Biden Threatens Brazil’s Meat Exports, JBS and Marfrig Shares Fall

The U.S. President is offering $1 billion to spur competition, independent enterprise, and curb inflation

U.S. President Joe Biden has announced measures to spur competition in the meat sector, causing shares of Brazilian companies to fall.
January 03, 2022 | 12:58 PM

Bloomberg Línea — The shares of Brazilian meat processing companies JBS and Marfrig began the first trading session of the year in sharp decline on B3, pressured by the news of plans by the President Joe Biden administration to open up the meat and poultry sector to more competition.

JBS shares were trading midday Monday at 36.40 reais ($6.42), down 4.08%, while Marfrig shares retreated 2.63% to 21.49 reais ($3.79).

Biden is expected to announce plans Monday to fight the market power of conglomerates that dominate meat and poultry processing, intensifying a months-long campaign that highlights anti-competitive practices in the sector as partly to blame for food-price inflation, according to Bloomberg News.

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The effect on the two companies’ shares was almost immediate. JBS’ beef operations are its biggest business worldwide, with some even saying the company is more American than Brazilian.

In the third quarter of last year, for example, JBS saw its net profit double due to its results in the U.S.

Read More: U.S. Beef Craze Gives Brazil’s Meatpackers Relief Amid China Ban

And at Marfrig the situation is no different. After the purchase of National Beef, the company saw its U.S. operations grow significantly, reflected in its overall financial result. Just like its competitor, it was the company’s U.S. operation that brought Marfrig a positive result in the third quarter of last year, with its net profits increasing two and a half-fold.

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As the White House moves to try to curb the power of the industry, many investors are adjusting their positions. Biden will join Agriculture Secretary Tom Vilsack and Attorney General Merrick Garland to hear complaints from livestock raisers and farmers about consolidation in the industry, which still includes companies such as Cargill and Tyson Foods. Together, the four companies account for 80% of US beef processing capacity.

Read More: Why Beef Consumption in Brazil is the Lowest in 28 Years

Cash for Competitors

Among the measures to be announced, according to Bloomberg News, is the release of $1 billion in federal assistance to help independent ventures expand. In addition, new competition regulations are under consideration. Biden’s fight with the meatpackers has already cast him as a president willing to take on powerful business interests when it comes to curbing end prices to consumers.

Biden’s aim is to curb the inflation of meat prices that bolstered the profits of companies in third quarter of 2021. Meat, which accumulated a 16% price rise in the 12 months to November, was the largest contributor to inflation in supermarkets, while sector representatives attribute the price increases to the shortage of labor, the rise in fuel prices and supply chain restrictions, according to Bloomberg News.

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