May 19, 2008

JBS may cut beef production, workforce in Argentina due to strikes

Restrictions on beef exports may force JBS S.A., which reported a third straight quarterly loss on Thursday, to cut production and fire workers in Argentina.

Joesley Mendonca Batista, president and CEO of the Sao Paulo, Brazil-based beef giant, told investors his company will begin scaling back production by 30 percent and lay off 1,500 of its 4,000 workers in Argentina, where it operates five beef plants, if the Argentine government does not lift export restrictions.

The plan also calls for shifting operations to the production and sale of fresh beef from processed beef, which Argentines are not buying.

He added that JBS can continue to serve its processed beef customers through production at similar plants in Brazil and sell what would be exports of fresh beef to Argentina's domestic market.

Argentina's government on May 7 imposed a new measure capping beef exports in an effort to ensure domestic supplies.