Meat packing has been a near-monopoly business in the U.S. for several years, and a blockbuster announcement today that the Big Four packers are now the Big Three makes it even worse.
The distant fourth, National Packing of Dodge City and Liberal, Kansas, was purchased by the Brazilian interests who recently bought Swift and Company. This vaults Swift near the top with Tyson Foods as the nation's largest. Excel, the other major player in meat packing, is probably third.
If competition is the mother's milk of free enterprise, the very essence of the supply and demand economy, there is suddenly even less of it now in the meat packing business. This is bad news for America's cattle producers, as there is now one less bidder out there each week at the feedlot pens, looking for cattle to kill. The livestock sector is having trouble already, with bad winter weather, drought and high grain prices spurred by corn diverted to ethanol production.
One less competitor for slaughter cattle cannot be good news. Beef cattle production probably does not lend itself to the factory, market-cornered trend we've seen in poultry and pork. The truth is today that if you want to raise chickens or pigs, you better have a contract in hand to sell them when you're done, before you start. So far, the cattle market is more open than that, and the individual producer still can compete, unlike chicken and hogs, but the days could be numbered.
National Packing is probably too small to be on the radar screen of federal anti-trust regulators, and since they sold to Swift rather than Tyson, will probably skate by. But it bears watching.
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