Look who’s working for JBS Swift now
By David Kruse POSTED: March 24, 2008
I somehow was not surprised to see former NCBA lobbyist, Chandler Keyes working for JBS Swift, defending their bid to be the largest beef packer in the U.S through pending acquisitions of National Beef and Smithfield Foods Beef operations. It was my perception that Chandler set as much NCBA policy in Washington as NCBA members ever did and most of it favored packers.
That’s how many in Washington earn better paying jobs. They carry water for these special interests while serving in a capacity representing producers and then are later rewarded with employment from those special interests for a job well done.
There is potential future reward along these lines for all government regulatory officials, including USDA, from the company’s that they regulate. When I see Chandler Keyes now working for JBS/Swift, I think that’s his reward for previous work for packers while he was paid by the NCBA. Expect there are many at NCBA who see Chandler Keyes as their role model. Believe me, R-Calf CEO Bill Bullard will never be hired by a major packer.
Chandler Keyes essentially works for the Batiste Family who is putting their Brazilian family fortune ($3 billion) into their U.S. beef industry bid to become the No. 1 U.S. beef packer.
Back in 2004, $3 billion converted to 9 billion Real, a 3 to 1 currency conversion. Today, from the subsequent weakness seen in the U.S. dollar the conversion is 1.7 to 1. It would take just 5.3 billion Real today to buy the same amount of dollars that it took 9 billion real to buy in 2004.
In other words, the value of Swift, National Beef, and Smithfield Foods has plummeted to only 57% of what it was in 2004, priced in Brazilian currency. The plunge in the U.S. dollar is putting U.S. assets and industries on sale to foreign buyers and this pending purchase of the U.S. beef industry is only the beginning of a trend. The U.S. is on sale. JBS wants the U.S. beef industry because the weak U.S. dollar will give it a low cost export platform. They believe U.S. beef exports will improve. Brazilian packers are better schooled than the U.S. beef industry in exporting and they intend to benefit fully from the weak U.S. dollar.
I had it all wrong. I expected Excel, Tyson, or Smithfield Foods to invest in Brazilian livestock and meat processing and eventually fight to open the door wider to meat importers, exporting from foreign production platforms to the U.S.
While that still may happen long term, what “is” happening now is that Brazilian meat companies are buying a platform in the U.S. beef industry purchasing packing plants and feedlots, beating U.S. integrators to the punch. They bought us before we bought them. The rest will likely eventually work out just about the same.
Brazilians know how to export, so with their input and expertise they may eventually straighten out the U.S. industry’s handicapped attitude on what it takes to service foreign customers.
Yes, I think Brazilians are better at that. Europe is doing a lot of things wrong with its food production which will eventually result in a necessity to expand imports. Brazil will take advantage of that.
JBS-Swift says that they are optimistic on expanding Japan/Korean beef exports from the U.S. They expect “change” is coming to USDA next election that will produce a new attitude at USDA toward accommodating foreign customers. How did JBS get the jump on the U.S. beef industry?
It’s all about the value of the U.S. dollar. Swift, National Beef, Smithfield Foods, were all on sale in terms of Brazilian currency.
The really good part, however, (from their perspective) is that once they’ve bought into the U.S. with the strength of the Brazilian Real, they get to export beef priced in cheap dollars, making them globally competitive.
They are betting on the future. First, they buy the dollar discounted assets of Swift/National Beef/Smithfield Beef. Then they use those assets to produce and export dollar cheapened beef. I don’t know if they can get this past the Justice Department, but I think the business logic and business plan is brilliant.
Keyes says the Batiste family is fully committed, here to stay and will fight for this. No doubt, they want their dollar discount while it’s offered to them.
Restricted access to foreign markets has denied the U.S. Beef Industry the benefits from a weakened U.S. dollar to beef exports. Domestic demand is struggling too.
The narrowing of choice/select beef grade spread is symptomatic of a serious demand problem. Consumers are opting for less steak out and cheaper cuts from the grocery meat counter. It’s questionable if packers can transfer this loss in choice product value to feedlots but it will negatively impact packer margins, ultimately reducing what they pay for cattle in general.
While attempting to save, consumers are backing down the food chain to lesser quality but cheaper food items. Wal-Mart is selling more Sam’s Club pizzas and beef is losing sales to chicken. High gasoline prices compound the cost of eating out as families re-consider driving to the restaurant. They can make one trip to the grocery store and buy food for many meals. They buy less beef there and more pork or poultry.
Under normal demand conditions, today’s beef production would not be considered burdensome. The beef industry survived a curtailed export market but that means that domestic demand problems developing are all that much more of a threat with export markets closed.
