The Ranchers and Cattleman’s Action Legal Fund (R-CALF) is asking the U.S. Department of Justice to initiate an antitrust investigation and issue an enforcement action to block JBS USA from buying properties from XL Foods, the Canadian company linked to a massive beef recall and E. coli outbreak.
On October 17, JBS USA, a wholly owned subsidiary of Brazil-based JBS S.A., announced an agreement with XL Foods to manage one of the company’s Canadian operations. The agreement also provided JBS USA with an exclusive option to purchase Canadian and U.S. operations of XL Foods including: the Lakeside beef packing plant; a beef packing plant in Calgary, Alberta; a feedlot in Brooks, Alberta, and the adjacent farmland acreage; a beef packing plant in Omaha, Neb.; and a beef packing plant in Nampa, Idaho. Under the terms of the agreement, JBS USA would pay $50 million in cash and $50 million in JBS S.A. shares to exercise the option to purchase those properties. JBS USA would not assume any of XL Foods’ debt or liabilities. XL Foods has been linked to a recall fo millions of pounds of beef in Canada and the U.S. and an ongoing E. coli outbreak that has sickened at least 17 people.
JBS is already the world’s largest beef packer and JBS USA is already America’s second or third largest beef packer and owner of the largest cattle feedlot company in the U.S., says R-CALF. If the acquisition goes through, the parent company could become the largest beef packer in Canada and the U.S., the group says.
“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,” the group stated in a letter it sent to U.S. Attorney General Eric Holder, U.S. Department of Agriculture (USDA) Secretary Tom Vilsack and Larry Mitchell, Administrator of Grain Inspection, Packers and Stockyards Administration at the USDA.
“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 percent of the market. 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 in the consumers’ U.S. beef market,” the group stated in the letter.
