. packing industry to Brazilian control.
“National Beef competes with Iowa Premium for fed cattle in Iowa, particularly in the fall and winter when southern cattle supplies typically tighten,” the letter, signed by R-CALF CEO Bill Bullard, read.
“National Beef’s acquisition of Iowa Premium will substantial reduce competition for fed cattle regionally, as well as nationally, thus harming independent U.S. cattle producers. The acquisition will also likely substantially reduce competition for boxed beef, which will harm American consumers.”
The letter asks that the attorney general take antitrust enforcement action against the acquisition, which was announced by National Beef on March 11. In the announcement of the acquisition, National Beef noted that, “The transaction is subject to customary conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the second quarter of 2019.”
Tim Klein, president and CEO of National Beef, expressed excitement at the time, adding that “we look forward to strengthening [Iowa Premium]’s relationships with the family farmers who produce the highest quality Black Angus cattle in the U.S.”
In its letter to Barr, however, R-CALF asserted that the acquisition would “accelerate the decline of the fed cash cattle market.”
“The Iowa-Minnesota fed cattle procurement region, as so designated by the USDA, is the U.S. cattle industry’s last bastion of robust regional competition for fed cattle,” the letter pointed out. It additionally highlighted USDA Agricultural Research Service records showing over 57 percent of cash fed cattle in the region were purchased via the cash market in 2018.
“As a result, the IA-MN fed cattle procurement region is vitally important for maintaining a sufficient volume of cash market cattle with which to ensure that at least some semblance of competitive price discovery on a national basis,” the letter added.
The request additionally voiced concern over “the fact that National Beef is now majority-owned by the Brazilian firm Marfrig.” The letter characterized Marfrig as a consistent “bad actor” on the international and beef stage, citing violations of Brazilian antitrust rules including collusion with Brazilian beef giant JBS, and allegations of bribing Brazilian food safety officials to export unsafe beef.
“Further, we believe it is self-evident that Marfrig and JBS, together or individually, will favor Brazilian cattle producers and Brazilian beef over U.S. cattle producers and U.S. beef when given the opportunity to do so in the global marketplace.”
The letter ended, urging Barr to “aggressively enforce United States antitrust laws” to prevent the acquisition. — WLJ
