Tyson Do Brazil Sees End to Difficult Conditions

BRAZIL - Tyson Do Brazil sees conditions in the poultry sector improving, and a senior executive also talks about exports of poultry meat to China, and possible future mergers.
calendar icon 4 June 2009
clock icon 4 minute read

The Brazilian unit of US giant meat and poultry processor Tyson Foods Inc. said on 3 June that the worst is over in the financial crisis, according to CNN.

"We are seeing an increase in [chicken] prices and more demand both internationally and in Brazil," Joster Macedo, president of Tyson do Brasil, says the report, citing Dow Jones Newswires.

Mr Macedo said the global economic situation will continue to improve and the demand for food will remain. "The 2009 crisis won't impact this," he said.

Although credit tightened for imports into countries such as Russia, credit is now more readily available. The banks, however, have tighter processes so it can take more time to receive the credit, he said.

In September 2008, Tyson, the world's largest meat processor, earmarked $200 million over an 18-month period to be invested into Brazil, the world's leading chicken exporter.

At the same time, Tyson acquired three companies in Brazil. Tyson bought Macedo Agroindustrial in Santa Catarina state and two start-up companies, Avicola Itaiopolis, or Avita, in Santa Catarina state and Frangobras in Parana state.

Tyson, by 2011, aims to hike its Brazilian production capacity to 816,000 birds per day, according to CNN. The company would not reveal its current capacity.

Tyson do Brasil expects export growth at above Brazil's Chicken Exporters Association's estimate of five per cent growth industry wide in 2009 versus 2008.

Mr Macedo admitted, however, that bottlenecks have appeared, such as an insufficient supply of chickens in the regions near its three plants. There is not a big culture of producing poultry in these areas, he said, adding that Tyson therefore needs a supply of poultry from within 100 kilometres.

To help the supply, Brazil's southern regional development bank, or BRDE, has allocated a 100-million-Brazilian-real (BRR; $51.4 million) credit line to support poultry producers in the region.

Tyson do Brasil is also talking with other Brazilian banks to encourage new lines of credit to help local poultry producers in the area, he said.

Exports to China

Tyson do Brasil's is already exporting chicken products to markets such as Europe, South Africa and Hong Kong, said Mr Macedo. And Tyson do Brasil expects to generate 40 per cent of its sales from exports this year.

Mr Macedo said that the new export agreement signed in May between China and Brazil to export chickens direct to China is unlikely to change its volumes.

Tyson do Brasil, like many Brazilian companies, is already selling chickens to Hong Kong that end up in China, he said. The agreement, however, should make this more lucrative as companies can sell direct to China and incur fewer costs, such as freight, he added.

Mergers & acquisitions, integration

Mr Macedo told CNN that Tyson does not rule out further acquisitions in the future in Brazil but the company is not in talks at the moment.

Indeed, the company is currently focused on its integration in Brazil. Tyson legally completed the merger and is in the process of integrating systems, people and cultures, Mr Macedo said.

Further Reading

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