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Lawmakers want scrutiny of pork producer merger

by 5m Editor
12 March 2007, at 3:18pm

US - Lawmakers from South Dakota and other farm states are making a final push to influence an antitrust investigation that could halt the merger of the nation's two largest pork producers, a deal that critics say would hasten the consolidation of livestock markets and inflate food prices for consumers.

Rep. Stephanie Herseth, D-S.D., wrote a letter this week to U.S. Attorney General Alberto Gonzales outlining her concerns about Virginia-based Smithfield Foods' plans for an $800 million buyout of its Kansas City, Mo., rival, Premium Standard Farms.

Smithfield, parent of John Morrell & Co. in Sioux Falls, expects to close the deal before April 30, a move that would give it control of about a quarter of the U.S. pork market. Herseth and others warn that could give the company too much control and limit independent hog producers' options and ability to get good prices for their meat.

"Smithfield has a history of constricting hog processing capacity in the Midwest by purchasing and closing swine processing plants in the region," Herseth wrote.

In recent years, she said, Smithfield has established the pattern with closings in Huron, Kansas City and Dubuque, Iowa. The company also this year laid off more than 400 workers at its Morrell plant in Sioux City, Iowa. "I have concerns that this merger may lead to a further round of hog facility closures," Herseth said.

Smithfield executives have declined to be interviewed at length about the deal. And there has been no official word from the Justice Department.

But spokesman Jerry Hostetter said Smithfield anticipates getting regulatory approval in time to close the Premium Standard deal by the end of April.

South Dakota's congressional delegation joined Iowa's senators in calling for the antitrust investigation after the deal was announced last fall. The Justice Department could block the merger or require that Smithfield sell off some of its other holdings to comply with federal regulations.

Source: ArgusLeader.com

5m Editor