Further
Consolidation of Canadian Meat Packing Industry
A
decision in February by the federal government’s Competition Bureau to
facilitate a merger between Lakeside (Tyson) and XL Foods will lead to higher
meat prices at the retail level and lower prices for cattle producers,
according to analysis conducted by the National Farmers’ Union (NFU). The
merger, which is expected to proceed quickly now that the Competition Bureau
has approved it, leaves only two companies – Cargill and XL – with control of
virtually the entire beef packing capacity in Canada, the NFU points out in a
news release.
“Cattle
farmers are already struggling with record low prices,” said Fred Tait, NFU
Manitoba Coordinator. “This will only
make the situation worse.”
The
merger means there will be no competition in an industry that has also seen
regulations decreased considerably as a result of federal cost-cutting over the
past decade.
“The
Competition Bureau has become a joke,” Tait said. “It is more appropriate to call it the Consolidation
Bureau. This decision allows XL to attain a 48 percent market share of the beef
packing industry in Canada, as well as acquiring auction markets, cattle
finance companies and cattle insurance companies. It already had control over
virtually all the largest auction markets in
Tait said the cattle marketing system has
become a full-fledged “command and control” operation that will operate solely
for the benefit of the two big companies. “The current Canadian government has
long expressed the opinion that we should deregulate the market and replace
regulation with competition. But it now appears they have abandoned competition
altogether. Farmers are left exposed and under the thumbs of these two
companies that will dictate the market.”
Tait also noted that in 2005, the federal
Competition Bureau allowed Cargill to buy out Better Beef, a large
In
its report “The Farm Crisis and the Cattle Sector”, released in November 2008,
the NFU pointed out that Cargill first entered the beef packing industry in
Canada in May 1989, opening their plant in High River,
Alberta. Since that time, the report
notes, there has been a “dramatic acceleration in the transfer of control of
this industry, from a relatively large number of Canadian-based packers
operating a large number of plants to two US-based corporations that have
concentrated production in a few huge plants.”