Made in the U.S.?

The COVID-19 pandemic has unearthed some ongoing issues within the United States meat industry.

Disruptions in the supply chain, declining cattle prices and increasing grocery store prices have caused concerns among farmers. It also has caused some to question what goes on behind the scenes in the meat industry.

This story will look into the worldwide meat market domination by Brazilian owned packing plants.

JBS S.A.

JBS S.A., and its subsidiary JBS USA, is a Brazilian packing company which is owned by Joesley and Wesley Batista through J&F Investamentos.

JBS currently is the largest meat packing company in the world with 54 plants on four continents handling a majority of the beef and poultry processing across the globe. It also is the thirds largest meat processing company in the U.S. behind Tyson Foods and Cargill Meat Solution Corp.

JBS USA, a direct subsidiary of JBS S.A., is wholly owned by the aforementioned company. JBS USA entered the market in 2007 then purchased Smithfield Foods, then the fifth largest meat packing company, and Pilgrim’s Pride Corp. in 2008.

The company also attempted to purchase National Beef Packing Co. in 2008, which would have made it the largest beef packing company in America. This move was blocked by the U.S. Department of Justice due to concerns regarding a drastic increase in the price of beef.

It also would have put 80 percent of meat on the U.S. market in the hands of three packing companies instead of four.

In 2017, Brazilian police investigated several meatpacking plants owned by JBS where inspectors were suspected of being bribed, allowing rotten, expired and contaminated meat to be processed and sold.

According to the Wall Street Journal, owner Joesley Batista admitted just days after the initial investigation to paying more than $150 million to three former Brazil presidents and many other politicians through his company — J&F Investmentos.

JBS also faced charges in the U.S. regarding the bribery due to the Foreign Corrupt Practices ACT, according to Bloomberg News. The Batistas agreed to pay more than $3 million in fines in exchange for leniency for lenience in Brazil. The brothers also avoided jail time through cooperation.

While the company’s shares eventually rose again after the scandal, the Batista brothers have a history of scandals and corrupt practices in their businesses.

More recently, U.S. Rep. Rosa DeLauro, D-Connecticut, has called for the United States Department of Agriculture Inspector General to investigation another case of corruption involving JBS. In addition, DeLauro alleged JBS received more than $100 million in payments in subsidies meant for struggling farmers and ranchers, according to Food Safety News.

Marfrig Global Foods S.A. and National Beef

Marfrig Global Foods S.A. is the second largest beef company in Brazil, following JBS, and the largest beef producer in Uruguay.

In 2018, Marfrig acquired a 51-percent outstanding ownership interest in National Beef Packing Co. through its indirect subsidiary NBM US Holdings. The following year, Marfrig acquired additional ownership from Jefferies Financial Group, giving them an 81.7-percent outstanding ownership interest in National Beef.

After the second purchase, the United States Cattlemen’s Association called for an investigation in the situation. According to Global Beef News, the organization’s main concern was a U.S.-based company is being controlled by a foreign corporation.

National Beef currently is the fourth largest meat packing facility in the United States and seventh in the world.

“Today, nearly 30 million acres of U.S. agricultural land is owned by foreign investors,” USCA President Kenny Graner said in response to the situation. “Once Americans lose out on the capacity — whether it be land, feedlots, meat processing facilities or other resources — it may be we will never have the opportunity to buy it back. In short, the growing trend of foreign interests acquiring U.S. agriculture resources jeopardizes the ability of our nation to feed itself. In our view, this is a direct threat to our democracy.”

Many others who raise cattle for processing also share this concern. With two of the four largest meat packing companies in the U.S. being owned by Brazil-based corporations, some are questioning the future of the meat industry.

Food Safety Concerns

As shown with the JBS bribery scandal, foreign ownership of U.S. processing plants raises some safety concerns. Shortly after the initial investigation in 2017, the USDA temporarily blocked the import of beef processed in Brazil after 11 percent was rejected due to “public health concerns, sanitary conditions and animal health issues.” Typically, only 1 percent is rejected at entry.

Brazil was allowed to resume exports of fresh beef in February.

After the JBS scandal, many feared the Marfrig takeover of National Beef would introduce more questionable meat into the market. However, Marfrig released a statement which said its facilities were not involved in any of the bribery schemes.

However, they still are under investigation along with JBS for bribing Brazilian banks for loans which were used to buy U.S. meatpacking companies.

According to The Counter, an independent news source investigating the American food market, some believe it will increase food safety in trading.

“If anything, it might increase scrutiny at the borders,” Ted Schroeder, director fo the Center for Risk Management Education and Research at Kansas State University, said. “As you make more global connectivity in our food industries, we are maintaining our ability to carefully inspect and verity the product which comes into our country.”

Foreign ownership of two of the nation’s largest meat packing company makes some cattle raisers uneasy. They fear removing ownership from the U.S. will take away the company’s consideration for the local community.