SAO PAULO/CUIABÁ, May 26 An unfolding corruption
scandal involving meatpacker JBS SA may reduce meat
supply in Brazil, potentially benefiting rivals of the world's
largest beef exporter, industry group Abrafrigo said.
Since the scandal broke, JBS and ranchers have been at odds,
with the company deciding to stop buying cattle for cash and
producers reluctant to sell on credit, analysts said.
In some parts of the country, JBS is the only buyer and
ranchers are worried.
"In export markets, there is no substitute for JBS in the
short term. In the domestic market JBS is likely to lose share,"
said Péricles Salazar, head of Abrafrigo, which represents
smaller meat processors. "There is plenty of idle capacity in
JBS' future became uncertain after Chairman Joesley Batista
admitted to paying bribes to politicians in exchange for favors
that benefited his business interests.
On Thursday, Agriculture Minister Blairo Maggi said he had
long worried about the size of the meatpacker and criticized
state development bank BNDES for helping it build a dominant
In the state of Mato Grosso, Brazil's largest grains and
cattle region, JBS accounts for 48 percent of all cattle
JBS did not have an immediate comment on its relationship
Marfrig Global Foods SA, one of JBS's largest
rivals in Brazil, believes it is early to determine the impact
on cattle supply stemming from potential issues opposing JBS and
"We have not noted an impact on supply related to these
commentaries," Marfrig's Chief Executive Officer Martin Arias
told Reuters, in relation to market chatter.
Still, as JBS halted cash purchases of cattle, producers in
Mato Grosso asked the government to eliminate the ICMS tax on
interstate cattle sales.
The aim is to sell animals to processors willing to pay cash
in other states, said Luciano Vacari, president of ranchers
Wagner Bacchi, president of the Mato Grosso meat institute
IMAC, said JBS' competitors sought to take advantage of the
turmoil caused by the company.
Since JBS's revelations, competitors lowered the bid price
for cattle cash purchases, putting pressure on Mato Grosso
producers, Bacchi said.
(Reporting by Ana Mano and Roberto Samora; Editing by Andrew