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Stockgrowers call for competition

By
Alex Hargrave with the Buffalo Bulletin, via the Wyoming News Exchange

Politicians and industry weigh in on market issues
 
BUFFALO — Advocates for small ranching operations are opposing the world's largest meat packing company's bid to go public on the New York Stock Exchange.
 
JBS is a worldwide beef conglomerate whose international headquarters are located in Brazil. Its American operations, a subsidiary of the Brazilian multinational JBS S.A., are based in Greeley, Colorado, where its U.S. headquarters, a beef processing plant and cattle feedlots are located.
 
A bipartisan group of senators, including Wyoming Republican Sen. John Barrasso, recently signed onto a letter to the U.S. Securities and Exchange Commission, which regulates the NYSE. Already considered a monopoly in the meatpacking market, JBS being approved for listing on the NYSE would be detrimental for U.S. producers, the letter says.
 
The lawmakers ask, in part, that the agency consider adverse impacts the company's anticom petitive conduct could have on American ranchers.
 
“Our local producers and small packers in Wyoming are vital to our state's economy," Barrasso said in a statement to the Bulletin. "They're facing significant challenges within the cattle market. Expanding large packers will only cause further hardships for local packers and result in food safety concerns.”
 
JBS and its subsidiaries have been investigated for anticompetitive conduct and, specifically, bribery schemes to aid its expansion into U.S. markets, the letter notes. For environmentally minded senators who signed the letter, the ire toward JBS comes down to its international operations in Brazil and its role in Amazon rainforest deforestation.
 
The United States Cattlemen's Association told the New York Times that a listing on the NYSE would only help the company build up its market share. JBS is the largest of four companies, dubbed the Big 4, including Tyson, Cargill and National Beef, that control 85% of the U.S. beef market.
 
At the state level, the Wyoming Stockgrowers Association agrees with that sentiment, Executive Vice President Jim Magagna said. 
 
Of the Big 4, he said, JBS has been the most difficult company for the organization's national counterparts to work with.
 
"From that perspective, we're certainly not anxious to see anything that'll make them more financially powerful and give them more control over our marketplace,” Magagna said. 
 
However, he acknowledges that the current structure means the country's biggest meatpackers are crucial to the industry's survival. 
 
The Big 4 meatpacking plants can process 3,000 to 5,000 head of cattle a day. The ability to process a lot of beef at lower costs is important for producers, Magagna said. 
 
Small scale meat processing plants, which cater primarily to consumers seeking locally sourced beef, have processing capabilities of roughly 100 head per week. Wyoming has gained at least 10 of these USDA-inspected small processors in the past three to four years, Magagna said.
 
Overall, he said, the state stockgrowers association would like to see a diversity of processing capabilities in the market, including larger operators that are not Big 4-owned but could keep pace with those companies. 
 
Two examples of that are a mid-sized plant in south-central Nebraska and one in Idaho.
 
"That's where I think our focus really needs to be,” Magagna said. "Not just beating up on the Big 4 but creating true, honest competition in the marketplace.” 
 
Ultimately, to compete with the Big 4 meatpackers such as JBS will require private investment, eliminating some regulatory hurdles while ensuring consumer product safety and sharing a good public image for processing facilities, Magagna said. 
 
Building a processing facility requires finding a community willing to house it.
 
“The image is a dirty type of facility that uses a lot of water, (and creates) undesirable jobs," he said. "This isn't necessarily true for a modern plant, but an image is out there that creates resistance.”
 
Wyoming Republican Rep. Harriet Hageman is also opposed to a stock exchange listing for JBS, citing concerns with its further monopolization of the market and its scandalous business practices.
 
As the world's largest foreign-owned meatpacker prepares for a potential initial public offering, advocates for U.S. beef are pushing for more accurate labeling and squashing burdensome regulation, like electronic identification ear tag mandates to keep a database of the nation's cattle, Hageman pointed out in a statement.
 
“The structure of the proposed listing would ensure JBS would be exempt from U.S. laws  a scary scenario at a time when we need to be supporting American production and pushing for accuracy and labeling,” she said.
 
This story was published on February 29, 2024. 

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