Tyson Teams Up in Argentine Beef Venture

15/01/07 Tyson Foods, Inc has entered into a joint venture in Argentina, which will create the first vertically integrated beef operation in the South American country. The venture is expected to produce both products for the domestic Argentine consumer and give Tyson access to European and other high value beef markets.

Tyson has teamed up with Cactus Feeders Inc., one of the world’s leading cattle feeding companies, and Cresud S.A.C.I.F. y A., the leading agribusiness company in Argentina. The joint venture will use an existing feedlot operated by Cactus and Cresud to supply most of the beef for a beef slaughter and processing plant recently purchased by the joint venture. Both the feedlot and plant are located in central Argentina. Sales for the joint venture are expected to be in the range of $30 to $35 million in 2007.

Cactus and Cresud have successfully operated the feedlot, located at Villa Mercedes in the province of San Luis, since 1999. It currently has a one time capacity of 25,000 head, but the new venture has plans to expand its feedlot capacity in the region. The boxed beef plant, previously operated under the name Exportaciones Agroindustriales Argentinas S.A., is located in Santa Rosa in the province of La Pampa. It will be Tyson’s first participation in a beef operation outside of North America.

Currently, approximately 380 people work at the government inspected facility, which now has the capacity to slaughter and process about 9,500 cattle per month. The new company expects to expand the plant’s capacity to 15,000 head per month in the future.

As part of the joint venture, much of the plant’s production will gradually be converted from grass-fed to grain-fed beef using cattle from the Cactus-Cresud feedlot. The higher quality product will provide increased access to important export markets in Asia, as well as the European Union (EU). The plant already has approval to ship product to the EU, as well as other countries, and exports a majority of the mostly grass-fed, boxed beef it currently produces.

“At Tyson, we are excited to join two great business partners in Cactus Feeders and Cresud. We believe our combined expertise will create a great new company that will be able to produce products for domestic consumption as well as export,” said Rick Greubel, group vice president of international for Tyson. “Cresud’s involvement in grain and livestock production, the experience of Cactus in the feedlot business and Tyson’s success in processing and marketing beef will help capitalize on the strengths of Argentina’s beef industry. This is also an important first step for Tyson as we look to create a presence in South America.”

Paul Engler, chairman of the board of Cactus Feeders, Inc., said “We’re very pleased the reorganization of Cactus Argentina includes the ownership and active participation of Tyson. Developing a vertically integrated system with such a partner has been one of our ultimate objectives in Argentina. Having a U.S. meat processor with the stature of Tyson as an active participant will have a very positive impact on the growth of the cattle sector in the country.”

“We believe a vertically integrated system for finishing cattle and processing beef in Argentina is the perfect way to capitalize on the strengths of the country’s beef industry,” added Miguel De Achaval, vice president and general manager of Cactus Argentina. “The commitment of this venture is to work with the Argentine beef producers to offer a superior product at an affordable price for the domestic and the foreign markets.”

Argentina is the fifth leading producer of beef and veal in the world, after the U.S., Brazil, the European Union and China, and is the second leading exporter of beef. The country is known for its low beef production costs due to competitive livestock, labor and energy markets, as well as the high quality breeds of the cattle raised there.