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Brazilian beef producer Marfrig calls Asia main growth area
October 18, 2016 / 7:51 PM / in a year

Brazilian beef producer Marfrig calls Asia main growth area

SAO PAULO (Reuters) - Marfrig Global Foods SA, one of Brazil’s main producers of beef, expects the Asia-Pacific region to be its principal motor for growth going forward after China and the United States opened their markets to Brazilian fresh beef in 2015, a company executive said on Tuesday.

A worker cuts up joints of beef at the Marfrig Group slaughterhouse in Promissao, 500 km northwest of Sao Paulo October 7, 2011. REUTERS/Paulo Whitaker

Mergers and acquisitions in the region, however, are not on the company’s immediate radar, Marfrig Vice President of Finance José Eduardo de Oliveira Miron told Reuters.

“We are concentrating on organic growth,” he said. “We see growth in beef consumption in the world propelled by the Asian markets, where demand should remain robust and met mainly by imports.”

Asian consumers have been the focus of other Brazilian meat exporters including BRF SA and JBS SA, which have expanded their foothold in the region through acquisitions, partnerships and joint ventures.

After suffering a minor debt crisis from rapid expansion in recent years, Marfrig resorted to selling its poultry businesses in Britain and Brazil to JBS. But Miron said the company was back on stable footing.

“We are betting on sustainable growth through the reduction of leverage, continued free cash flow generation and consolidation of operations,” Miron said.

In September, Brazil’s agriculture minister, Blairo Maggi, led a Brazilian trade mission including 40 agribusiness companies to the region, visiting China, India, Vietnam, South Korea, Thailand, Malaysia and other countries, stirring up as much as $2 billion in new trade.

Miron said a small per capita increase in Chinese beef consumption could easily be equivalent to all of Brazil’s current exports of beef annually of nearly 2 million tonnes.

Miron said the company’s Keystone division, which focuses on supplying restaurant chains in the United States and Asia, is leading one of the company’s main investments of $35 million to build a new plant in Thailand. It will have capacity to produce 20,000 tonnes of processed food a year starting in 2017.

Next year, Miron said the beef division is expected to expand its sales in Malaysia, which should allow the company to export beef on the bone and raise the value of products sold there.

As for China, Miron said only that the company expects 2017 to “be an equally fruitful year in the country.” In 2015, Brazil cleared some of its slaughterhouses to ship beef to China, which had been suspended since 2012 due to concerns over mad cow disease.

The World Animal Health Organization maintained Brazil’s status as a country with an insignificant risk of the disease.

Miron said the clearance of fresh Brazilian beef for import into the United States in August helped open the door to other markets, especially in Asia, which tend to follow U.S. officials’ recommendations.

“We expect Mexico and Canada to be the next markets to open,” he said.

Writing by Reese Ewing; Editing by Will Dunham

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