Brazil beefs up on U.S. companies

Dan Grech Mar 5, 2008
HTML EMBED:
COPY

Brazil beefs up on U.S. companies

Dan Grech Mar 5, 2008
HTML EMBED:
COPY

TEXT OF STORY

TESS VIGELAND: Today, House lawmakers voted to subpoena the co-owner of that meatpacking plant that made headlines a few weeks ago. It’s part of the investigation into the largest beef recall in U.S. history, stemming from a video of sick cows being led to slaughter. Also today, there is word of further consolidation in the meatpacking business. The world’s biggest beef producer, Brazil’s JBS, announced plans to buy up Smithfield Beef Group and National Beef Packing.

From the Americas Desk at WLRN, Marketplace’s Dan Grech reports.


DAN GRECH: Meatpackers slaughter cows and other livestock, process their meat and distribute it to stores. The industry in the U.S. has always been dominated by American-owned firms. Then Brazil’s JBS came to town. In under a year, it bought Swift & Company, Smithfield and National — the third, fourth and fifth largest meatpackers in the United States. It’s now bigger than heavyweights Cargill and Tyson. Steve Kay edits Cattle Buyers Weekly.

STEVE KAY: It’s the most significant reorganization, arguably, in the history of the meatpacking industry. My list of the top five beef packers is soon to be reduced to three.

JBS can afford these acquisitions, which total more than $2.5 billion, because of the strength of the Brazilian currency. The Brazilian real has appreciated by about 25 percent against the dollar in the past year. Tom Trebat heads the Institute for Brazilian Studies at Columbia University. He says JBS joins a growing list of Brazilian firms that have stormed the international stage.

TOM TREBAT: What we’re seeing in some of the Brazilian names, Petrobras, Vale, Gerdau, is something that people were never used to seeing. They’re used to seeing big Chinese companies, big Korean companies, big Japanese companies, but one hadn’t seen very large Latin American firms.

The JBS acquisitions might spark antitrust concerns. The combined company could slaughter 42,000 cattle a day, nearly a third of the nation’s total.

I’m Dan Grech for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.