Dive Brief:
-
California has approved the sale of a Cargill beef plant to Western Valley Meat, but will require the local meat producer to keep the facility operational for at least one year to address anticompetitive concerns.
-
As part of a state settlement agreement, Western Valley agreed to continue operating the Fresno, California, facility for 12 months and to retain at least 700 existing workers during the period, according to court records.
-
California Attorney General Rob Bonta said the agreement staves off a potential closure of a major processing plant that accepts meat from non-milk producing or “culled” dairy cows.
Dive Insight:
As meat processors seek to lower costs and sell off assets to consolidate operations, regulators are paying close attention to mergers and acquisitions that could spark market competition issues.
Scrutiny around the Cargill sale comes as mass layoffs and meat processing closures in other states spark lawsuits from farmers and ire from local regulators. Tyson, for example, has been the target of a lawsuit from two local poultry farmers who claim the meat giant’s move to close a Missouri plant was part of an “anticompetitive and fraudulent scheme” to raise prices.
Bonta filed a lawsuit against Cargill and Western Valley, a subsidiary of Central Valley Meat Holding Company, California’s largest beef producer, last week over concerns that the deal could adversely affect dairy farmers in the San Joaquin Valley and result in mass layoffs.
The sale would give Western Valley control over two of the region’s largest processing plants accepting culled dairy cattle, which could lead to a loss of capacity or lower prices offered to farmers given the lack of competition.
Cargill and Western Valley agreed to settle the complaint outside of the Superior Court of California, denying the allegations without admission to any wrongdoing.
Together, Cargill and Western Valley have two of the largest beef facilities in the San Joaquin Valley, each capable of processing more than 300,000 head of cattle per year, according to data from the U.S. Department of Agriculture.
Cargill entered an agreement in April to sell off its processing plant in Fresno for an undisclosed amount to Western Valley.
When the deal was announced, Cargill employed about 880 workers at the Fresno location. The company issued layoff notices to 178 workers over the summer, with plans for Western Valley to retain roughly 700 workers.
“I am grateful to our local and state partners like Attorney General Rob Bonta who worked to sustain good paying jobs in the San Joaquin Valley and find paths forward,” U.S. Congressman Jim Costa said in a statement.