JBS Contracts Require Feedlots to Waive Rights

Contracts eliminate rights under Packers and Stockyards Act.

JBS Swift began sending contracts to U.S. feedlots in April that requires they waive any rights they have under the trust provisions of Section 206 of the Packers and Stockyards Act. The contract additionally feedlots must give JBS Swift the right to withhold payment for grade and yield cattle for three days after grading.

"The fact that JBS Swift can cavalierly impose such a requirement on U.S. cattle feedlots itself demonstrates the tremendous market power presently enjoyed by JBS Swift – market power manifest by virtue of JBS Swift's dominant control over available slaughter capacity," wrote R-CALF USA CEO Bill Bullard in a letter to the U.S. Department of Justice.

R-Calf has been pressing the Justice Department to act to stop the proposed acquisition of National Beef Packing Company, Smithfield Beef Group, and Five Rivers Ranch Cattle Feeding by JBS. The merger is under review and if approved would make the Brazil-based company not only the largest meatpacker in the U.S. but also the world.

"This JBS Swift contract is evidence of R-CALF USA's contention that market power abuses are ongoing, and would likely worsen if the JBS mergers go through because those mergers would further elevate JBS Swift's dominance over available slaughter capacity, to the detriment of U.S. cattle producers," Bullard says. "R-CALF USA is confident that this example, as well as information provided to the Justice Department previously, provides clear and convincing evidence that the JBS acquisitions must be blocked because approval would lessen competition and facilitate the exercise of market power in the U.S. cattle market."

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