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For Immediate Release

May 12, 2008

LMA members meet with DOJ about proposed JBS mergers, want ‘producer, consumer interests protected’ as agency makes final decision

Members of Livestock Marketing Association brought marketing’s concerns over a proposed mega-merger in the packing industry, to a recent meeting with officials of the U.S. Department of Justice (DOJ).

The subject was the proposed acquisition by Brazilian-owned JBS of National Beef Packing Co., Smithfield Beef Group and Smithfield’s Five Rivers Ranch Cattle Feeding, the largest cattle feeding company in the world.

DOJ is currently reviewing the competitive effects of the proposed acquisitions. If allowed, the current “Big Five” packers would become the “Big Three,” and JBS “would control about 80 percent of the U.S. fed cattle market,” said LMA President Jim Santomaso.

He said the meeting with DOJ attorneys and other DOJ staff, “was a learning experience for both sides. We talked about how livestock marketing works in this country – how, for example, calves from the Southeastern U.S. move to the feedlots of the western High Plains.”

For their part, Santomaso said, the DOJ staff members “helped us understand what they’re considering during their review: whether there are sufficient facts showing the acquisition would lead to anti-competitive practices, or if the resulting level of concentration would be enough to inhibit competition.”

“Competition is something America’s livestock markets understand well,” he said. “Our businesses are founded on the principle that the best way to get the best price is put a seller’s livestock before several potential buyers, and we told the Justice officials we are very concerned that the merger would put fewer buyers on the seats at our markets.”

Captive supply – cattle owned by the packers who slaughter them – is a continuing industry concern, Santomaso said. “That’s why an important consideration in this proposed merger is that JBS’s acquisition of Five Rivers would put the nation’s largest packer in control of the nation’s largest cattle feeding operation – and do we know what impact that would have on prices paid, both to producers, and by consumers?”

LMA representatives also told DOJ officials they should factor in, as part of their review, the broad implications of foreign ownership of such a large part of the livestock and meat industry.

The bottom line, Santomaso said, is that LMA wants this proposed acquisition “thoroughly scrutinized, and the interests of both producers and consumers protected as DOJ moves forward in making their final determination.”

The meeting, on April 29, came during LMA’s fourth annual Washington, D.C., Fly-In. Members met with key members of Congress and regulatory officials, as well as lawmakers from their home states.

LMA members participating in the Fly-In this year, in addition to Santomaso and his wife, Becky, were Charles Adami, Baraboo, Wisc.; Cal Green, Roanoke, Ala.; David Macedo, Tulare, Calif.; Joey Martin, Williamston, S.C.; J.D. and “Sugie” Sartwelle, Sealy, Texas, and Curt and Heather Sporleder, Unionville, Mo.

LMA is North America’s largest membership organization dedicated to supporting, representing and communicating with and for the entire livestock marketing sector.