Farmers and ranchers have had to adjust to significant changes in the structure and business methods of the livestock and meat sectors in recent decades. At the farm level, animal production in general and hog production in particular have undergone significant consolidation since 1980. Beef and pork packing (slaughtering) and processing have consolidated rapidly since 1980 into fewer and larger plants. As an industry consolidates, it can become highly concentrated, with a relatively small number of firms accounting for most production or sales. The successive stages of cattle and hog production, processing, and marketing also are becoming more carefully managed and aligned, often referred to as vertical coordination or, in its most advanced form, vertical integration, where most stages are owned or financially controlled by a single entity. Some farm constituencies assert that these structural changes have undermined the more "traditional" U.S. system of smaller-scale, independent, family-based farms and ranches; created closed markets with less price transparency; eroded farmers' negotiating power; and contributed to lower prices paid to farmers. These groups believe that federal officials have not enforced existing laws designed to prevent anti-competitive behavior, and that the laws themselves should be strengthened to better address today's market realities. Others assert that present competition and antitrust policies remain adequate and effective. They believe that the sector's structural changes are a desirable outgrowth of other factors such as technological and managerial improvements, changing consumer demand, and more international competition. Many of the changes in business relationships along the livestock and meat marketing chain have brought U.S. consumers the ample variety of high-quality, low-priced products they now enjoy, it is argued. New laws or more aggressive interpretation of existing laws will stifle private investment and innovation, and make the industries less competitive, defenders of current policies argue. The 2008 omnibus farm bill (Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) contains a number of animal-related provisions as part of its new Livestock title (Title XI) that may affect how USDA is to regulate livestock and poultry markets. These include provisions that change Agricultural Fair Practices Act (AFPA ) definitions of associations and handlers and require USDA to issue rules and specify requirements regarding breach of contract and the venue for any litigation. The farm bill also requires USDA to issue an annual report detailing investigations into possible violations under the Packers and Stockyards (P&S) Act. The 2008 farm bill, however, did not include other provisions that were part of the Senate-passed version of the farm bill, such as provisions prohibiting ownership among large meat packers, provisions strengthening enforcement authorities over live poultry dealers, and certain changes to the Mandatory Livestock Price Reporting Program. These types of competition and marketing issues could continue to be of interest to some Members of Congress. Other livestock title provisions in the enacted 2008 farm bill include permitting some state-inspected meat and poultry products to enter interstate commerce, just like USDA-inspected products; bringing catfish under mandatory USDA inspection; and modifying the mandatory country-of-origin labeling (COOL) law to ease compliance requirements affecting meats and other covered commodities. The enacted bill also contains amendments aimed at further protecting primarily companion animals, which are regulated under the Animal Welfare Act (AWA). For information on these other livestock provisions adopted in the 2008 farm bill, see CRS Report RL33958, Animal Agriculture: 2008 Farm Bill Issues . Market concentration in the cattle and hog sectors has increased sharply in the last two decades, with a few firms now dominating each sector. The "four-firm concentration ratio," which measures the four largest firms' share of total shipment values, is commonly cited as a summary indicator of concentration and overall structural change in the industry. As shown Figure 1 , the four-firm concentration ratio for cattle and hog slaughter indicates that, over time, the top four firms are accounting for a growing share of the overall market (based on slaughter volumes). Four-firm concentration ratios from 1963 to 2004 rose from 26% to 72% of the cattle slaughtered, and from 33% to 66% of all hogs slaughtered. Continued consolidation and recent mergers could raise these concentration ratios even more, particularly in the beef sector. Although observations about concentration and vertical integration are often ascribed to the meat and poultry sectors as a whole, individual production and marketing segments within these sectors do differ in how they are structured and function. The following discussion focuses primarily on the beef and pork industries, with some limited