JBS eyes foreign markets

Joesley Mendonça Batista, CEO of JBS S.A., the parent company of JBS Swift & Co., recently had some interesting observations during an hour-and-a-half conference call on the company's latest financial results.

The beef division lost a bundle in the final quarter of 2007, but that did not seem to disturb Batista, the youngest of three brothers who now operate what is the world's largest processor of beef, and, with recent planned acquisitions, the world's largest cattle-feeding operation.

Batista said 2008 will be the year of a turnaround of the company's beef division, and predicted the price of beef the company processes and the price of cattle it buys will increase.

And he's not concerned about that, either.

"We need to erase all memory about commodity prices, because we are now in a new scenario," Batista said, noting the high cost of commodity prices does not frighten him because global conditions are so much different now than they were 20 years ago. Those in the industry, he said, must change, adjust and operate under a different mindset.

What will drive the price of beef in the future?

In Batista's mind, new markets and the way JBS sells to its customers.

He expressed confidence that South Korea will re-open its market to U.S.-produced beef following meetings between the country's two presidents -- which were scheduled last week -- and that Japan will follow soon after. He also said the economies of China, India and Brazil are all growing faster than previously anticipated, and Russia and Hong Kong have bought Brazilian beef at almost double the price it once was. China, he indicated, is a looming monster market for beef.

"We will increase our sales (of beef) without increasing our volume," he predicted. Europe, he added, may be lost in the shuffle.

"Europe has imposed new restrictions (on beef) at a time when all the rest of the world is asking for more beef. Europe decided to do that at a very bad time," he said.

That was bolstered by a World Trade Organization ruling that a ban on imports of U.S. beef by the European Union from certain hormone-treated cattle is scientifically unjustified. The dispute is one of the longest running in the history of the WTO. It dates back to 1996, when the U.S. succeeded in its challenge of the EU prohibition. Following an unsuccessful appeal by the EU, the WTO authorized the United States to raise tariffs on imports from the EU to the tune of nearly $117 million per year. The U.S. did exactly that in 1999.

The latest WTO ruling is being called a victory for U.S. cattle producers and consumers in the European Union, who will have access to U.S. beef.

The restrictions Batista talked about has hit European cattle producers hard, and they are unable to meet the demand of consumers throughout Europe. That leaves the door open for beef exports into Europe.

"I am a person who believes in free markets," Batista said during the conference call. "I am confident that no government can control or fix prices."

And on another front:

Tony Frank, provost and senior vice president at Colorado State University, said he plans to wait until June to set up a search committee for a new dean of agriculture at the Fort Collins campus. Marc Johnson is moving on to the University of Nevada-Reno effective June 1.

Frank, in a telephone conversation, said CSU President Larry Penley's ag advisory council, which includes the leaders of most of the state's agricultural organizations, will meet in June.

"I want to get their input on what they feel is in their best interest, and the university's best interest, in what the new dean should be," Frank said. He plans to name an interim dean in the meantime, but didn't know who that might be at this time.

It will be sometime next spring before a new dean is named and on campus, Frank added.

-- Bill Jackson has covered agriculture in northern Colorado for more than 30 years.