Last September, Smithfield Foods and Premium Standard Farms agreed to a merger that would combine PSF, the country's second-largest hog producer and sixth-largest pork processor, and Smithfield, already the top hog producer and processor in the U.S.. On Friday, the Department of Justice cleared the merger, saying it "is not likely to harm competition, consumers or farmers."
The cash-and-stock transaction was valued at $640 million, plus the assumption of $170 million of debt, and gives Smithfield control of 20% of all hogs produced and 30% of hogs processed in the U.S.
The Department of Justice says that Smithfield's competitors - such as Cargill, Hormel, Tyson, Swift & Co., and Seaboard Foods - will still provide "significant competition."
The National Farmers Union disagrees.
"The Smithfield-Premium Standard Farms merger will further concentration in the livestock industry, while lessening competition. The move will leave both consumers and independent livestock producers at a disadvantage," says NFU President Tom Buis.
According to a study released by NFU, "the top four beef packers dominate 83.5 percent of the market, four pork packers control 66 percent of that market and the top four poultry companies process 58.5 percent of the broilers in the United States," Buis says.
"This makes it all the more clear that we need to address concentration in the farm bill to give the family farmer a fighting chance in the marketplace," Senator Chuck Grassley, R-Iowa, and advocate of controlling vertical integration in agriculture.