Thursday, May 17, 2007

Merger enlarges pork giant, Iowa Senators dismayed

It began late last year, when the largest processor of pork on earth announced that it was purchasing another giant in the industry of hog production.

Smithfield Foods purchased Premium Standard Farms, creating a mega-conglomerate that would control much of the hog production and processing in the world. All Smithfield needed to proceed was a green light of approval by the U.S. Department of Justice.

Last week, that approval was given. The Antitrust Division of the Justice Department determined that the merged firm would not harm competition, consumers or farmers.

Now, according to Senate Agriculture Committee Majority Staff, Smithfield will control 20 percent of hog production and roughly 30 percent of pork processing. These big changes in the structure of the pork industry mean that the top four firms in the nation control roughly 50 percent of hog production and 66 percent of pork processing.

Iowa Senator Tom Harkin, who chairs the Senate Ag Committee, has been very vocal about his frustrations with the lack of action by the Department of Justice on the issue.

"Not only am I deeply concerned by this merger, but I find it frustrating that the Department of Justice continues to look the other way and not prevent or modify these increasing number of acquisitions," said Harkin. "I have asked DOJ to review this merger under anti-trust laws and I have expressed concerns regarding mergers in submitted testimony at the Senate Judiciary antitrust subcommittee in March. Either DOJ isn't doing enough to review or alter these mergers, or the anti-trust laws aren't working."

Iowa's Senator on the other side of the aisle, Sen. Chuck Grassley, used even stronger language in response to the approval of the merger by the Department of Justice.

"It looks like nobody’s going to stand in the way of all this vertical integration until we’ve just got one meatpacker in the country," said Grassley. "Maybe then the Justice Department will figure out that we’ve got a problem. This makes it all the more clear that we need to address concentration in the farm bill to give the family farmer a fighting chance in the marketplace."

Harkin and Grassley have both supported efforts at the federal level to ban meatpacker ownership of livestock, and Harkin has introduced new legislation that would strengthen the Packers and Stockyards Act.

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