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Beef Packers Get What They Wished For

Mike

Well-known member
Beef packers likely to get what they wished for

By Eric Nelson, R-CALF USA Region VII Director
Thursday, March 27, 2008 10:58 AM MDT




While reading the numerous articles on JBS' proposed purchase of National Beef Packing, Smithfield Foods' beef operations and Five Rivers Cattle Feeding, as well as last year's acquisition of Greeley, Colo.-based Swift & Co., which would easily make JBS the largest beef packer in the world, it struck me that one must be careful of what you wish for.

Tyson Foods and Cargill Meat Solutions lobbied for packer concentration for years, yet may end up succumbing to the very thing they've advocated: unbridled and unabated scale.

We've seen it in other industries where having only a handful of players is not a good thing, and having only one is worse - particularly if that one player is from out of the country.

With Tyson investing heavily in overseas poultry production, the likelihood of large quantities of imported chicken driving smaller players out of business here in the U.S. has become very real. That is why several domestic poultry integrators recently formed a consortium calling for country-of-origin labeling (COOL) of chicken, to protect our domestic chicken industry from being taken over by Tyson's imported product.

The generic glyphosate (Roundup) industry also gives us a vision of how large integrators and foreign countries can operate. For example, China began producing glyphosate a few years ago when the product went off patent, and China then produced - and sold - glyphosate cheaper and cheaper, until our domestic production ceased to exist. Farmers here capitalized in the short run, but once competition was removed, China increased prices.

Last year, the price of glyphosate was roughly 50 percent higher than the year before, and this year, glyphosate is nearly 500 percent higher than a year earlier.





Here in the U.S., we don't have many choices because domestic production shut down after the dumping of cheap glyphosate by China. Glyphosate is used heavily on a majority of U.S. crop acres as its developer, Monsanto, exerted lobbying pressure to achieve a monopoly position with its biotech seeds - so much so that only biotech seeds from Monsanto qualify for a federally approved discount on crop insurance premiums, for which no other company qualifies.

In fact, today it is difficult for farmers to buy seeds that are not tolerant to Roundup herbicide.

JBS will work in similar fashion within the packing industry, bidding up cattle - in the short run - to maximize their capacity until they drive competitors out of business. It is likely JBS also will bolster smaller domestic cattle supplies with cheap imports, thus accomplishing the same thing.



The latter will be less likely to happen with COOL finally in place. It's a shame that the National Cattlemen's Beef Association, the American Meat Institute, and the National Meat Association were so successful over the years in convincing those in cattle country and in Washington, D.C., that a concentrated packing industry - that fixes prices, denies market access, and stuffs the market at key times with its own supplies - is superior to one that is competitive, innovative and concerned about its cattle-producer suppliers and its customers, who are beef consumers.

Because packing-industry lobbyists were so successful since the late ‘60s, both the meatpacking and cattle industries are frightfully susceptible to collapse now.

All of this seems especially unfortunate as our government not only has allowed monopolistic practices to continue in the packing industry, but also appears willing to allow the dominant player to be foreign-owned, while leaving U.S. companies at a competitive disadvantage. Surely our ancestors are rolling in their graves at the shortsighted, cold-hearted and even unpatriotic nature of these actions.

Competition reform for agriculture - and specifically for the packing industry - is currently under consideration by the U. S. Congress as part of the farm bill package. Hopefully these competition reforms being championed by Sen. Chuck Grassley, R-Iowa, Sen. Tom Harkin, D-Iowa, and others will become law in time to override the shortsightedness of the last 40 years.

We also applaud two letters to the U.S. Department of Justice from the following senators, who asked the Justice Department to safeguard independent U.S. cattle producers - and consumers - from anti-competitive practices: Sen. Byron Dorgan, D-N.D.; Sen. Max Baucus, D-Mont.; Sen. Jon Tester, D-Mont.; Sen. Kent Conrad, D-N.D.; Sen. Sherrod Brown, D-Ohio; Sen. Claire McCaskill, D-Missouri; Sen. Russell Feingold, D-Wis.; Sen. Tim Johnson, D-S.D.; Sen. Mike Enzi, R-Wyo.; and Sen. John Barrasso, R-Wyo.
 

RobertMac

Well-known member
Surely our ancestors are rolling in their graves at the shortsighted, cold-hearted and even unpatriotic nature of these actions.

Our government is selling out our national sovereignty for the sake of multi-national corporations under the guise of 'free trade' and cheap consumer prices!!!
 

don

Well-known member
for years the usa has fought through the wto for freedom to invest in foreign countries by american interests and now you complain that the knife shouldn't cut both ways. boo hoo boo hoo.
 
