RED meat processing giant JBS is adamant it will be keeping Primo Group's abattoirs in South Australia and NSW's Hunter Valley, and "investing in them", if its $1.4 billion takeover is approved by regulatory authorities.
The world's biggest animal protein processing business is hoping its local diversification into pigmeat and smallgoods products will get Australian Competition and Consumer Commission and Foreign Investment Review Board consent by early 2015.
Chief executive officer Brent Eastwood has even left open the possibility that Primo's Port Wakefield plant in SA may not be enough to service the demands of what is expected to be a growing domestic pigmeat and export smallgoods business in future years.
He also envisages Primo's Scone, NSW, beef plant becoming a focal point for expanding JBS' popular Great Southern grassfed "natural beef" brand into the Hunter Valley.
"We see Scone as a good opportunity to roll out this brand to producers in an area we consider as being a good source of pasture-fed cattle," Mr Eastwood said.
Suppliers to the JBS Great Southern program - mostly in Tasmania and Victoria - receive price premiums to produce cattle meeting specific production and quality criteria, including being hormone growth promotant-free.
Much of the Great Southern product is exported, although it is also enjoying strong support with domestic supermarket shoppers.
In an effort to quash any meat industry unease about the Brazilian giant's takeover of Australia's biggest pork and smallgoods processor, Mr Eastwood said the company was happy to keep talking to stakeholders and regulatory authorities about its market expansion and the throughput growth it envisaged at its existing plants and new acquisitions.
However, Primo's butcher shop chain seems less likely to be a strong interest for JBS, which operates 10 meatworks and Australia's biggest domestic meat wholesale business, the DR Johnston Group.
"Vertical integration is not our game," Mr Eastwood said.
JBS's Primo takeover follows a pattern of recent diversification and meat meal value-adding moves in South America and the United States, ranging from production of sausages and hamburger patties to special retail pork and beef cuts and chicken meals.
In 2009 JBS acquired about 75 per cent of the biggest US chicken meat producer Pilgrim's Pride, which sells a huge range of value-added meal products.
Pilgrims is also a major chicken meat name in Mexico and South America.
"In Australia we've been basically a beef and lamb processing business so our desire with Primo is to have a very strong brand that can take us into new value-added areas, including international markets," Mr Eastwood said.
The Primo move also comes soon after JBS' July purchase of a majority share in NSW-based specialist meat supplier Andrews Meats, which services top end restaurants, hotels and clubs with specialist cuts.
Andrews also supplies supermarket chains with semi-prepared meat meal pack lines and is now building new kitchen facilities to expand its pre-cooked microwave meal offering.
However, Mr Eastwood said despite its enthusiasm for meat product diversification and value adding, JBS had less appetite for taking on meat retailing.
The Primo sale includes about 30 Joe's Meat Market and Farm Fresh Meats businesses.
"We intend to continue with them, but we are not a retail company and we don't look to grow that side of the business," Mr Eastwood said.
Hinting that NSW butcher shops may eventually be carved off after the Primo sale goes through, he said JBS had good relationships with the supermarket sector and was "not looking to get into retailing".
Nor was the company giving much consideration to the Scone abattoir reverting to offering service kill facilities for regional butchers or producers.
JBS was, however, enthusiastic about investing in its human capital and facility upgrades, where necessary, to improve throughput and the value of its own meat products.
The meat processor's works at Dinmore, Queensland, Bordertown, South Australia and in the NSW Riverina have been gearing up with bigger workforces and improved skills in the past year, and Mr Eastwood believed more could probably also be achieved at Scone.
He said investing in the human capital side of the business at Scone would help lift the export plant's branded product output and get better returns for producers selling to JBS.
Port Wakefield would also "a very good addition" to JBS' processing portfolio and the company would look to do more at the plant and possibly elsewhere, too.
"We haven't yet thought too far ahead about how much pork processing we may need to do."
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