information for poultry production focused mostly on broiler meat. Most U.S. beef cattle are born, bred, and pastured on a large number of widely dispersed, often small-sized farms and ranches, called cow-calf operators. These operators keep some heifer calves from each year's crop for breeding herd replacement; the rest generally are sold at from 6 to 12 months of age to feedlots (or sometimes to an intermediary known as a backgrounder who readies them for feedlots). These lots fatten them to slaughter weight and sell them to the packing houses. Overall, the trend in U.S. agriculture is toward fewer, larger farms. This is also true in the beef industry: the number of beef operations has declined dramatically over the past few decades, and the largest operations now account for a growing share of total marketings. Still, operations with small herd sizes continue to provide calves to feedlots and backgrounding operations, and despite concentration in larger operations, the cattle sector remains structurally diverse. Cattle feeding has also become more concentrated into larger feedlots, fewer facilities, and fewer states. A relatively small number of feedlots now fatten and market a significant portion of fed cattle (those ready for slaughter). In 2008, the top 10 companies had the capacity to feed more than 3.2 million cattle in 58 feedlots, representing about one-fourth of all cattle on feed on January 1, 2008 (at facilities with 1,000+ capacity feedlots). At these larger facilities, the top 30 operations account for nearly one-half of all cattle on feed. There were 2,170 feedlots with 1,000+ capacity in 2006. Feedlots with a one-time capacity of less than 1,000 head still account for a large share (about 95%) of all U.S. feedlots, but these facilities account for a small share (less that 10%) of annual marketings. Cattle feeding is now concentrated in the middle part of the country, where five states marketed 80% of all fed cattle: Texas, Kansas, Nebraska, Colorado, and California. Beef cow facilities are more widely dispersed, but also tend to be located in the central states. Meatpacking is more concentrated than the production phase. Since the 1970s, the number of meatpacking plants has decreased from nearly 2,500 plant to 1,400 plants in 1992. In meat processing, the number of facilities remained more or less unchanged. Concentration in meatpacking has increased: In 1985, the then-top four firms claimed 50% of all steer/heifer slaughter and 39% of all cattle slaughter; by 2007, four firms slaughtered 84% of all young cattle (steers and heifers), and 72% of U.S. cattle of all types. Recent concentration numbers approach those of the early 1900s, when 50% to 75% of the market was dominated by five firms that slaughtered several species. Another way the federal government weighs concentration is the so-called Herfindahl-Hirschman Index (HHI), which is considered to be a more comprehensive measurement than the four-firm percentage cited above. An industry with an HHI below 1,000 is considered to be unconcentrated. An industry with an HHI between 1,000 and 1,800 is considered to be moderately concentrated; an HHI above 1,800 is highly concentrated. The beef packing industry reached the highly concentrated level by the mid 1990s; its 2004 HHI was 1,900. Table 1 shows the market shares and related information for the top U.S. packers and feeding companies based on available data. Market concentration in the U.S. beef sector could increase considerably following a series of mergers and acquisitions starting in 2007. In July 2007, JBS—a Brazilian company regarded as the world's largest meat processor—purchased the U.S. beef processor Swift & Co., then the third-largest U.S. beef processing company. In February and March 2008, JBS signed agreements to acquire the fourth- and fifth-largest U.S. beef packers, National Beef Packing Company and the Smithfield Beef Group, respectively. These planned acquisitions have undergone customary regulatory review by the U.S. Department of Justice's (DOJ's) Antitrust Division. In October 2008, DOJ and 13 states filed a complaint in U.S. District Court to block the JBS buyout of National Beef Packing Company, citing concerns that it could contribute to higher consumer prices and also to lower producer prices. That same day DOJ announced it would not challenge the JBS acquisition of Smithfield Beef Group, which was later purchased by JBS. Some in Congress publicly applauded DOJ's lawsuit; opinion within the U.S. meat industry is mixed. If the DOJ lawsuit is not successful and JBS acquires National Beef in addition to Smithfield, this could raise the JBS combined share of the U.S. commercial cattle slaughter market to about 30%, assuming it does not divest some facilities. JBS's acquisition of Five Rivers Ranch Cattle Feeding, which was part of the Smithfield deal, made JBS the largest cattle feeder in the United States. For more information on the JBS merger, see CRS Report RS22980, Recent Acquisitions of U.S. Meat Companies .