When a Chinese firm purchased the world’s largest pork producer, Smithfield Foods, for nearly $5 billion in 2013, there was considerable concern over the impact it would have on U.S. pork production.
The U.S. Senate subsequently held a hearing on the issue of “food security.” And when a China-backed investment group attempted to buy a U.S. semiconductor firm last fall, President Donald Trump blocked the move on the basis of national security.
Washington has become increasingly vigilant of late when it comes to the prospect of key U.S. assets being sold to China. Such concerns are understandable, noting Beijing’s systematic efforts to dominate global industry through state-sponsored enterprises, massive subsidies, intellectual property theft, and currency manipulation.
MORE NEWS: Cutting off Free Speech
But while the U.S. is now focused on China’s manufacturing challenge, Washington seems oblivious to a parallel problem for America’s agricultural producers. This time, it’s coming from Brazil.
Here’s the issue: The two largest meat processing companies in the world, JBS and Marfrig, are both Brazilian-owned — with JBS currently the second-largest meat processor in the United States. The pair are now poised to exercise a major hold over U.S. beef production following Marfrig’s recent announcement that it will buy another major U.S. meatpacker, National Beef.
The takeover raises antitrust concerns since the two companies can favor Brazilian beef imports over domestic cattle production. But Marfrig will also gain broader access to the U.S. market, less than a year after the U.S. Department of Agriculture (USDA) halted imports of Brazilian fresh beef due to safety issues.
In many ways, Brazil’s agricultural moves mirror China’s own drive to gain market share in manufacturing. Where China has brazenly funded state-owned steel companies to drive global overcapacity, Brazil has wantonly boosted beef production by skimping on food safety.
In March, Brazil’s federal law enforcement revealed that meat companies had paid government officials to overlook inspections and ignore health violations. Notably, JBS was one of the companies accused of paying bribes to cover up the sale of tainted meat.
MORE NEWS: War for Eternity
Seemingly obscure a decade ago, JBS has swiftly risen to become the second-largest of the United States’ four dominant beef packers, which together control roughly 80 percent of the U.S. cattle market. JBS’ rise began with the purchase of the American-owned beef packer Swift & Company.
What followed was a buying spree that included beef packing plants, cattle feeding operations, and poultry processing firms. Recently, attorneys general from 17 states filed an antitrust action to block JBS from purchasing National Beef.
Despite such vigilance regarding JBS, Marfrig — the recipient of favorable treatment for government loans, according to a Brazilian judge — will now be purchasing National Beef.
If Marfrig’s acquisition of National Beef is cleared, nearly 40 percent of all the beef produced by America’s farmers and ranchers will fall under the control of Brazilian-owned firms.
Why are two Brazilian companies overtaking domestic firms in America’s cattle industry? According to the Institute for Agriculture and Trade Policy (IATP), much of it has to do with Brazil’s so-called National Champions policy, implemented by the Brazilian National Development Bank (BNDES).
IATP says that subsidized loans and purchases of debentures and company shares have been used to transform select exporters into major revenue producers for Brazil. JBS and Marfrig are key parts of this strategy, and have been amply subsidized in the quest to swallow up smaller businesses and amass power in key meat-producing countries.
U.S. agriculture has been in the news of late, since China has responded to President Trump’s tariff actions with threats targeting U.S. pork and beef, along with farm producers. But while the president is looking to defend America’s agricultural interests, he needs to recognize that China is not the only problem.
There’s now the simmering threat posed by Brazil’s predatory focus on U.S. beef production. Marfrig’s purchase of National Beef raises troubling safety and anti-trust issues, given Brazil’s deliberate targeting of the U.S. cattle industry. While Washington is justifiably concerned about China, it’s time to recognize the threat to U.S. agriculture posed by Brazil’s aggressive tactics.
Bill Bullard is CEO of Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF U.S.A).
The opinions expressed by contributors and/or content partners are their own and do not necessarily reflect the views of LifeZette.