001137 Farm Bureau Urges Review Of Smithfield-IBP Merger

Washington - The United States' largest farm group on Friday urged the Justice Department to closely examine Smithfield Foods Inc.'s plan to acquire its meatpacking rival IBP Inc.

“We seek a thorough investigation into this purchase and ask that you act to protect the interests of both producers and consumers,” American Farm Bureau Federation President Bob Stallman said in a letter to Justice Department officials.

Smithfield is the nation's largest pork producer. Its offer to purchase IBP, the largest U.S. beef processor and second largest pork processor, for $2.7 billion raises several concerns, Stallman said.

“If the proposed buy-out is approved, Smithfield would control about 37% of the pork packing in the U.S. They would also be the predominant packer in all of the major hog-producing states, giving them the ability to exert extreme influence in those states,” he said.

Earlier this week, U.S. Agriculture Secretary Dan Glickman said he also wanted the Justice Department to examine the proposed merger. That cry has been taken up by many farm state senators as well.

The Justice Department and Federal Trade Commission routinely review large mergers. Regulators can require asset sales or sue companies to block a merger if they believe a deal would harm consumers or other market players.

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