A U.S. Senator has expressed concern JBS USA’s proposed acquisition of Cargill Inc.’s pork unit will decrease competition in the U.S. pork industry.
Sen. Chuck Grassley, R-Iowa, pressed the U.S. Department of Justice’s Antitrust Division to review the proposed JBS USA-Cargill deal, in a letter the senator wrote Tuesday.
“If the JBS-Cargill deal is finalized, the four largest pork processors will control roughly 71 percent of the processing capacity in the country," Grassley said. “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.”
JBS USA Pork announced July 1 it had entered into an agreement with Cargill to acquire the company’s U.S.-based pork business for $1.45 billion. Completion of the acquisition is subject to regulatory review and approval.
JBS USA’s acquisition of Cargill’s pork business would include two Midwest meat processing plants, one in Ottumwa, Iowa, and the other at Beardstown, Ill. Both plants were acquired by Cargill in 1987, and in 2014 they processed a total of 9.3 million hogs, according to the two companies. The purchase also includes five feed mills (two in Missouri, and one each in Arkansas, Iowa and Texas), and four hog farms (two in Arkansas and one each in Oklahoma and Texas), the joint statement said.
“The strengths of the JBS and Cargill pork businesses are complementary,” Todd Hall, Cargill senior vice president, said. “Together, they promise to offer enhanced service to customers and more opportunities for employees and hog producers while providing an important source of protein to consumers around the world.”
If the transaction is finalized, JBS USA will become the second largest pork processor with a daily slaughter capacity of around 83,000 head, which equates to nearly 20 percent of U.S. daily pork processing capacity, Grassley said in his letter to the justice department's Antitrust Division, citing industry estimates of the two companies’ market share.