JBS Used Illegal Activity to Profit and Take Over the U.S. Beef Market
From a small butcher shop in Brazil, JBS has become the world’s largest meat processing company and a dominant force in America’s food industry, and much of its growth is the result of illegal activity.
JBS Bribes Brazilian Officials for Government-Backed Loans to Fuel Growth
In a decade-long scheme, the meat processor bribed more than 1,800 Brazilian politicians to secure Brazilian government development loans, which JBS admitted helped it take over the U.S. beef market. With these funds, JBS was able to acquire more than 40 rivals on four continents between 2007 and 2017.
JBS’ Owners Defrauded Four Brazilian Pension Funds Out of $2.5 Billion
The Batista family of Brazil owns JBS and several other Brazilian companies. The Batista brothers, Josely and Wesley, led a stock fraud scheme that defrauded four Brazilan pension funds out of $2.5 billion.
JBS Was Caught Bribing Meat Inspectors
In 2017, JBS was caught exporting rotten meat worldwide and trying to cover up the stench using cancer-causing acid products.
JBS Ripped off U.S. Cattle Farmers and Ranchers
In 2018, USDA found JBS had ripped off U.S. cattle producers at three separate slaughter facilities by shorting them on payments for their cattle. While the JBS abuses were extensive, USDA settled the claims for a mere $50,000 penalty.
Impact on Farmers
Excessive Market Concentration
Economists have shown that abuses are likely whenever four companies control more than 40% of a certain market sector. Four companies control over 80% of the U.S. beef processing market. JBS is the largest of those companies, having gained its position through illegal activity. Today, in many regions of the U.S., a cattle farmer has only one buyer for his or her cattle, so the farmer has no negotiating power when it comes to price.
The cattle farmers’ share of the retail price of beef has been as high as 70%, but today it is just 38.5%. This autumn, cattle producers were losing over $200 per head while the monopoly meatpackers like JBS were making over $400. Farmers and ranchers own and care for their cattle 365 days a year and are going broke, while the Big Four meatpackers own the cattle for about a week and get rich.
Abusive Trade Practices
JBS has brought its abusive trade practices to the U.S. With cattle producers often times only having JBS to sell their cattle to, they find JBS taking advantage of them by paying below market value for their cattle. In 2018, JBS was found to have defrauded cattle producers by claiming the cattle that they bought weighed less than they actually did, thus short paying the producers. Fearful of retaliation from JBS if they speak out, cattle producers too often have to accept these abuses or simply go out of business.
Impact on Consumers
JBS’s historic pattern of corruption and underhanded dealings has not only allowed them to take over the beef industry but has resulted in putting U.S. consumers’ health and safety at risk. With JBS being a dominant force in the meat industry, it has the ability to artificially inflate the price consumers pay at the retail store, leaving consumers vulnerable to price gouging. Because the U.S. no longer requires mandatory Country-of-Origin Labeling on beef, and the USDA allows imported meat to be falsely labeled “Product of the U.S.A.,” consumers are not able to choose to purchase from American farmers and ranchers instead.
2017 Rotten Meat Scandal
JBS has demonstrated a pattern of cutting corners on food safety and outright bribing inspectors, allowing it to sell rotten meat to the consumer. In 2017, JBS was caught exporting rotten meat worldwide and trying to cover up the stench using cancer-causing acid products.
2018 Ground Beef Recall
In 2018, 12 million pounds of JBS ground beef were recalled and 246 people were sickened in the U.S. due to salmonella poisoning. Evidence shows the salmonella outbreak was caused by JBS’ standard practice of allowing sick dairy cows into the beef supply.