Blue Sky And Mud
Around the state this past week we have finally seen some blue sky. We’re not complaining about the moisture, but it is good to see and feel some sunshine. One rancher told me he was going to tie his overshoes to his front bumper and drive south until someone asked what they were. By the looks of the weather map he may want to stop off for some Spanish lessons. I’ve heard our good friend Mike Smith, a range professor at UW, has been holding rain dances, weather permitting. We have a great start for a good grass year.
Reading through a meat processing magazine, Meatingplace, this past week, I came across an interesting article on JBS-Swift & Co. You’ll likely remember that this is the Brazilian-based meat packing company that bought Swift and Company and other beef, lamb and pork facilities. They tried to purchase National Beef Packing Co. but ran into trouble with the U.S. Department of Justice.
The article says that not being able to buy National Beef turned out to be a good move for JBS considering the world economic situation and the value of the dollar going higher. JBS spokesman Chandler Keys says the “silver lining” is that JBS saved $970 million (the sum of the purchase price of $560 million-cash and shares-and a debt load of $410 million). So now JBS has $990 million cash on hand to do with as they please. JBS has never sold any assets, they’ve just bought them.
So what will they buy now? They are a big player in the meat and particularly the beef packing business. The article goes on to say they’ll likely spend their dollars in Brazil and neighboring countries as they see more of a future there. They also don’t have to deal with the U.S. Department of Justice, which seems to have their number, if they make purchases there. JBS, since the acquisition of Swift, has turned Swift into a low cost, low service meat packing company despite the harsh economic climate.
Like them or not, the Batista family knows what they are doing in the meat packing business. One has to admire them for starting at a kill of one cow per day and growing to the level they work at today. Last year JBS S.A. spent nearly $415 million on capital improvements, a figure that doesn’t include its acquisitions. In the US, they own eight cattle slaughter plants with a daily kill capacity of 28,100 head, three pork slaughter plants with a daily slaughter capacity of 47,900 head, a case-ready plant and a lamb slaughter plant. JBS also manages 11 cattle feedlots. The Five Rivers Feedlots alone have a one-time capacity of 811,000 head and marketed 1.6 million head of cattle last year. The article states that, according to a Reuters report, the cattle feeding industry is losing around $110 million per week. How do they, and their bankers, sleep at night?
Sooner or later, every Wyoming livestock producer’s cattle or sheep will be affected by JBS and how their business is managed. It is too costly for them to buy ranches and raise cattle and sheep, which is our job. I hope they treat us well.