Something strange is afoot in the US beef industry. The US is technically the world’s largest beef producer, but meatpacking companies from Brazil, the second largest country-of-origin, are consolidating the industry.

The Brazilian company Marfrig Global Foods SA now owns nearly 80 percent of the US National Beef Packing Company.

Brazilian-owned companies Marfrig Global Foods SA and JBS SA control half of the four top meatpacking companies in the US, processing roughly 74 percent of all beef in the country.

Last year, during the urgent and necessary media attention covering fires and deforestation in the Amazon, one company kept resurfacing in the news: JBS.

JBS produces more meat than any other company in the world, and was exposed for purchasing large amounts of cattle from deforested zones in the Amazon.

While this behaviour is deeply concerning, the company’s history suggests that illicit behaviour by JBS is commonplace. ­It's time to hold them to account.

History

José Batista Sobrinho (or JBS) started out raising cattle on a farm in Brazil in 1953. Just three years later, JBS was providing meat to butchers and restaurants all throughout the newly developing capital city of Brasilia. JBS purchased its first slaughterhouse in 1968, and by 1970 it had increased production by 400 percent.

Sobrinho’s three sons dropped out of high school to manage the slaughterhouses. JBS purchased several meatpacking companies in Brazil in 1990, and sought to expand throughout South America.

JBS enlisted Jeremiah O’Callaghan to expand the franchise on a global level six years later. In 2005, JBS bought its first company outside of Brazil: Swift Armor, Argentina’s largest meat producer and exporter. JBS launched an IPO in Brazil in 2007.

JBS previously lacked the funds to get involved in the US marketplace, but the Brazilian government has changed that.

The Brazilian Development Bank (BNDES) implemented the “National Champions” policy from 2007-2013 to financially support companies seeking to expand internationally. The Brazilian government presumed that the expansion of these companies would result in large increases in revenue for the country.

BNDES gave large sums of public money to conglomerates like JBS. BNDES’ first investment in JBS totaled $390 million. By 2011, BNDES controlled 20.6 percent of the company.

Global

Facilitated by low interest rate loans from BNDES, JBS made several notable US acquisitions. These consolidations made JBS the largest meat producer in the world. JBS also became the leading processor of beef, pork, and lamb and the second largest poultry producer in the U.S.

Being an international corporation equips JBS with an arsenal of solutions that allows the company to manipulate its business in a variety of ways.

Expansion into other exporting countries has allowed JBS to avoid food safety or sanitary and phyto-sanitary restrictions imposed on Brazilian exports.

For example, the EU restricted Brazilian meat in 2008, criticizing breeders in Brazil for failing to comply with EU traceability measures.

In response, JBS utilized its Australian subsidiary to export to Europe instead. Similarly, JBS has its own US operations to get around the embargo on Brazilian beef in the US, which allows the company to skirt any potential losses in revenue.

America

A Forbes article from 2011 found that 70 percent of JBS’ revenue came from US operations. With such a strong foothold on the US market, JBS is able to take advantage of the US government in a variety of ways.

Since 2007, JBS has spent more than $7.7 million on lobbying, making it the fourth largest political spender in the meat processing industry. JBS has also won more than $900 million in government meat contracts, second only to Tyson foods.

This past year, JBS’ US subsidiary received $78 million in government pork contracts funded with bailout funds— the most of any US pork producer. JBS also received more than $64 million in tariff relief funds as part of a USDA program meant to assist farmers during Trump’s trade war with China.

The US funds allocated to support JBS’ producers failed to adequately assist farmers due to its corrupt practices in the US. L

ast year, USDA found that JBS underpaid family farmers and ranchers at three slaughterhouses in Colorado, Nebraska, and Texas by claiming the cattle weigh less than they did.

JBS agreed to pay a fine for violating the Packers and Stockyards Act when it failed to keep accurate records of cattle weights and grades which resulted in inaccurate payments to ranchers who sold those animals, but USDA fined the company a mere $79,000.

In 2019, small cattle ranchers in the US started a campaign, “Stop the Stealin,” to protest the power of JBS and other large beef processors in setting cattle prices, claiming many were being drastically underpaid.

Factory farming

JBS, like other agribusinesses in the US, uses the “revolving door” of industry and the US government to advance its interests.

Most disconcertingly, they hired former USDA Deputy Under Secretary for Food Safety, Alfred V. Almanza, as vice president for global food and safety and quality at JBS. Under his purview at USDA, Almanza used his position to inform meat industry trade groups of USDA’s intention to expand a privatized inspection model to other hog slaughter facilities.

