CHAMPAIGN, Ill. (AP) — A Brazilian-owned meat processing company undercut its competition by more than $1 per pound to win nearly $78 million in pork contracts through a federal program launched to help American farmers offset the impact from an ongoing trade war.
As a result, JBS USA has won more than 26% of the $300 million the USDA has allocated to pork so far — more than any other company, according to an analysis of bid awards by the Midwest Center for Investigative Reporting.
The USDA’s Trade Mitigation Program was announced last August, and included direct payments to farmers, as well as $1.2 billion in food purchases from farmers and ranchers whose crops normally benefit from international markets. The plan called for $558 million worth of pork purchases. The program is intended to help U.S. farmers and ranchers hurt by the ongoing trade disputes with China, Mexico, Canada and other trading partners.
JBS bid an average of $2.56 per pound for five pound pork loin cuts, while its competitors bid an average of $3.80 per pound. The company bid as low as $2.02 for the cut, the Midwest Center found.
The analysis found that JBS bid 33% less on the contracts - undercutting its competitors, even Tyson Foods, the second largest meat processor in the country.
JBS USA is the U.S. division of JBS SA, the world’s largest meat producer. The company owns more than 300 live hog operations in the United States.
It’s expanded its reach in the U.S. in the last decade, buying Swift & Co., Smithfield Beef Group, Inc., Pilgrim’s Pride poultry and Cargill’s Pork business, in addition to other acquisitions abroad.
JBS’ facilities in Minnesota, Iowa, Illinois and California have won trade mitigation contracts with the USDA.
“Who’s the government going to purchase it from? The Brazilian-owned JBS or the Chinese-owned Smithfield? They’ve allowed enough concentration in the packing industry, you’re running out of choices,” said Brian Duncan, a hog farmer from Northwest Illinois and vice president of the Illinois Farm Bureau.
Duncan raises 70,000 hogs each year, selling mostly to Tyson, but also to JBS’ Beardstown, Illinois facility.
Following publication of this story, the USDA provided a response from Secretary of Agriculture Sonny Perdue:
“We’re buying U.S. produced agricultural products. The premise behind procurement is to take product off the market and support prices. This will help U.S. Farmers,” said Perdue. “These are legal companies operating in the United States. This is no different than people buying Volkswagens or other foreign autos that are manufactured in the United States, where their executives may have been guilty of some issue along the way. They still buy the cars. JBS is a Brazilian company operating in the United States, buying product from U.S. farmers.”
Greg Gunthorp, who raises hogs near Mongo, Indiana, said its JBS’ size that allows it to offer such low prices.
“They’re a huge global corporation,” he said. Because of that, they are less impacted by the demand problems purely American pork processors are facing. “To claim we’re bailing out the farmer and bailing out agriculture, and giving it to foreign multinational corporations is a joke.”
JBS is under scrutiny by several U.S. senators who say the company shouldn’t be able to participate in the USDA program.