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By David Kruse POSTED: March 24, 2008
I somehow was not surprised to see former NCBA lobbyist, Chandler Keyes working for JBS Swift, defending their bid to be the largest beef packer in the U.S through pending acquisitions of National Beef and Smithfield Foods Beef operations. It was my perception that Chandler set as much NCBA policy in Washington as NCBA members ever did and most of it favored packers.
That’s how many in Washington earn better paying jobs. They carry water for these special interests while serving in a capacity representing producers and then are later rewarded with employment from those special interests for a job well done.
There is potential future reward along these lines for all government regulatory officials, including USDA, from the company’s that they regulate. When I see Chandler Keyes now working for JBS/Swift, I think that’s his reward for previous work for packers while he was paid by the NCBA. Expect there are many at NCBA who see Chandler Keyes as their role model. Believe me, R-Calf CEO Bill Bullard will never be hired by a major packer.
Chandler Keyes essentially works for the Batiste Family who is putting their Brazilian family fortune ($3 billion) into their U.S. beef industry bid to become the No. 1 U.S. beef packer.
Back in 2004, $3 billion converted to 9 billion Real, a 3 to 1 currency conversion. Today, from the subsequent weakness seen in the U.S. dollar the conversion is 1.7 to 1. It would take just 5.3 billion Real today to buy the same amount of dollars that it took 9 billion real to buy in 2004.
In other words, the value of Swift, National Beef, and Smithfield Foods has plummeted to only 57% of what it was in 2004, priced in Brazilian currency. The plunge in the U.S. dollar is putting U.S. assets and industries on sale to foreign buyers and this pending purchase of the U.S. beef industry is only the beginning of a trend. The U.S. is on sale. JBS wants the U.S. beef industry because the weak U.S. dollar will give it a low cost export platform. They believe U.S. beef exports will improve. Brazilian packers are better schooled than the U.S. beef industry in exporting and they intend to benefit fully from the weak U.S. dollar.
I had it all wrong. I expected Excel, Tyson, or Smithfield Foods to invest in Brazilian livestock and meat processing and eventually fight to open the door wider to meat importers, exporting from foreign production platforms to the U.S.
While that still may happen long term, what “is” happening now is that Brazilian meat companies are buying a platform in the U.S. beef industry purchasing packing plants and feedlots, beating U.S. integrators to the punch. They bought us before we bought them. The rest will likely eventually work out just about the same.
Brazilians know how to export, so with their input and expertise they may eventually straighten out the U.S. industry’s handicapped attitude on what it takes to service foreign customers.
Yes, I think Brazilians are better at that. Europe is doing a lot of things wrong with its food production which will eventually result in a necessity to expand imports. Brazil will take advantage of that.
JBS-Swift says that they are optimistic on expanding Japan/Korean beef exports from the U.S. They expect “change” is coming to USDA next election that will produce a new attitude at USDA toward accommodating foreign customers. How did JBS get the jump on the U.S. beef industry?
It’s all about the value of the U.S. dollar. Swift, National Beef, Smithfield Foods, were all on sale in terms of Brazilian currency.
The really good part, however, (from their perspective) is that once they’ve bought into the U.S. with the strength of the Brazilian Real, they get to export beef priced in cheap dollars, making them globally competitive.
They are betting on the future. First, they buy the dollar discounted assets of Swift/National Beef/Smithfield Beef. Then they use those assets to produce and export dollar cheapened beef. I don’t know if they can get this past the Justice Department, but I think the business logic and business plan is brilliant.
Keyes says the Batiste family is fully committed, here to stay and will fight for this. No doubt, they want their dollar discount while it’s offered to them.
Restricted access to foreign markets has denied the U.S. Beef Industry the benefits from a weakened U.S. dollar to beef exports. Domestic demand is struggling too.
The narrowing of choice/select beef grade spread is symptomatic of a serious demand problem. Consumers are opting for less steak out and cheaper cuts from the grocery meat counter. It’s questionable if packers can transfer this loss in choice product value to feedlots but it will negatively impact packer margins, ultimately reducing what they pay for cattle in general.
While attempting to save, consumers are backing down the food chain to lesser quality but cheaper food items. Wal-Mart is selling more Sam’s Club pizzas and beef is losing sales to chicken. High gasoline prices compound the cost of eating out as families re-consider driving to the restaurant. They can make one trip to the grocery store and buy food for many meals. They buy less beef there and more pork or poultry.
Under normal demand conditions, today’s beef production would not be considered burdensome. The beef industry survived a curtailed export market but that means that domestic demand problems developing are all that much more of a threat with export markets closed.
———