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Delegation seeks tougher antitrust laws

by 5m Editor
14 May 2007, at 11:31am

US - In the wake of the biggest agriculture industry merger of the year, South Dakota's congressional delegation is pushing for tougher antitrust laws and legislation designed to reduce concentration in the meat markets.

Smithfield Foods the parent of John Morrell & Co. in Sioux Falls - completed an $800 million acquisition of Premium Standard Farms last week, a deal that joined the nation's two largest hog producers and gave Smithfield control of more than a fourth of the nation's hog market.

Critics say the company will be able to use its sheer size to stifle competition, lower prices for independent hog producers and raise prices for pork consumers.

Rep. Stephanie Herseth Sandlin, D-S.D., is pushing a House bill to require livestock marketing agreements - often called forward contracts - to have a firm base price. It also would require meatpackers to bid against each other publicly, helping farmers make sure they are getting the best prices for their livestock.

"This bill does not eliminate forward contracts, it just makes the marketing of livestock more transparent and levels the playing field for those of us who cannot pass the higher cost of production onto the next user," said Karen Englehart, a rancher from Bison.

Englehart and other critics maintain that forward contracts allow large meatpackers such as Smithfield to set up hog sales at fixed prices well ahead of the date that producers intend to deliver their livestock for slaughter. Critics say meatpackers insist on set prices or turn away livestock, leaving farmers to accept poor prices or no sale at all.

Source: ArgusLeader.com

Further Information

Smithfield given approval to acquire rival Premium Standard Farms
NFU: Smithfield-Premium Merger Harmful to Rural America

5m Editor