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KAI RYSSDAL: Moving on now, it’s not only China — the American cattle industry has had its own share of trouble with food safety. Some countries banned beef from the U.S. for a while over some isolated cases of mad cow disease. Cattle growers and meat packers took a painful hit. Some are still struggling to recover.
But today, Latin America’s biggest meat producer gave U.S. meatpacker a $225 million vote of confidence. A Brazilian firm is going to buy this country’s third-biggest processor, Swift & Company. Marketplace’s Bob Moon has more.
BOB MOON: If anti-trust regulators go along, the takeover of Swift by Sao Paulo-based JBS will create the world’s largest beef and pork processing company. Brazil is already the world’s biggest exporter of beef, but it’s had trouble making inroads into the North American and Asian markets because of food safety concerns — primarily from hoof-and-mouth disease.
D.C.-based trade analyst Gary Hufbauer, at the Institute for International Economics, says the acquisition could open some important doors for the Brazilians.
GARY HUFBAUER: This firm would clearly have to meet U.S. standards. But operating on a very big scale of the U.S., it would get to know better the standards and be able to integrate them backwards to the big livestock sources within Brazil. So I think they see it as kind of a technology-learning process.
Swift also operates out of Australia, giving the Brazilian company a key jumping-off point for exports to Asia. U.S. cattle producers might be worried, but Hufbauer says the Brazilian company has a clear interest in building up Swift’s American operations.
At the agriculture research firm DTN, veteran livestock analyst John Harrington agrees that in the end, the acquisition should benefit the entire industry.
JOHN HARRINGTON: That will add more buyers for U.S. cattle, and I think it’s actually good news for U.S. producers.
Swift’s operations could use some beefing up. It’s posted just a single profitable quarter since November of 2004, when the scare over mad-cow disease caused exports to collapse. And Swift is handing over more than a billion dollars in debt to its Brazilian buyer.
In Los Angeles, I’m Bob Moon for Marketplace.
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