June 6, 2006

Cargill to build new poultry plant in Brazil

Cargill, the giant US agricultural company has announced plans to build a US$100 million poultry-processing plant in Brazil as it expects its growing economy would spur greater demand for poultry meat, Sergio Rial, president of the company's Brazilian unit Seara Alimentos SA, said.

Cargill's Brazil unit is the third-biggest meat processor in the country.

Work would start in December and the company plans to begin operations next year, Rial said.

Seara would use its own cash and may take government loans to finance the project, he said.

Cargill, which bought Seara early last year, expects the unit's sales to rise 8 percent this year, down from the original 15 percent as it expects bird flu to trim demand, he said.

Cargill's Seara this year has laid off 500 workers or 4 percent of its staff, as sales declined.

The new plant would add 3,000 jobs, Rial said. The company expects poultry prices, which have fallen 40 percent this year, to rebound 20 percent by year-end.

He also expects the strong Brazilian currency to weaken by then, which would help exports. A strong Brazilian currency has lowered profits for soy farmers in Brazil, giving rise to protests as profits from exports were affected.