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Farmers Union opposes Smithfield investment in IBP

DENVER>>Rocky Mountain Farmers Union (RMFU) is joining National Farmers Union in urging the Department of Justice to investigate Smithfield Foods, Inc.’s purchase of IBP, Inc. shares. Smithfield, the largest pork-processing firm in the nation, acquired 6.3 percent of IBP, the second largest pork processor.

“Smithfield’s purchase of IBP stocks is a blatant breech of anti-trust regulations, given that just four firms now control more than 50 percent of all U.S. pork processing,” said RMFU President Dave Carter. “Discussions of United Airlines purchasing US Air brought broad-based objections, yet similar action in the agricultural sector has invoked virtually no protests.” Purchase of IBP shares is not Smithfield’s first attempt to reduce competition by buying it out. In recent years, Smithfield has purchased entire hog processing operations from once-competitors Murphy Farms and Carroll Foods.

Not accounting for the IBP shares it owns, Smithfield slaughters, processes and markets 21 percent of the nation’s hogs.

Just as competition at the retail level keeps prices competitive for consumers, competition among companies purchasing producers’ livestock is vital to them receiving a fair price. Over the last several decades, purchasers of farmers’ raw commodities have become fewer and larger. All of the major buyers in the U.S. agricultural market are diversified, multi-national conglomerations. This has producers concerned.

“Well-known free market economist Adam Smith acknowledged the need for anti-trust restraints within a free market economy,” Carter said. “We need to enforce the anti-trust measures we have and enact stronger anti-trust legislation.”
National Farmers Union has formally requested the Antitrust Division of the Department of Justice to investigate Smithfield’s purchase of IBP shares on the ground that it may have violated Section 7 of the Clayton Act.