JBS SA, the world’s biggest meat producer, said it plans to increase exports to Asia after paying $1.3 billion to buy Primo Group, the largest producer of ham and bacon in Australia and New Zealand.
JBS will also use the deal to produce more higher-cost processed foods, according to an e-mailed statement from the Australian unit of the Sao Paulo-based company.
Buying Primo gives JBS an opportunity to take advantage of pork demand in China which has led to a four-fold increase in imports of the meat since 2009, according to data compiled by Bloomberg.
Australia currently exports minimal quantities of pork to the world’s biggest consumer of the meat because of the lack of certification for local products and tariffs of as much as 20 per cent that will be removed by 2018 due to a free-trade agreement announced between Canberra and Beijing this week.
"People have money and therefore they’ll demand more high-quality meat,” Zhangyue Zhou, a business professor at James Cook University in Townsville, Australia, said. Changing tastes will also support Australian exports as urban residents show more interest in “products like bacon that Chinese people don’t normally eat,” he said.
Pork makes up more than two-thirds of meat consumption in China, thanks to historical difficulties in transporting beef and lamb that made it and poultry the most affordable meats, he said.
Demand is already increasing in China, which makes up about half of the global pig herd, and the country may account for more than 75 per cent of worldwide pork-consumption growth during the next five years, according to Bloomberg Intelligence.
Securing certification of abattoirs and improving the export supply chain will be necessary to take advantage of the reduced trade tariffs, Emily Mackintosh, a spokeswoman for industry body Australian Pork, said.
Bloomberg News, edited by ESM
