ALBERTA

R-CALF, U.S. Ranchers Want To Block Potential Sale Of Alberta XL Foods Plant

10/30/2012 01:20 EDT | Updated 12/30/2012 05:12 EST
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EADS, CO - AUGUST 23: Rancher Gary Wollert feeds hay to his cattle on August 23, 2012 near Eads, on the plains of eastern Colorado. Like many ranchers, who's grasslands have dried up due to the drought, he has to suppliment his cattle's diet with hay, now at record prices, to keep them alive. The nation's severe drought has been especially hard on cattlemen, made worse when Congress recessed for 5 weeks withought passing disaster relief legislation. Most of the high plains areas of eastern Colorado and virtually all of Nebraska and Kansas are still in extreme or exceptional drought, despite recent lower temperatures, according to the University of Nebraska's Drought Monitor. The record-breaking drought, which has affected more than half of the continental United States, is expected to drive up food prices by 2013 due to lower crop harvests and the adverse effect on the nation's cattle industry. (Photo by John Moore/Getty Images)
EDMONTON - Some American cattle producers want the U.S. government to block the possible sale of a troubled Alberta company's beef operations.

The Ranchers-Cattlemen's Action Legal Fund is concerned about JBS USA's option to purchase the XL Foods Inc. plant in Brooks, Alta., two U.S. slaughtering plants and other properties.

Bill Bullard, CEO of R-CALF, has written a letter to the U.S. Justice Department saying if the deal goes through it would make JBS USA a dominant player in the beef industry.

"It is a significant acquisition and it would catapult JBS perhaps into being the largest beef packer in the United States if the acquisition were to go through," Bullard said Tuesday from Billings, Mont.

"We will do everything within our power and means to block this merger."

In the letter, Bullard asks the department to investigate how the deal would affect U.S. cattle producers and consumers and to block it if it would lead to further consolidation of the beef market.

On Oct. 17, JBS USA signed a deal to manage the XL Foods plant in Brooks, Alta., that was involved in a massive beef recall and E. coli scare.

As part of the agreement, JBS USA has the option to purchase the Brooks plant as well as beef packing plants in Nampa, Idaho, and Omaha, Neb., and other properties for US$50 million and another US$50 million in shares.

Cameron Bruett, a JBS USA spokesman, said the company is aware of R-CALF's letter.

"We are aware of their efforts and we will work with the regulatory authorities here in the U.S. and in Canada to make sure the proposed option to purchase — should we pursue it — passes legal muster," he said from Greeley, Colo.

On Oct. 20, 2008, the U.S. Justice Department and 13 states launched a lawsuit to prevent JBS USA's parent company, JBS S.A., from purchasing National Beef Packing Company, LLC.

The lawsuit filed in Federal Court said the merger would likely reduce competition and that U.S. cattle producers, ranchers and feedlots would likely receive lower prices for their cattle. The lawsuit also said the deal would mean U.S. consumers would likely pay higher prices for beef.

Four months later, JBS S.A. announced it was terminating the deal with National Beef Packing Company. The U.S. Justice Department lawsuit was then dropped.

Bullard said R-CALF was a driving force in persuading the federal and state governments to launch that lawsuit.

He warns the Montana-based organization will lobby just as hard against the possible JBS USA - XL Foods deal.

"In 2008, we encouraged the Department of Justice to block the proposed merger between JBS and the nation's fourth-largest beef packing plant, which is National Beef Packing Company," he said.

"Under U.S. law, JBS is required to notify the Department of Justice if it intends to merge or acquire any additional market share. We are trying to urge our Department of Justice to take all steps necessary to prevent this acquisition from going through."

R-CALF has long been a burr under the saddle of Canada's beef industry.

Recently the organization has been a keen supporter of U.S. country-of-origin labelling laws on meat products. Canada opposes those rules.

R-CALF has also been a vocal proponent of restricting Canadian cattle imports into the U.S. since mad cow disease was discovered in an Alberta cow in 2003.

The XL Foods plant in Brooks resumed slaughtering cattle Monday under increased supervision from Canadian Food Inspection Agency officials.

Bruett said the plant was running smoothly and JBS USA hoped to recall more of its 2,200-member workforce later in the week.

"Things are going good," he said. "We've got the employees back to the business of processing beef and getting some safe food out there for consumers to enjoy."

Bruett said no date has been set on when this newly slaughtered beef will be released from the plant for sale to retailers and consumers.