MercoPress. South Atlantic News Agency

JBS meat group regrets investing in Argentina because of lack of sufficient cattle

JBS the world’s leading meat producer and distributor said it “temporarily” regrets having invested in Argentina since the lack of sufficient prepared cattle has forced the closure of several plants and the redundancy of 480 workers.

“This is something temporary, which we regret, because when JBS invested it was thinking in the long term and we continue to believe Argentina is capable of increasing its cattle herd by 30%”, said Jerry O’Callaghan, director of investor relations for JBS S.A.

However O’Callaghan insisted that JBS “has not made any statement, about selling plants, except that it will continue to look at all the options to manage costs to be as competitive as possible in Argentina. We’re not a company that’s going to bail out because of some short-term issues in any country”.

However at the end of August Brazil’s JBS informed shareholders and the Bovespa market (Sao Paulo stock market) that the Company is always analyzing the best market options and at present in the Company's operations in Argentina, “these options include reducing production due to limited cattle supply and restricted exports to the possible sale of some production units in the event that the values involved reflect the real value of the assets”.

In related news the Argentine chamber of meats industry and trade (CICCRA) reported that the retail price of beef in supermarkets, in the last twelve months has soared 75% while the price of live cattle ballooned 91%.

CICCRA said this can be directly linked to the Argentine government’s policy towards cattle breeding which has resulted in a loss of 15% of the national herd, equivalent to over 9.4 million head of cattle.

“Abattoir activity has also plummeted and cattle slaughtering in the last twelve months is down 25%”, said Miguel Schiariti head of CICCRA, which has meant an 18% reduction of per capita beef consumption in the domestic market and a 54% drop in fresh and frozen beef exports in the last twelve months.

CICCRA estimates it will take al least six years to recover from the current situation, which has also seen the disappearance of 6.000 small farmers in the last four years.

According to CICCRA statistics in the first eight months of 2010, Argentine per capita consumption of beef was 56.8 kilos, quite short from the 69 kilos of the same period last year.

Neighbouring Uruguay with a cattle herd of 12.5 million is now ahead of Argentina in per capita beef consumption and for three years running in total export volumes.