Politico: Beef Group Urges Senate Judiciary Committee to Investigate Antitrust Concern at Meatpacker
Beef group urges Senate Judiciary Committee to investigate antitrust concern at meatpacker
01/04/2018 05:44 PM EST
A major beef lobbying group is pressing the Senate Judiciary Committee to investigate whether Cargill has been engaging in anticompetitive behavior in Pennsylvania after the shutdown of a plant owned by its biggest rival, the global protein giant JBS.
A letter that R-CALF USA, along with its affiliate Buckeye Quality Beef Association, filed Wednesday said that the concentration of beef packers means that the disappearance of even just one player can cause the market to be drastically affected. That happened in the Northeast, the groups said, after the USDA’s Food Safety and Inspection Service shut down JBS’ beef packing plant in Souderton, Pa., in October as a result of pest problems.
The groups contended that the withdrawal of a major player led to depressed prices being paid to cattle ranchers, with prices dropping $5 to $10 per hundredweight in the week after the JBS plant was shut.
“JBS’ withdrawal from the market caused immediate market failure in the region," R-CALF USA’s CEO Bill Bullard wrote in the letter. "One private news service reported that cattle prices were depressed in Pennsylvania even while cattle prices were increasing in the rest of the United States."
As POLITICO previously reported, beef prices by multiple measures made a comeback in 2017: Retail prices in November increased to $5.64 per pound from $5.59 per pound the year before, a 0.9 percent rise. Wholesale prices per hundredweight in November increased 12.7 percent to $209.65 from the same time a year before.
"Cargill continued procuring cattle from area cattle producers at prices it knew or should have known were artificially manipulated because there was no meaningful market competition," the letter said. "Cargill likely enjoyed windfall profits at the expense of both regional cattle producers and regional consumers because wholesale meat prices were increasing as cattle prices were decreasing."
In an interview Thursday, Bullard said that the JBS plant has since reopened.
But JBS, the Brazilian-based protein conglomerate, has also been plagued by corruption charges, including insider trading charges that have entangled Brazilian President Michel Temer.
The cattle groups also noted that there is tremendous concentration in the cattle industry, with four companies, including Cargill and JBS, controlling 85 percent of the market.
The groups added in their letter that they have found “persuasive evidence that the United States’ beef packing industry has now achieved a level of marketplace concentration that allows them to destroy competition, either individually or in concert, within several cattle marketing regions in the United States.”
R-CALF USA officials also emphasized that they did not raise their complaints with the USDA after the agency scrapped its GIPSA rules last fall — a move that farmers complain has further empowered major players in the protein industries.
“The Agriculture secretary unilaterally disarmed USDA by throwing out the GIPSA rules. Those are the rules that would have given the agency the tools necessary to enforce antitrust laws and laws to prohibit anti-competitive conduct," said Bullard. "Now the agency is a toothless tiger.”
A Cargill spokeswoman did not immediately respond for comment.