As mentioned in a previous column the chaotic business dealings of the hierarchy of JBS in Brazil had some legs to run with and as the weeks go by more and more is being revealed.
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No doubt more will be detailed in the coming months as investigations continue. So far, we learn that the mothership has agreed to sell nine plants in South America outside Brazil. These include 5 in Argentinia, 3 plants in Paraguay and one plant in Uruguay.
This deal is worth $A400 million and the abattoirs in question have been purchased by a major processing competitor namely Minerva SA. A fine of some $A3.5 billion has been imposed on the Batista family company J & F, this apparently is to be paid over the next 25 years and will be indexed to their CPI.
Brazil currently has a high inflation rate and some analyst suggest that over this period the fine could blow out to $A12 billion.
These repayments have been restricted to the family company J & F to preserve the well-being of minority shareholders, worldwide staff and other affiliated business’s around the globe while allowing the company to proceed as normal.
As to the flow-on effect this may have on the Australian processing industry opinion is divided. But, many have expressed concerns as to the aftermath of these latest revelations. president of the Cattle Council of Australia Howard Smith expressed the organisation’s concern at these latest developments and stated it was closely watching as this saga unfolds.
The fact that JBS Australia is our largest beef processor and that margins are currently very skinny at their end in Australia, Mr Smith was worried about the possible “ripple effect” caused by asset sales around the world.
JBS as we know is involved in white and red meat processing and lot-feeding through North and South America, Australia and Europe.
Lesser well-known facts are that it is the world’s largest leather producers, is involved with biodiesel, collagen, soaps, glycerine, embedded wraps, waste management, metal packaging and the transport industry.
The jury is still out on whether the family may need to sell some of these assets as the furore continues.
Richard Norton, managing director of MLA, has recently returned from a series of meetings in the UK in an apparent effort to level the playing field for the import of beef and lamb to that country with a population in excess of 65 million people. The MLA is confident that now is the time to rebalance the archaic quota system that has for the last 45 years hampered our efforts to increase market share. Currently the UK imports 250,000 tonnes of beef and 90,000 tonnes of sheep meats and our share is a paltry 6 per cent.
The MLA hopes that since the fall-out from Brexit the situation will change. Our first major loss in market share occurred when the UK joined the European Economic Community (EEC) way back in 1973.
