At press time, a federal bankruptcy court approved the sale of Farmland Industries' controlling interest in Farmland National Beef (FNB) to the producer-owned beef marketing company U.S. Premium Beef (USPB). Completion of the acquisition is expected by late summer.

Under USPB's ownership, FNB will be renamed National Beef Packing Company, LLC. A National Beef management group and Beef Products Inc., of Dakota Dunes, SD (the world's largest manufacturer of boneless lean beef), will be minority investors.

USPB's $232-million bid buys beef packing operations in Liberal and Dodge City, KS, as well as further processing facilities in Hummels Wharf, PA; Moultrie, GA; and Kansas City Steak Company in Kansas City, KS. National Beef also owns National Carriers, a 700-unit refrigerated trucking operation. NBP is the nation's fourth largest beef packer, processing 3.2 million head of cattle/year.

USPB has more than 1,850 members in 37 states representing all segments of the U.S. beef industry. USPB member cattle are marketed under the U.S. Premium Beef brand and numerous NBP product lines including Farmland Black Angus Beef®, Farmland Certified Premium Beef® and Black Canyon Angus Beef®, in addition to Certified Angus Beef®. Member cattle are also marketed direct to consumers through Kansas City Steak Company, a high-quality, portion control and mail order company owned by National Beef Packing Company.

Smithfield Is After Pork Side

Now, interest is focused on the pork side of Farmland Industries' business operations. As expected, Smithfield made an offer for the pork processing business, bidding $365 million, which is subject to court approval.

Smithfield Foods' offer states that the firm will continue to operate all the pork plants and roughly the same production levels, and that Smithfield would retain all employees, in addition to honoring all existing Farmland contracts with unions and producers. By promising to keep the management team as well, the offer is expected to remove much of the opposition that would have been raised, while satisfying the creditors.

But first, the proposed Smithfield purchase must pass the anti-trust muster of the U.S. Department of Justice (DOJ). U.S. Sen. Charles Grassley has already indicated he'll try to stop the transaction. In a letter sent on July 15 to the DOJ, the Iowa Republican asked the agency's Antitrust Division “to carefully scrutinize this proposal and consider the projected impact on independent producers.”