A

Anonymous

Guest
Today since its April Fools day-I'm going to agree with Maxine -- this JBS buyout of the packers and feedlots looks like it definitely has advantages....Instead of the 10-15 buyers we have now setting in those cushy "buyer seats" at the sales barn- we'll only have 3 or 4- and then I can get a more comfy seat...

Thanks Maxine and NCBA for helping me out :wink: :lol: :lol: :p
 

Sandhusker

Well-known member
RobertMac said:
Surely our ancestors are rolling in their graves at the shortsighted, cold-hearted and even unpatriotic nature of these actions.

Our government is selling out our national sovereignty for the sake of multi-national corporations under the guise of 'free trade' and cheap consumer prices!!!

And there is a price to be paid for this....
 

don

Well-known member
sandhusker: What does the WTO have to do with investing?

you're kidding right? wto negotiations include flows of capital and investment. you don't think canadian banks are allowed to invest in american banks under international agreement? what century is it in nebraska?
 

Sandhusker

Well-known member
don said:
sandhusker: What does the WTO have to do with investing?

you're kidding right? wto negotiations include flows of capital and investment. you don't think canadian banks are allowed to invest in american banks under international agreement? what century is it in nebraska?

There's been US companies buying foreign and foreign buying US long before the WTO.
 
A

Anonymous

Guest
don said:
and under the wto that access is guaranteed. why shouldn't it go both ways?

So do you mean that Canada and in particular Saskatchewan is in violation of WTO law when they won't allow US citizens to buy Agriculture land in Canada :???: without having 51% of it in the name of a Canuck?...

Protectionist trade barrier-eh :???: :wink: :lol: :p
 

don

Well-known member
but it has been negotiated what investment can be made and then that investment is protected. i guess if it's okay for foreign interests to own the canadian beef packing industry it should be okay for foreign interests to own the american beef packing industry, right?
 
A

Anonymous

Guest
don said:
but it has been negotiated what investment can be made and then that investment is protected. i guess if it's okay for foreign interests to own the canadian beef packing industry it should be okay for foreign interests to own the american beef packing industry, right?

Just because you guys let them come in- doesn't mean we have to do the same....Bush tried to sell out all our major seaports management to the Arabs too- but the folks of this country rose up and stopped it...

We need to do the same with these foreign packing/feedlot investors too...
 

don

Well-known member
but shouldn't there be reciprocal rights? that's what got me to first reply. it's like it's ok for americans to buy up foreign industry but everybody keep their hands off the usa! good luck with that if your dollar keeps dropping. china already owns a pretty good chunk of you and it's going to be tough to reverse the trend.
 

don

Well-known member
from meatingplace.com:


Beef News
JBS to target Brazilian companies: report

By Tom Johnston on 4/1/2008 for Meatingplace.com




JBS S.A. indicated that it might shift its shopping spree to its home country of Brazil following its recent expansion in the United States.

The Sao Paulo-based company acquired Swift & Co. last year and recently inked deals to buy National Beef Packing Co. and Smithfield Beef Group. JBS CEO Joesley Batista said his company will focus on integrating those businesses, the Toronto Star reported.

Meantime, Batista noted that the European Union's ban on imports of Brazilian beef could squeeze domestic producers' profits and make acquisitions cheaper.

"It may be that we see a reduction of margins in Brazil," he said. "We'll have many acquisition opportunities in Brazil
 
A

Anonymous

Guest
don said:
but shouldn't there be reciprocal rights? that's what got me to first reply. it's like it's ok for americans to buy up foreign industry but everybody keep their hands off the usa! good luck with that if your dollar keeps dropping. china already owns a pretty good chunk of you and it's going to be tough to reverse the trend.

Hopefully we've learned from the mistakes made in Canada....And you're right- it will be tough as Bush and the neocons have mortgaged the country almost into bankruptcy in their globalist profiteering schemes for their elitist buddies.. :(
 

Sandhusker

Well-known member
don said:
but it has been negotiated what investment can be made and then that investment is protected. i guess if it's okay for foreign interests to own the canadian beef packing industry it should be okay for foreign interests to own the american beef packing industry, right?

Then that's not exactly "access is guaranteed", now is it? Do you have anything to back your statement at all that farmland and fishing camps (or any other asset) were negotiated?
 

don

Well-known member
boy you got me there! i kind of doubt fishing camps were very high on the american negotiators' agenda. count on you to get to the real meat of the issue. i kind of doubt you want to open up too much more access in case the chinese decide to cash in their paper and end up owning the parts of the usa they don't now.
 
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