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7th Submission to Justice Department
Highlights Disparity Washington, D.C. (October 6, 2008) – In its seventh formal submission to the U.S. Department of Justice, R-CALF USA furnished a five-page letter and two separate exhibits to show the disparity in fed cattle prices between and among various regions over a 12-week period – all to provide yet more evidence to show that harm will come to independent U.S. cattle producers and cattle feeders if Brazilian-owned JBS is allowed to purchase National Beef Packing Co., Smithfield Beef Group and Five Rivers Ranch Cattle Feeding, the largest feedlot corporation in the United States. Previous evidence to the Justice Department on other harms that would befall the U.S. cattle industry were formally submitted on April 9, April 24, May 8, May 20, May 28 and Aug. 1. R-CALF USA’s latest submission was in response to reports from its members that indicated the disparity of fed cattle prices between various regions has worsened in recent weeks. R-CALF USA provided the Justice Department with U.S. Department of Agriculture (USDA) weekly price data on live cattle contracts in eight regions of the U.S. during the period July 14, 2008, through Sept. 29, 2008. “The proponents of the JBS mergers assert that the U.S. cattle market is a national market, and therefore, it doesn’t really matter if there are four major buyers or just three in such a large market area,” said R-CALF USA CEO Bill Bullard. “But, the data we provided the Justice Department show the cattle market consists of several regional markets, with significant price variations among regions.” The data provided by R-CALF USA show the amount of the disparity between regional prices ranged from a low of $3.74 per hundredweight (cwt) in the July 14, 2008, report (approximately $46.75 per head on a 1,250-pound animal), to a high of $10.23 per cwt in the Sept. 2, 2008, report (approximately $127.88 per head on a 1,250-pound animal). R-CALF USA asserted that the variability in pricing disparity cannot be explained by transportation costs. “Additionally, the data show that the regions with high prices and the regions with low prices are not the same, week-to-week,” Bullard explained. “For example, the prices in the Eastern Cornbelt were weekly highs in the July 21, Sept. 2 and Sept. 8 report, but the Eastern Cornbelt was a weekly low in the July 28 report. Also, the North Central/Eastern Montana region reported the weekly low in three of the 12 weekly reports, but reported weekly highs in five of the 12 weekly reports. “This should make it absolutely clear to all involved in the industry that the variability in pricing disparity between regions contradicts any notion that the fed cattle market is a national market,” he emphasized. “Equally important is the fact that the price disparity between regions is symptomatic of ongoing buying/market power emanating from the concentrated meatpacking industry, which already is causing price anomalies inconsistent with a competitive market,” he concluded. “The JBS mergers would significantly worsen this situation by putting more buying/market power in the hands of even fewer packers.” Note: To view or download R-CALF USA’s 7th submission to the Justice Department, please visit the “Competition Issues” link at www.r-calfusa.com, or contact R-CALF USA Communications Coordinator Shae Dodson to request a copy. # # # R-CALF USA (Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America) is a national, non-profit organization dedicated to ensuring the continued profitability and viability of the U.S. cattle industry. R-CALF USA represents thousands of U.S. cattle producers on trade and marketing issues. Members are located across 47 states and are primarily cow/calf operators, cattle backgrounders, and/or feedlot owners. R-CALF USA has dozens of affiliate organizations and various main-street businesses are associate members. For more information, visit www.r-calfusa.com or, call 406-252-2516. |
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