Marfrig will import an American cattle supply model to Brazil

Marfrig Global Foods (MRFG3) will import a model of vertical integration in the supply of cattle to the industry from the United States. It is a type of integration, similar to that of poultry and pork slaughterhouses, with some adaptations.

The reference comes from its American subsidiary National Beef, which has cattle farmers among its minority shareholders. They are responsible for guaranteeing around 25% of the animals slaughtered by the company, through long-term supply contracts.

To cover 25% of the demand at its plants in Brazil, Marfrig expects to spend between R$2 billion and R$3 billion over the next few years, depending on the value of the cattle. The idea is to provide partner ranchers with calves for fattening and bulls that guarantee genetic improvement in the herd.

“This will act as a supply balancing buffer when the availability of animals is lower and the livestock cycle in Brazil turns around,” said Marcos Molina, founder and president of the Board of Directors of Marfrig, during a conference call with analysts and investors this Thursday. -fair.

For now, the project is at home. This is because MFG Agropecuária, a group that brings together the personal farms of Molina and his family, already supplies 10% of the needs of the industries that remained with Marfrig after the sale of the company’s assets to Minerva (BEEF3).

Today, these units have the capacity to slaughter 5,100 heads per day. With the investments made and yet to be made, this capacity will reach 7.6 thousand heads in 2024, and reach its peak in 2025 (8.4 thousand animals per day).

“We see a still healthy supply of animals [no Brasil] to 2025. The livestock cycle to 2026 may be more challenging. We are positioning ourselves to face the low supply of cattle in the country,” said Molina. In his opinion, today the price of cattle in Brazil is the lowest in the world.

Molina’s expectation is that the model will guarantee an occupancy level in slaughterhouses above 90% throughout the 12 months of the year. This is a higher level than currently recorded.

Around R$1.5 billion of the total value estimated to reach the expected 25% of “own cattle” in 2025 will come from the R$6 billion that Marfrig still has to receive from Minerva.

In August last year, Marfrig sold most of its assets in South America to its competitor, for R$7.5 billion. For now, it has received an advance of R$1.5 billion. The remainder enters the cash register after approval of the operation by the Administrative Council for Economic Defense (Cade).