By Robert Pore
robert.pore@theindependent.com

In a conference call with reporters on Friday, Smith expressed concerns about JBS's purchase of National Beef Packing Co. and the beef unit of Smithfield Foods, along with an Australian beef company, for $1.27 billion. JBS already owns Swift & Co., which operates a packing plant in Grand Island that employs more than 2,000 people.

Smith, who serves on the House Agriculture Committee, said the committee should review the sale.

"It does give me pause to see this kind of consolidation," Smith said.

He said that type of concentration limits competition. It could hurt not only independent cattle producers, who would have fewer people bidding on their cattle, but also consumers, who could see even higher prices in the marketplace.

"We need policies that encourage competition, not discourage competition," Smith said. "If we are not careful, we could tie the hands of other American entities from competing with this huge conglomerate that is now foreign-owned."

If the deals are approved, the Sao Paulo, Brazil-based meat company will become the largest beef producer in the United States and in the world. JBS will hold about a 32-percent U.S. market share and 10 percent of the world beef market.

JBS, Latin America's largest beef processor, purchased Swift & Co., the world's third-largest processor of fresh beef and pork, last year in an all-cash transaction valued at $1.5 billion.

The Nebraska-based Organization for Competitive Markets is calling for the U.S. Department of Justice to block JBS Swift's attempts to consolidate National Beef Co. and Smithfield Beef Group within its current Swift operations.

OCM said combining three major packers into one is "unprecedented" in the U.S. cattle industry and could severely hurt the industry in many areas, creating regional pockets controlled by one or two packers.

According to OCM, independent cattle feeders cannot get bids 80 percent of the time.

"Captive supplies have shackle-space priority in packing plants, resulting in independent producers receiving bids only one day per week," a written statement from OCM said. "As captive supplies have grown, most independent feeders receive competitive bids one out of approximately five weeks. Packers use this market access risk to drive producers into contracts, which, in turn, creates more market access risk."

Smith's 3rd Congressional District is the nation's largest cow/calf congressional district.

"This is a lot less competition," he said. "It is a huge concern, and we are working to see what our options are."

JBS will further the decline of the U.S. cattle industry by shifting market power from the producer to the packers, OCM said, through captive supply increases, horizontal concentration and cross-border importation.

OCM is calling for the following actions to be taken:

The U.S. Department of Justice should review and then block the merger. Congress should hold hearings to ensure that result.

Congress should include the livestock provision, unchanged from the Senate version, in the final Farm Bill.

Congress should review and pass the Agricultural Competition Enhancement Act, which has been introduced by U.S. Sen. Charles Grassley, R-Iowa. That bill would strengthen Department of Justice merger review.