JBS, the Brazilian meat giant set to benefit from EU-Mercosur trade deal
All the versions of this article: [English] [français]
Le Monde | 16 December 2024
JBS, the Brazilian meat giant set to benefit from EU-Mercosur trade deal
by Anne-Dominique Correa
While the December 6 announcement of the finalization of the European Union-Mercosur agreement sparked controversy in France’s agricultural regions, in Brazil, JBS was celebrating. The Brazilian multinational, the world’s leading producer of animal proteins, is ready to use the trade agreement to increase its presence in Europe, which accounted for around 7% of its exports in 2024.
The agreement allows Mercosur countries to export an additional 99,000 metric tons of beef at a reduced tariff of 7.5%. "JBS produces most of Brazil’s top-quality meats, which are the most sought-after in Europe," explained Alessandro Francisco Trindade de Oliveira of the Federal Institute of Parana. He believes that Brazil "could at least double its meat exports to the European Union."
This would further boost the group’s sales to 364 billion reais (€57.48 billion), with a stock market value of €13.3 billion. According to a study by the Economic Research Institute Foundation published in August 2023, its activities account for 2.1% of Brazil’s gross domestic product and generate 2.73% of jobs.
Massive deforestation
JBS has come a long way from its humble beginnings as a small family butcher’s shop founded in 1953 by brothers José Batista Sobrinho and Juvencio Batista, two farmers from Neropolis, in the state of Goias, in west-central Brazil. Today, the company is able to slaughter 75,000 cattle, 14 million poultry and 147,000 pigs a day. It operates more than 10 feedlots in Brazil, with a capacity of 2 million cattle.
In Brazil, the expansion of the agricultural sector was strongly encouraged during the military dictatorship (1964-1985), which sought to multiply livestock farms in the west and north of the country, in particular to "occupy" the Amazon and protect it from foreign interests, at the cost of massive deforestation. But it was in the 2000s that JBS, then run by Joesley and Wesley Batista, the sons of José Batista Sobrinho, experienced significant international growth. The group benefited from the support of the National Bank for Economic and Social Development (BNDES) as part of the industrial policies of the governments of Luiz Inacio Lula da Silva (2003-2011) and Dilma Rousseff (2011-2016), which aimed to promote "national champions."
BNDES took a stake in the company, injecting 8 billion reais in exchange for control of 20% of the shares. This financial boost enabled the group to accelerate its international expansion, culminating in its listing on the Sao Paulo stock exchange in 2007. Today, JBS controls 25% of the global market for beef and beef by-products and operates in 17 countries. The company has no intention of slowing down: on November 21, it announced a $2.5 billion (€2.38 billion) investment over five years in Nigeria to build six poultry, beef and pork processing plants.
Several controversies
In Brazil, the company has been involved in several controversies. In 2017, brothers Joesley and Wesley admitted paying 400 million reais in bribes to politicians. Two months earlier, the company’s reputation had already been tarnished by another case: it was targeted by a federal police investigation into a corruption scheme that allegedly allowed tainted meat to enter the market. This led the European Union to suspend imports from the companies involved.
In an e-mail to Le Monde, JBS defended itself by claiming that, at the time, "none of its units were closed." However, the case has left its mark. On Wednesday, November 20, Carrefour decided to stop selling meat from Mercosur countries, citing concerns over "lower environmental and health standards," although the retailer later reversed its decision.
Read more Subscribers only ’Carrefour’s decision to stop selling Mercosur meat in France threatens its interests in Brazil’
According to Allan de Campos, a specialist in the impact of the agri-food sector on public health at Sao Paulo State University, Europeans are right to be wary. In Brazil, cattle "are fed corn and soybeans containing high levels of pesticides, such as glyphosate, and are treated with antibiotics," he explained. Furthermore, he pointed out that multinationals only monitor cattle during their stay in feedlots, the last stage of breeding before slaughter, leaving the sanitary conditions of earlier stages, such as birth and early feeding, largely unchecked.
Lack of control
This lack of control also raises doubts about the ability of multinationals to curb deforestation. Almost half of Brazil’s livestock population, which will reach a record 238.6 million head by 2023, is concentrated in the Amazon region, where extensive livestock farming is the main driver of deforestation. Between 1985 and 2022, 77% of deforested land was converted to pasture, according to the MapBiomas collective.
In an email to Le Monde, JBS stated that the company "prohibits purchases from properties that engage in illegal deforestation," and "evaluates thousands of potential cattle farms daily using a satellite monitoring system." However, due to a lack of control over its indirect suppliers, JBS remains "one of the main drivers of deforestation" in Brazil, warned Boris Patentreger, director of the French branch of the NGO Mighty Earth. He estimates that the company is responsible for the "deforestation of 118,310 hectares of forest" between February 2022 and July 2024, three-quarters of which is in the Amazon.
