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cowz

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  This was in Beef Magazine today.......lets here your opinions!       
           
Swift & Company Goes Brazilian

Troy Marshall

Jun 1, 2007 11:44 AM


Months of rumor and speculation ended this week with the announcement that Swift & Company was to be purchased by J&F Particpacoes S.A. of Brazil. J&F owns 77% of JBS, the largest beef processor in Brazil.

Swift sold for $225 million, with J&F agreeing to pay the transaction costs and assume $1.2 billion in debt. This would value Swift at about $1.4 billion, which was seen by industry insiders as a pretty steep price. It's steep in the sense that Swift had posted only one profitable quarter since BSE shut down U.S. beef export markets in 2003. Plus, Swift was rocked by immigration raids last December that decimated its workforce.

The steep price is justified by the fact JBS wants to gain access to the two most lucrative beef markets in the world -- the U.S. and North Asia. The purchase allows it to do so, and positions it to take advantage of the reputation of American beef, the world standard for high-quality, corn-fed beef. The purchase also allows JBS to establish a global presence.

The purchase gives JBS potential sales of nearly $12 billion, and greatly increases its beef-processing capacity. Swift's capacity is 5,500 head/day, while JBS' capacity prior to the purchase was only 800-1,600/day. As JBS lacks the expertise to run such a large plant, it plans to essentially retain the current Swift management.

Prior to the sale, Smithfield was thought to be the leading contender for Swift, with Cargill, National Beef and Seaboard all having expressed interest. Now the industry will focus on Smithfield, which has been very obvious in its desire to build its beef-processing position, to see if it responds by adding capacity. Such a step could create a lot of pressure on packing margins in the short term.

From an industry perspective, it will be interesting to witness the reaction to a foreign-based company taking ownership of Swift. Anti-global sentiment has resonated well among some fringe cattlemen groups, but concern over the prospect of a Swift ownership change had centered on its leading to further consolidation in the U.S. Instead, the purchase of Swift by JBS adds another major player to the mix.

As is always the case, a major change in ownership will likely lead to other changes in the packing industry, so stay tuned. JBS paid a lofty price premium to enter the market. In so doing, it is taking a very strategic and long-term outlook to the acquisition. Expect them to be in it for the long haul.

 

 

knabe

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i could be wrong, but i think brazil allows relatively few restrictions on foreign ownership of land, unlike say mexico, and obviously other anti-democratic states such as venezuela, paraguay etc.  many american farmers have been moving down there for a while taking their land stewardship knowledge with them because the climate for farming is so caustic here. obviously the farmers that go to brazil will need area specific aquisition of land stewardship, but compared to current practices of relative slash and burn, it can only be an improvement.  on the macro side, countries are almost invisible to corporations these days.  the thing i worry about is where the capital scraping will end up.  it surely is a good way to scrape capital to escape the americn debt that is only increasing causing the dollar to fall, less interest in our bonds, even as we seek to finance ever more through that revenue pyramid.  i think capital is planning for the possiblity that america will cease to exist as it drowns under democracy, rather than the republic it is, but increasingly ignores.  democracy is essentially mob rule when those who can vote for more handouts reach a tipping point.  this drives away capital.  look at all the people and businesses leaving california and coming to live in texas, OK, Ks, iowa, etc, the "homeland" of themselves and their parents, bringing with them california expectations and forms of government.  we are coming, because no one is willing to stop the race to the bottom for labor.

overall, i am not too concerned.  when japan bought LA, they put billions into capital improvements and then sold at pennies on the dollar as the yen crashed andhasn't recovered as evidenced by their essentially 0% fed interest rate.  what i would like to see is more regional response to markets and have whoever it is in congress that hates business, to encourage processing plants to be more locally integrated, similar to ethanol plants at the one per county distribution, like in iowa.  i am much more comfortable with econmic cooperation with brazil than mexico, whose economy was bailed out by clinton and continues to be as they export more people than die (a proven fact) and send back more money than they generate in any other sector except the drug trade.  i am actually ok with labor from mexico, but make it legal, take away anchor babies, interpret the 14th amendment like it was meant to be (for slaves born in the us, not anyone, it's VERY clear).  allow downward pressure on land values to be more in line with making money on it farming, or we will not be having it.  look at the latest Voice issue.  the number one cited difficulty in the breeder spotlight section was expansion and entry costs and competing with development.

perhaps things will shift more importantly in response to corn and the cost to ship it and this will seem a small issue and actually accelerate the distribution of capital and beef processing.  probably wrong on that since consolidation to reduce labor and scrape capital, reduce investment except for news purposes or morale will rule the day.  in the long run, as long as contracts and property rights are enforced, and constant improvement and response to market is encouraged, otherwise, we are hosed anyway and this experiment will be done with, and we'll start over.  is this a figure 8 or circle?
 

cowz

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Another angle.....

http://test.denverpost.com/headlines/ci_6043005
 

knabe

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hmmmm, overall, or ag related?

ag related are the typical
range magazine
california farmer
beef
quarterhorsenews
westernhorseman
performance horseman
grassfarmer........................too many to list

others, finehomebuilding etc.  cars, trucks, sunset,

my dad reads about 5 books a week, so i get suggestions from him.  it's important to seek out people who are seeking out info for good material.

probably what you are asking is where do i get my hairballed info economics and cliff clavin useless info.  i read books about economics, history, archaeology, demographics.  i read controversial material regarding consequences of demographics, taxation.  i particularly like history of math, history of anything.  i like to read about consequential history.  unintended consequences.  the balancing of contracts, both written and implied and how they change as new information or vaccuums change the equation.  i like information about how to utilize natural systems and how to get carbon and nitrogen from the atmosphere, sugar content, why grasses dry out in the summer, causing cow's nutrition to change and how that is good/bad.  most things are a circle, and people don't like that, even weather!  it's interesting how through time, man created stories about how to deal with time spans beyond instant gratification and how to protect that knowledge through oral tradition, religion, writing and how to extinguish it through oral tradition, religion, writing.  i find the rumen one of thee most interesting devices known to man that can utilize a relatively undigestable product, cellulose, and store it in a moving, accumulating, reproducing vessel of products and how we keep adding costs to that utilization by concentrating harvesting and finishing to central locations, of course creating utilization problems/opportunities.

i find in general, i spend about 10% or less of my reading time with periodicals.  i read periodicals at dinner time when i'm eating and watching tv. like to get some balance so i seek out information that is a little more in depth.

my best suggestion about what to read is how i used to listen to music, check whose on the label and go seek out what else they have written rather than waiting for it to come to you in a periodical.  be the discoverer, not the discovered new source of revenue for periodicals.  you as a taxpayer have paid for most information, so go get it.
 

knabe

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ok,

here's an interesting link with money generating books for sale, which, if  that's offensive, there is the library.

http://www.barbaraehrenreich.com/decent_wages.htm

so why wouldn't people making, say below $16/hour down to minimum wage or less not vote to get all kinds of things, and those who profit from it, not vote for it either?

distributed capital and property rights, and enforceable contracts is the way to go.  not loopholes for constituencies predisposed to vote for in support for a bribe in the form of a particular matching grant, subsidy, tax break, amensty, etc.
 

cowz

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Off of the site you just gave....I have read Nickled and Dimed.  I think it should be required reading for high school juniors and seniors that do not think college or trade school is necessary.  I found the idea of such a dead end outcome very depressing.  So all of you young people out there.....if you dont want to go on to a 4 year school, please, please, please look at internships, apprenticeships, training programs, anything but the minimum wage vicious cycle.  Ok, sermon over....have a great day!
 
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