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Brazilian company JBS dominates world beef industry from farm to fork

Thursday, April 21st 2011 - 21:29 UTC
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By Juan Forero, Thursday (The Washington Post)
The following piece is a brief history of a Brazilian family business which in a few decades, climbed aggressively to become the world’s largest provider of meat. The piece however, we believe, lacks reference to the Brazilian government’s strong financial support to these enterprises that become global corporations flying the green/yellow colours.

In many ways, JBS, the company that owns the big slaughterhouse here on the edge of town, is still run like a family business.

The founder, who began by slaughtering one or two head a day in 1953, raises calves far in the countryside. Six of his children are in JBS’s management. And ranchers such as Edson Crochiquia, who is 69 but rounds up cattle on horseback near here, spare no detail to provide the company with healthy, 1,000-pound animals.

Even a decade ago, JBS was still mainly focused on selling in Brazil. But by acquiring US giants such as Swift and Pilgrim’s Pride, JBS grew from a $1 billion private company into a $40 billion behemoth that slaughters 90,000 head of cattle a day, employs 125,000 workers and exports to 150 countries.

JBS is now the world’s biggest provider of meat, its footprint felt by feedlots, packing plants and chicken processors from Argentina to Italy to the US Midwest.

In Brazil, it is not uncommon to find banks, steel mills and other companies that evolved from family businesses into global giants. But JBS stands out, using an alliance with Brazil’s development bank and an aggressive acquisition strategy to become a vital pillar of the country’s efforts to project its economic power abroad.

To Wesley Batista, JBS 40-year-old chief executive and the founder’s fourth child, the company is still run “a simple way,” using a management model without “a lot of layers, not a lot of fancy things, not a lot of time spent on PowerPoint presentations.”

And although family patriarch Jose Batista Sobrinho, 77, can still be found at JBS headquarters in Sao Paulo whispering advice to his sons, the company he built is anything but folksy.

High-tech plants in Australia supply the Asian market, and its 39 slaughterhouses in Brazil help feed this booming country as well as Europe. In the United States alone, it employs 75,000 workers and is projecting revenues of 28 billion US dollars this year.

“In terms of slaughtering capacity, we have 10% of the total worldwide capacity,” Wesley Batista said. “And in terms of the beef trade, 25% of the worldwide trade in beef comes from JBS.”

Brazil’s rise

No meat company in decades has come so close to dominating all facets of beef production — from feedlots and grazing lands to packing plants to distribution points.

“Today, 50% of the meat commercialized worldwide is transported by companies with Brazilian capital,” said Dante Sica, a Buenos Aires economist who tracks Brazilian foreign investments. “Brazil is advancing strongly.”

That has rankled some in cattle country, as far away as Montana. “We believe it is a very aggressive company that truly is attempting to dominate the protein market globally,” said Bill Bullard, chief executive of R-CALF USA in Billings, Mont., which represents 6,500 cattle producers.

In 2009, JBS dropped its purchase of Kansas City, Mo.-based National Beef after the Justice Department and several state attorneys general opened an investigation to determine whether a takeover would hurt competition. By then, JBS had already bought Swift for $1.4 billion, to be followed by cattle feedlots and a chicken processor.

Since 1980, Bullard said, the number of cattle-raising operations in the United States has fallen by 42% as companies such as JBS, Tyson and Cargill have expanded. “A major factor contributing to this contraction is the unbridled concentration of our meatpacking sector,” Bullard said.

JBS officials say that their arrival in the United States brings efficiency, which ultimately benefits consumers, and that the company’s purchase of companies such as the chicken processor Pilgrim’s Pride, which was in bankruptcy when it was acquired, saved jobs.

Feeding the middle class

JBS buying spree took place at a time when cattle operations in the United States and elsewhere were struggling. The cost of the grain cattle consume soared in recent years, while meat prices remained relatively low.

JBS secured the financial heft for its expansion by going public in Brazil in 2007, which raised $5 billion, Wesley Batista said. The company is also banking on the future; the UN Food and Agriculture Organization projects that meat consumption will rise 20% in the developing world by 2018.

Batista said that an expanding middle class in Russia, China, Brazil and the Middle East, places vital to JBS long-term plans, will use its new purchasing power to improve its diet. “They put this money — first thing — in food,” he said.

And that means more meat — beef that begins its circuitous journey from farm to fork on ranches such as Santa Izabel.

Here, 6,500 heads of humpbacked Cebu cattle graze three days in one field before Crochiquia’s cowboys herd them to the next plot, a process designed to keep fields lush.

In less than a year and a half, he said, they are shipped to feedlots for a final few weeks of fattening. Then it is on to the processing facility in Lins, not JBS biggest but still so sizable that it has its own plants to generate electricity and bio-fuels.

The end comes on a narrow concrete corral leading to the slaughter room. In their final minutes of life, the steers must be kept from panicking, which releases adrenaline and makes meat acidic tasting, said Bassem Akl Akl, the plant manager.

Once inside, the animal is rendered unconscious by a captive bolt pistol. It is hoisted up by its hind legs. A worker then slices the carotid artery and jugular vein, and the steer bleeds to death in seconds. A processing line of workers, all in hard hats and white aprons, then skin, debone, slice, can and package the meat.

“You have to have people very well trained,” said Akl Akl, yelling to be heard above the din of conveyer belts, “because this is a very specific task. You have to cut exactly on the anatomical division.”

It all happens fast. By the end of a typical day in Lins, at least 900 animals will have been slaughtered. The final product: rump roasts or tenderloins, corned beef or beef jerky, to be exported as far away as London.


Categories: Economy, Brazil.

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  • GeoffWard

    Good article, Washington Post.
    Nice recognition by Mercopress that going public in Brasil helped the company´s expansion by Brasilian public investment.

    Apr 22nd, 2011 - 04:08 pm 0
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