Marfrig stirs up competition with JBS in exporting to China

The Global Foods Marfrig was the only food company listed on BM & FBovespa to benefit from China's decision this week to accredit more three refrigerators producers of beef to be exported to the country.
The company was able to enable his unit in Bagé (RS), SIF 232, shipments, and now has three industrial plants to meet growing demand in the Chinese market. JBS and Marfrig, Minerva's main competitors, failed to obtain new credentials for export to the country.
During visit of the Minister of agriculture, Kátia Abreu, to Beijing this week, the Chinese Government has authorized, in addition to the Marfrig, industrial plants the Stresses and Mataboi, owned by José Batista Jr., brother of Wesley Batista (President of JBS) and Joesley Batista (Chairman of the Board of Directors of JBS). The unit of Stresses is in Nanuque (MG), SIF 2051, and Mataboi, on Araguari (MG), with SIF 177.
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The new credential leaves the Marfrig closest to the JBS that, so far, leads the number of factories to export to China, with five units.
Minerva has only a refrigerator to sell beef to the country. This difference, however, should be temporary, as China and Brazil pledged to expedite the vetting by sampling of groups of plants.
Alegrete
It is expected that the credential to Bagé (RS) work naturally in greater market share for the Marfrig, since the number of authorized plants is still well below the potential estimated consumption for the Chinese market.
However, Marfrig wants further agitate dispute to put your refrigerator in Alegrete (RS) to work at full steam. The unit in question is able to export since the reopening of China, but has been running short of capacity.
At the beginning of the year, the company unveiled plans to close the plant of Alegrete, but was taken to sign agreement with the Regional Labor Court of the 4th region (TRT/RS) to keep it in operation for a year, although with lower capacity in use.
At the time, had justified the decision by Marfrig considers the loss-making unit, in addition to facing the lack of raw materials and the need for a high investment to keep it.
Since then, however, China has reopened its market to production and raised the strategic importance of the unit for the Marfrig, which discusses with authorities of Rio Grande do Sul details for the expansion of activities in the fridge.
The food company takes the opportunity to make demands to the Government. It is possible that among them are a possible reduction of the GST and the implementation of a program of identifying origin of the herd, which would add value to the product marketed by Marfrig.
Questioned by service real-time Broadcast of State Agency, about the strategy behind the driver's license of the plant of Bage and the strengthening of activities in Alegrete, Marfrig has not yet indexed.
Opportunity
China is the big bet for exporters of beef from Brazil, mainly after the reduction of sales to major trading partners, such as Russia and Venezuela, earlier this year.
The Rabobank estimated that the demand for Red protein in the country advance, an average of 2.2% per year by 2025. With this, the internal Chinese consumption should rise to 8 million tonnes this year to 10.2 million tonnes in the final projection.
"Despite the scenario still be challenging (global economy), the perspective of the animal protein sector follows. The average income growth of emerging countries, particularly Asia, continues to contribute to that, "said the President of Marfrig, Martín Secco, in teleconference with investors in October 6, before announcing the strengthening of operations in Alegrete.
Like any bet, however, there are risks. The rate of expansion in China is lower than that registered between 1996 and 2014, when the average advance was of 4.8% per year. According to Rabobank, the index decreased due to the economic downturn.
The country also has faced volatility in the stock market and the fall of the yuan. The exchange rate devaluation was headed by the people's Bank of China (PBoC), in order to strengthen the country's exports and improve its balance of trade. Both factors can affect international trade and, therefore, the long-term prospects for the export of beef from Brazil.
So far, however, the results look solid. Shipments to China only started in June, but the country is already the seventh largest importer of Brazil with 61.3 1000 tons of beef-considering data from January to October, the Brazilian Association of Meat exporters (Abiec).