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Feb 10, 2005
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Brazilian Beef Co-Op Plans U.S. Partnership
The difficulty of marketing cattle to meatpackers is causing Brazilian cattle breeders to build their own slaughter and processing plants. In Rolandia (Paraná state), Corol Cooperative Agroindustrial plans to build a plant with an initial harvest capacity of 500 animals/day.

Corol is investing US$33.9 million in the facility in a joint venture with a "U.S. company." About half the capital will be foreign and the rest raised through bank financing. Corol officials won't specify which U.S. company is involved, and a canvass of the larger U.S. meat packers didn't turn up any admitted candidates. Corol execs estimate the joint venture will be formed in a month.

The project stipulates each cattle breeder will have a quota of animals to deliver each month. The plant will have the potential to increase production to 2,000 animals within four years. Production will be bound for export markets.

Corol joins several other co-ops in developing meatpacking enterprises but is the only firm hinting of direct U.S. investment. In Goias state, cattlemen are organizing the State Cattle Marketing Agency, which should be operational by month's end and able to trade 15,000 head/day.

"The plan is part of the cooperative's strategy to verticalize production," says Antônio Sérgio de Oliveira, Corol vice-president.

"The price, the profit from the carcass and the weight of the animal imagined by the producer are never close to that of the meatpackers," adds cattleman José Antônio Fontes, a Corol member.

Co-op members/shareholders say they will receive a premium for quality -- and payment will be made in cash. Today, Brazilian meatpackers that pay cash impose price discounts. Otherwise, they're allowed by law up to 30 days to make payment for their cattle supplies.

In related Brazil news, the Brazilian Ag and Livestock Confederation (CNA) was to finish this week the juridical preparation of its "denunciation of the alleged formation of a cartel" on the part of meatpackers. Its complaint will be sent to Brazil's Chamber of Deputies for investigation.

CNA says the biggest companies in the meatpacking sector have created a "unified slate of prices" paid for cattle throughout the country. CNA is calling for a producer boycott to reverse the "cartelization" of the meatpacking sector.

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