Wednesday, September 1st 2010 - 06:02 UTC

Brazilian beef producer wants to sell abattoirs and reduce Argentine operations

Brazil’s JBS, the world's top beef producer is trying to sell three of its Argentine plants due to government policies that have depleted cattle stocks and supply and hurt profits, a trade group said on Tuesday.

Ban on beef exports and price caps have turned grasslands into soy bean plantations

“It will take four to five years to recover the volume of cattle needed to meet domestic and export demand,” said Miguel Schiariti, president of Argentina's Meat Industry and Trade Chamber (CICCRA). He said the business would remain unprofitable for several years because of government policies.

JBS, based in Sao Paulo, Brazil, told Brazilian regulators on Sunday that it may sell some of its eight Argentine slaughterhouses because of “scarce livestock and export restrictions”.

Argentine President Cristina Fernandez de Kirchner administration has imposed export quotas on beef and some grains to guarantee domestic supplies and tame prices.

A source based in Buenos Aires who is close to the potential sale said on Tuesday that JBS was trying to sell three plants that were “nearly paralyzed” because rising cattle prices had reduced profits.

The source said this decision was made “in desperation,” although he said the company does not want to leave Argentina altogether but would rather reduce its holdings in the country until market conditions improve. The source asked not to be named because the person is not authorized to speak to the press.

Brazilian newspaper O Estado de S. Paulo, citing unnamed sources, reported on Tuesday that potential buyers would probably be discouraged by the extent of Argentine government restrictions, which have included export curbs and price caps.

Estado also reported that Argentine Domestic Commerce Secretary Guillermo Moreno had offered local industry leaders state loans to finance the purchase of JBS' units.

”Moreno wants to find someone (to buy the units). He's offering state loans,“ Schiariti said. ”But there's nothing concrete. These are just promises.“

Argentina is traditionally a leading beef exporter but shipments have been disrupted because of government regulations and have fallen behind neighbouring Uruguay in the ranking of top world exporters.

Increasing numbers of Argentine ranchers are turning fields over to more lucrative soybeans, pushing up beef prices and triggering state intervention to limit price increases of the nation's favourite food.

The annual per capita consumption fell nearly 17% in the first half of this year to 56.7 kilograms, leaving Uruguay as the world’s top beef per capita consumer with over 58 kilos.

Cattle numbers in Argentina according to the National Service for Animal Health and Agrifood Quality have fallen 15% between March 2008 and March 2010, from 57.5 million head to 48.9 million. In 1977 the national herd was 61 million head.

Furthermore this year Argentina was unable to fill its portion of the ”Hilton quota” of high-quality beef accepted on preferential terms by the European Union since 1979.

Its allocation is 28,000 tonnes, the largest slice of the total quota of 60,000 tonnes, but this year it only delivered 18,000 tonnes because the necessary export permits to Europe were delayed, according to industry sources.
 

Published in: Economy, Argentina, Brazil.
Tags: beef.

11 comments Feed

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1 fredbdc (#) Sep 01st, 2010 - 12:29 pm Report abuse
The Ks have given us a playbook on how to destroy a 100 year old business in just a few years! Go Argentina!
2 avargas2001 (#) Sep 01st, 2010 - 05:16 pm Report abuse
I would buy it if I was given the credit line, I would aslo stop export all together and build a good functioning national meat marcket and once the busyness turn profitable I would open for export, not one day b4 that. the Argentine president has done lots of good stuff, too bad the meat unions don't go to work and the strikes don't help Argentina, it's always like that, corportaions don't want to pay taxes or fees they stop production by calling for strike and the money stops flowing then a few months later the crap hits the fan and we blame the government, let me explain something to people you don't work your union will be out of work simple, the big corporations will still make money when they sell off their assets and leave you on the streets without work, you get it ? ok now go to work and quit playing the strike card.
3 fredbdc (#) Sep 01st, 2010 - 06:51 pm Report abuse
Gas, Do you know any of your own history? Look at how Peron destroyed your country doing exactly what you are suggesting. Do you want Argentina to be even poorer in the next 70 years? You can't really be that dumb.
4 avargas2001 (#) Sep 01st, 2010 - 07:52 pm Report abuse
if you can't make money in a product you might as well let it go broke, and if it's going to go broke what better then losing your money in your land rather then give it to outsiders ??? #3 let Argentina fix their own problems, outsider opinion is never welcome, in any case according to you all Argentina couldn't be poorer then now, so I tell you again why export a product that doesn't make money ? when we can enjoy it at home and wait for market prices to reflect the real value of the product, while we decrease production and divert the food supply into bio-fuels therefore decreacing the bulk of meat causing it to increase in price and offsetting the loss of productivity throught the returns caused by the demand and supply curve, hungry people will pay anything to stop hunger, the world is't hungry enough yet, economics 101
5 Beef (#) Sep 01st, 2010 - 09:29 pm Report abuse
Gassy. Once again you show why you you should sue your education services. Your strange grasp of economic theory (turning in on yourself) in the age of globalisation appears more like the approach taken by North Korea and Zimbabwe.

If you think the world is not hungry enough then you need to come on my next visit to Uganda and Kenya and see real hunger for yourself; idiot!

When you have grown some pubic hair and decided to enter the real world from your nationalistic dream then perhaps you will be worthy of some respect. Until then continue to be a failure,
6 fredbdc (#) Sep 01st, 2010 - 09:34 pm Report abuse
The Ks put price caps on beef 5 years ago and stopped most exports, that is why it is not profitable any longer. The cattlemen used to make their profits off the foreign market and kept prices low at home then your stupid government screwed with the system and now you have neither. For the first time in over 200 years your country is running out of beef. You must have a learning deficiency.
7 Nicholas (#) Sep 02nd, 2010 - 03:45 am Report abuse
poor avargas. still doesn't realize that most businesses are in hands of foreigners (mainly Brazilians and Americans) and have allot to say there. Cheeeee(moron)
8 Sergio Vega (#) Sep 02nd, 2010 - 04:02 pm Report abuse
And the remaider business are in Chilean hands....
The same theory was applied to the natural gas provision to Chile (under private signed contract and Gvt. signed treat) so, they now have to get the gas from Bolivia because no oil & gas companies take the risk to invest drilling new holes up to the selling price go over the production cost.
R.I.P. Argentina again, sadly
9 harrier61 (#) Sep 03rd, 2010 - 04:22 pm Report abuse
But, on the bright side, when they've achieved bankruptcy, famine, pestilences etc., there will be a huge amount of land for someone to make a proper country out of!!!
10 avargas2001 (#) Sep 07th, 2010 - 09:24 pm Report abuse
Who cares what brits and outsiders think of Argentina as long as Argentine's are ok with their elected president, thanks for your derrogatories but no thanks, outsiders better get used to saying goodbye Argentina, even those british pirats in Islas Malvinas Argentina.
11 Zethee (#) Sep 08th, 2010 - 06:42 am Report abuse
What a sad little person.

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