JBS Swift & Co. executive testifies before Congress about acquisitions

Staff Reports
May 9, 2008

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The heads of two beef packing operations, including Wesley Batista of JBS Swift & Co., said Swift's pending purchases of National Beef Packing and the Smithfield Beef Group would not have an effect on market competition during a hearing at the U.S. Senate.

Batista was joined by Steve Hunt, CEO of U.S. Premium Beef in the hearing before a Senate Judiciary subcommittee Wednesday. The meeting was called by U.S. Sen. Herbert Kohl, D-Wis., before the Senate's Antitrust, Competition Policy and Consumer Rights subcommittee.

According to industry information source Meatingplace.com, some cattle producers have raised concern that the merger would effectively reduce the number of cattle buyers to three from five, which would lead to depressed prices for cattle producers and higher retail prices for consumers.

Batista told the subcommittee JBS Swift plans to continue its strategy of maximizing production, improving plant operations and increasing sales domestically and in foreign markets. That requires, he said, the purchase of more cattle.

He said JBS Swift, Cargill and Tyson, along with regional and local plants "will continue to compete intensely for the purchase of cattle," in north Texas, Oklahoma, Kansas, Nebraska and eastern Colorado, Meatingplace.com reported.

U.S. Premium Beef is the majority owner of National Beef and Hunt told the panel "the livelihood of all cattle producers depends on the health and the growth of the beef industry, which is why we agree with JBS's vision."

One of the major objectors of packer consolidation is R-CALF USA, led by Bill Bullard, CEO of that Billings, Mont.-based organization comprised mainly of cattle producers. Bullard said the merger would put many independent producers out of business. Hardest hit, he said, would be those fewer than 80,000 beef cattle operations that have herd sizes of more than 100 head.

That group, Bullard said, "would be at greatest risk of being forced to exit the industry due to the price effects of monopoly power because it is presumed that this group is comprised of more full-time cattle producers wholly dependent on competitive cattle prices for their livelihoods," according to Meatingplace.com.

Meanwhile, JBS S.A., the parent company of JBS-Swift, has completed its purchase of the Australian-based Tasman Group, according to the company's Web site.

As a result, JBS Australia now has 15,000 employees and 15 production units, including slaughterhouses for cattle, sheep and calves, with a daily slaughtering capacity of 8,500 head of cattle and 16,500 head of sheep and calves.