Billings, Mont. -- In a strongly worded four-page letter to the U.S. Department of Justice (Justice), 17 R-CALF USA officers, directors and committee chairs from 12 states on Thursday expressed deep disappointment that Justice failed to properly investigate the antitrust implications associated with Brazilian-based JBS S.A.'s (JBS') acquisition of Pilgrim's Pride Corporation (Pilgrim's Pride).
The letter states, "In our opinion, the Justice Department's action in refusing to fully investigate the antitrust implications of the unprecedented merger between JBS and Pilgrim's Pride -- the world's largest beef packer and North America's largest broiler processor, respectively -- when these firms both control and market substitutable, competing proteins, is an irrepressible defiance of President Obama's promise to ensure competitive markets for the nation's farmers and ranchers, including its cattle farmers and ranchers."
The group's letter further states that Justice's inaction has "decisively undercut" the financial efforts of U.S. cattle producers whom were assessed $82.8 million in 2007 to fund the beef checkoff program that is designed to enhance beef's competitiveness with poultry and other protein substitutes. The letter points out that a producer-funded checkoff research project, which claims that beef's nutritional content is superior to poultry, was touted by the checkoff program as one of the 20 top accomplishments during the program's first 20 years of existence. In addition, the group's letter cites a 2006 producer-paid checkoff advertisement that publicly claimed the checkoff program was needed because of the significant supply of inexpensive poultry products.
"When, as here, the federal government has mandated that producers contribute to a program so beef can better compete against chicken, the Justice Department has no basis to assert that beef and poultry are not competing products and no basis to claim that a merger involving these competing products won't seriously reduce competition in direct violation of U.S. antitrust laws," said R-CALF USA CEO Bill Bullard.
"JBS is now free to control the majority of U.S. broiler production while it already controls a near-dominant share of U.S. fed cattle production and, therefore, is now free to adjust at will both the supply and price of both of these competing products. This is the antithesis of competition," the R-CALF USA letter states.
In its correspondence to Justice, R-CALF USA paints a dire portrait of the U.S. cattle industry by stating, "The markets for U.S. cattle producers are broke; cattle prices are falling precipitously; cattle feeders are experiencing record losses; tens of thousands of independent cattle farmers and ranchers are exiting the industry in the year this letter is written; consumers continue to pay near record prices for beef; and, the U.S. Department of Justice sits silent to allow yet another anti-competitive mega-merger to occur in the meatpacking industry that certainly will further reduce competition. We could not be more discouraged."