MercoPress. South Atlantic News Agency

Brazilian corporations consolidate a leading share in the global meat market

MBRF is ready to become one of the world’s leading meat processors but still has to overcome possible objections about market dominance

Two major Brazilian corporations’ shareholders, from Marfrig (MRFG3), and BRF (BRFS), approved on Tuesday the proposed merger between the two global food processors, the firms said in a joint securities filing.

The approval placed the deal one step closer to completion, although it still lacks necessary regulatory approvals.

The firms had announced in May a plan for Marfrig - already the holder of a controlling stake in BRF - to purchase the remaining shares of BRF in a share-swap deal, forming a global food company called MBRF.

However the merger still has to face some significant hurdles, such as the Administrative Council for Economic Defense, CADE, which is the competition regulator and market dominance in Brazil.

Marfrig already controlled some 60% of BRF assets, and with the new merger expects to reach an annual production capacity of eight million tons, including beef, pork and poultry. MBRF will then have operations in 117 countries and a work force of some 130,000, with consolidated turnover of approximately 28 billion US dollars. Only behind JBS, Cargill and Tyson Foods.

However another Brazilian large corporation and direct competitor has objected before CADE to the merger. Allegedly according to Brazilian financial media, Minerva has argued that the Saudi fund SALIC, is also a shareholder of Minerva and MBRF, meaning that it could in effect have a dominant position on the Brazilian meat market if the operation goes ahead.

Besides environmentalists in Brazil from the organization Green Radar, point out that during 2024, both Marfrig and BRF were highly listed as having some of the best records in controlling cattle suppliers as reliable compliers with strict deforestation rules in the Amazon.

However argues Green Radar is the new merger has the intention of increasing cattle fattening, it is very possible it will in effect have an impact on the Amazon. This is supported by the fact that according to Brazil’s stats office, IBGE, 43% of beef cattle is bred in the Amazon area, with a direct influence on deforestation and climate change