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RSS By: Steve Cornett, Beef Today

Read the latest blog from Steve Cornett.

Half a baby

Oct 21, 2008

By Steve Cornett


Department of Justice cut the JBS baby in half and both NCBA and R-CALF seemed pleased with the results.

Never mind that’s exactly what JBS expected: Ask for the moon and the stars and feign disappointment when you just get the moon. The bottom line is that the Bush DOJ has approved further concentration in an already concentrated industry.

Personally, I’m a little disappointed they will challenge the sale of National. The sale promised something of a windfall to the cattle producers who built that company and I’d like to see them rewarded. However, I suppose that, politically, DOJ had to stop something.

My biggest question is whether JBS is wise to jump so hard into this industry just as it looks like a month’s time will provide an Obama administration with a big democrat majority in Congress.
 
Were I JBS, I would wonder how much Five Rivers—the feeding company—will be worth if one of the first new laws next year forbids packer ownership—perhaps even “packer control”—of cattle. The next few years don’t exactly bode to provide a sellers market for Great Plains feedlots.
 
But to JBS, that is just pebbles on the mountain, I suppose. They have themselves in position to ride whatever trends develop in the globalization of the beef industry. 
 
If the EU doesn’t want Brazilian beef, they can deliver Aussie. If Japan is scared of U.S. beef, they can send some South American stuff.
 
They can be foreign buyers’ most reliable source, and once international integration gets back on track, that will probably be worth all the millions they’ve spent buying this market share.

That will be good for the cattle industry. Any manufacturer can succeed only with a good sales force, and that is what JBS has.
 
The trick is for regulators in DOJ and the Packers and Stockyards Administratin to keep them and their competitors bidding honest.

Steve Cornett is editor emeritus of Beef Today.

 


 

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COMMENTS (1 Comments)

Anonymous
bidding honest that depends... on what you think they think bidding is... ask any one of them what they think bid means.
8:54 PM Nov 16th
 

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