Attorney General's News Release

April 15, 2008

Nixon opposes acquisition of large U.S. beef companies, says it could hurt Missouri beef producers and consumers

Jefferson City, Mo. - Missouri Attorney General Jay Nixon today asked the federal government to block or modify a Brazilian company's acquisition of three of the country's largest beef packing companies. Nixon said the significant elimination of competition among packers in the U.S. would harm beef producers in Missouri, one of the country's largest beef-producing states, and hit consumers with higher prices at the grocery store.

In a letter to U.S. Attorney General Michael Mukasey, Nixon urged the U.S. Department of Justice to thoroughly examine the proposed acquisition by JBS S.A, of packers National Beef and Smithfield Beef, as well as Five Rivers Cattle Feeding LLC, a feedlot operation. Nixon asked Mukasey to "take appropriate steps to block or mitigate the inevitable anticompetitive effects" of the consolidation. JBS recently purchased one of the other largest packing companies in the U.S., Swift & Co.

The acquisition of National and Smithfield would combine three of the five largest beef packing companies in the U.S. into one company, Nixon said. This is especially troubling since the top four packers exercise an 83 percent share, Nixon added.

"Missouri beef is prized all over the world, thanks to the hard work on thousands of Missouri family farms and ranches," Nixon said in a statement separate from the Mukasey letter. "Beef is a key contributor to our state's status as an agricultural powerhouse. This significant elimination of competition among the packing companies that buy beef would hit our farmers and ranchers at a time when they are already facing crippling increases in the cost of feed and fuel. I'm asking the Department of Justice to step in to help protect Missouri agriculture and consumers."

Nixon also expressed his concern that with the acquisition of Five Rivers Cattle Feeding, JBS also would be in a position to vertically integrate its operations. By owning the same cattle it slaughters, Nixon said, JBS would pay less for live cattle from Missouri beef producers and then be able to charge more for the beef, harming both producers and consumers.

"We have observed this phenomenon in the pork industry, as consolidation has driven farm and retail prices in opposite directions," Nixon wrote to Mukasey. "Allowing vertical integration in the beef industry almost certainly will produce the same unsettling result."

Attorney General Nixon's letter to U.S. Atorney General Mukasey about this isue.

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