Meat + Poultry - September 2008 - 32

CEO SERIES

basically to the U.S., Japan and Korea.
Now we are shipping to a lot of countries. For example, we are shipping Australian cap-off rounds to Brazil (where
they are called the picanha), short ribs
to Korea and so on. We focus on carcass
optimization, by selling the right cut in
the right place at the right time.

feel very good about all these meetings
because, with some exceptions, people
have understood this message.
M&P: Regarding the Five Rivers Ranch
Cattle Feeding operation, how will you
use that business?
WB: Five Rivers will
continue to be an aggressive buyer of feeder cattle.
JBS would like to use Five
Rivers to produce more cattle for its
premium-beef programs. And we want
to grow these programs. We are doing
the same in Australia in relation to having beef with more marbling to go to
Japan. (Batista also iterates what JBS has
previously said - that Five Rivers will be
run as a separate unit from the packing

M&P: How conﬁdent are you that the
Justice Department will allow JBS to
acquire National Beef Packing and
the Smithﬁeld Beef Group as per the
agreement announced March 4?

WB: We believe we have a strong
argument both technically and in other ways. Look at what we have already
done here. We have created more, not
less, competition in the industry. We
have stimulated competitiveness and
efﬁciencies, and we have created more
equity and less debt in the business.

"We have stimulated
competitiveness and
efﬁciencies, and we
have created more
equity and less debt
in the business."

M&P: What about concerns that JBS will
own two plants in two regions, in the
Southwest and on the Southern Plains?
WB: By technical, we mean the plants'
location. Tolleson (Smithﬁeld's plant in
Arizona) and Brawley (National Beef's
plant in southern California) both kill fed
Holsteins. But Tolleson also kills a lot of
cows so it is a different business from
Brawley. On the High Plains, we have
Tyson and Cargill to compete with. Cargill has two plants in Texas, in Plainwell
and Friona. So, the market will remain
extremely competitive. The beef business
is competitive by nature. The ﬂexibility
of the business goes up and down and
allows companies to build capacity.

plants. Five Rivers markets about 1.5 million cattle per year (about 14% of JBS's
U.S. kill) but not all of these cattle will
go to JBS. The feedlots will be free to
sell cattle to the highest bidder).
M&P: Will JBS USA consider further
acquisitions in North America in beef
and pork?
WB: No, if the National Beef and
Smithﬁeld acquisitions are approved,
we will be looking to integrate these
businesses into JBS, to capture the
synergies, in case-ready production,
value-added, the international sales
structure, SG&A and logistics and so
on. As for synergies, we expect to see
considerable cost savings.

M&P: You have spoken to numerous
producer groups about the proposed
acquisitions. How has your message
been received?
WB: Our main message to producers is to work together and build
the business and create new markets.
That's the message I've been giving
producers since I was 19 years old. I
32

MEAT&POULTRY

September 2008

M&P: Will JBS stay in Greeley?
WB: We haven't made any decision.
We jokingly tell people we are moving to Green Bay (where Smithﬁeld
Beef is based).
I

www.MEATPOULTRY.com

M&P: How do you see prospects for
proﬁtability in U.S. beef and pork
processing the remainder of 2008
and in 2009?
WB: We are looking for the next two
quarters to be better in pork than in
the ﬁrst two quarters. We
are looking for this quarter (July-September) to be good
for U.S./Australia
beef, as we had a
good July. We expect 2009 to be much
better again because the U.S. dollar
will remain favorable for exports. That
makes U.S. beef more competitive than
ever in global markets. Demand from
emergent markets is strong and more
U.S. beef is going to previous markets
that have reopened, such as Korea. All
of these things together will mean a
new scenario for beef.
I must mention that JBS in the U.S.
in the second quarter 2008 had its best
EBITDA (earnings before interest, tax,
depreciation and amortization) of any
quarter in the last 10 years ($153M in
beef and pork), and the best six months
in 10 years, and that these results came
from internal improvements - not from
the market. It's not that the market was
so much better than last year.
M&P: Finally, how would you summarize the past year?
WB: Swift is not the worst beef company in the U.S. any more. We are very
competitive now and the numbers prove
that we made a signiﬁcant improvement. We increased the competition in
the market, which is opposite to some
people's concerns, and will continue to
do so with our acquisitions. We are not
buying these companies and putting
$3.5 billion into this market to not run
these plants at full capacity. We need to
be the most competitive beef company
in the U.S. and in the world.
Steve Kay is editor and publisher of Petaluma,
Calif.-based Cattle Buyers Weekly (www.
cattlebuyersweekly.com).
We would like to hear from you - to comment on
this story or to request reprints, contact us by
e-mail at: meatpoultry@sosland.com.

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