This AP story reports on the proposed merger between Smithfield Foods and Premium Standard Farms:
Agriculture and consumer groups are giving their support to a recommendation that the U.S. Department of Justice investigate Smithfield Foods' plan to buy rival Premium Standard Farms, a deal that would merge the nation's two largest hog producers.
The coalition says the deal would speed consolidation of livestock markets and lead to higher prices for consumers. The merger would lessen competition in the livestock industry and as such raises antitrust concerns for federal investigators, they say.
"Ensuring that livestock markets operate in a free, fair and transparent manner is critical to our nation's agriculture economy. Without such open and competitive markets, independent producers cannot survive, and consumers lose," the 15-group coalition said in a letter to Attorney General Alberto Gonzales.
. . .
The deal is expected to close in the first quarter of 2007. If it does, Smithfield will own about 20 percent of the nation's hogs. That could limit independent hog producers' options and ability to get good prices for their meat, lawmakers said.
South Dakota Sens. John Thune and Tim Johnson backed Iowa's senators in calling for an antitrust investigation in September. Thune said the deal deserves "scrutiny" in large part because it could hurt South Dakota's small farmers.
In related news, also see this Associated Press story about the 2007 Farm Bill.
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