Cheap dollar makes US a formidable competitor in beef and chicken production
Emerging countries such as Brazil found a significant space to expand meat exports during the last decade but a heavy weight competitor, United States will be gaining international competitiveness in the sector in coming years because of the steep depreciation of the US Dollar against other currencies.
The statement belongs to Wesley Mendonca Batista, CEO of Brazil’s JBS the largest global beef exporter and second in chicken meat, which currently has most of its turnover in the United States.
If the US dollar is a factor to be taken into account by South American exporting companies, it will certainly benefit the US branches of Brazil’s JBS.
“With the size of the US budget and trade deficits the US dollar will continue to loose value against other currencies for quite some time. In the coming twenty years the US will be back competing aggressively with the emerging countries of the world in the production of all commodities”, anticipates Batista.
JBS exports in 2010 totalled 8.5 billion US dollars and with its plants in the US, the Brazilian company has access to countries that do not import Brazilian beef such as Japan and Korea, which obviously pay far higher prices for the product.
And as the US beef gains competitiveness the performance of South American breeders, including Brazil and Argentina, will become far more difficult in the large markets such as Russia which imports from the main global suppliers.
The domestic markets where JBS operates, mainly in the US is also another hands down bet form JBS. Even when the Brazilian company has significant turnovers in Mercosur member countries, the US is the source of all remaining turnover which was over 40 billion Real (approx 24.4 billion USD) in 2010.
JBS CEO Batista also talked about the company’s expansion into the broiler business with the acquisition of Pilgrim’s Pride.
“With growing world demand for protein, JBS is ready to act with what is considered the ‘future’s animal protein’ and which has the greatest chances for expansion”.
“It is not possible to keep increasing cattle herds and the global production of beef and to a certain extent the same happens with pork”, said Batista
“The positive side of chicken meat is that it has an elastic, quick response to demand for the increase of production, with less space and in an integrated process”.
Finally Batista said that JBS is in the process of expanding in the search of added value companies that can optimize the quality of its production.
“This year we are focused 100% in the organic development of the company, in optimizing invested capital, but if an opportunity crops up which represents market growth through the acquisition of a company that means added value, brands with a consolidated distribution network, that is the type of business that might attract JBS”, pointed out the Brazilian entrepreneur.
But “we are not in the look out for such a company. But if tomorrow a company which strategically fits with our market and production objectives, we’ll look into it” added Batista who admitted it was time to deliver “our shareholders what they deserve”.