Clearly, JBS — a company with international origins and immense financing — uses its influence in the US to siphon off government funds intended for struggling American producers. The government bailout funds fiasco follows a long practice of violating US law.

As one of the world’s largest meat producers, JBS primarily uses factory farms. With factory farming comes a myriad of environmental, animal welfare, worker’s rights, public health, and food safety concerns.

Factory farming produces large amounts of contaminated effluent which runoff into waterways and promote eutrophication and other pollution.

In 2019, JBS settled a lawsuit that alleged that its operations were violating the Clean Water Act for discharging wastewater from one of its factory farms into a Greeley, Colorado stream. This wastewater includes materials like animal fat, meat, blood, but also E.coli, which can be a dangerous pathogen.

These factory farms seriously affect animal welfare at JBS facilities. Numerous undercover cruelty investigations exposed immense suffering within JBS’ supply chains.

JBS’ corporate concentration also leads to animal cruelty and price fixing. In 2016, JBS’ Pilgrim’s Pride and other poultry companies intentionally destroyed flocks of breeder hens to reduce poultry supply and increase prices.

Safety

Work safety violations abound at JBS: federal agencies fined JBS over $20 million over the past decade. The company’s rate of serious worker injuries, including amputations and hospitalizations, exceeds all other meat companies in the US and represents the second highest rate of serious injuries among all US companies.

Along with work safety violations, JBS violates other labor laws as well. In 2014, JBS was fined for forcing employees to work up to 20 hours per day and serving them maggot-infested meat.

When only a few large conglomerates control the meat industry, meat contamination poses a greater threat and a higher overall likelihood than it does when many, smaller companies process meat.

When food safety violations do occur they affect more people, because large retailers like Costco, Walmart, and Sysco sell JBS products across the US. Along with large recalls, JBS historically skirts food safety regulations to the detriment of their consuming public.

In the Meat Inspection Scandal of 2017, Joesley Batista paid auditors to produce fraudulent sanitary permits which led to the processing, packaging, and sale of rotten meat in Brazil.

This also entailed practices such as adding chemicals to meat to conceal rotting odor and adding cardboard to process poultry as filler.

These practices prompted the Brazilian government to temporarily shut down 10 out of 36 JBS-owned beef packing plants. In addition, the US put a moratorium on Brazilian beef imports that was only recently and controversially lifted.

Scandal

In 2018, JBS ordered the largest recall of ground beef in US history. Twelve million pounds of beef were contaminated with salmonella; thirty states and 403 people were impacted, with 117 hospitalized.

That same year, a factory farm owned by Five Rivers Cattle, LLC that supplies cattle to JBS’ beef processing plants was determined by the United States Food and Drug Administration (FDA) as the source of the E.Coli in Yuma Arizona lettuce outbreak of spring 2018.

Perhaps most concerningly, FDA sent a warning letter to JBS in April of 2019 after finding pentobarbital — a euthanasia drug! — in beef products produced for pet food at a plant in Pennsylvania.

These recalls and scandals reveal that JBS cares less about due diligence with regard to food safety than it does about selling as much product as possible regardless of the negative impact.

Deforestation

When Brazilian president Jair Bolsonaro took office in January of last year, environmental enforcement actions dropped drastically and resulted in a marked increase in deforestation of the Amazon.

The Amazon rainforest - one of the most biodiverse regions of the world - shelters half of all animal, plant, and insect species known to humanity.

Sixty percent of the Amazon rainforest lies within the borders of Brazil. In 2019 there were over 160 cases of land invasion, illegal exploitation of natural resources, and damage to property in 153 indigenous territories. Livestock grazing provoked 80 percent of these invasions.

Foreign investors control much of what happens in the Brazilian Amazon. Big banks and large investment companies play a critical role providing billions of dollars in lending, underwriting, and equity investment to soy and cattle companies. Capital and financial security enables JBS to maintain and expand operations.

JBS benefits from American investors who own well over $1 Billion of its stock. Since Bolsonaro’s election, the company’s stock price has roughly tripled. JBS suppliers expand their ranch lands through deforestation.

The greatest deforestation of the Amazon occurs near slaughterhouses and roads with access to slaughterhouses.

In 2009, JBS signed the Cattle Moratorium with Greenpeace and pledged not to buy cattle raised on deforested land. Since then, the company has sourced its beef from ranchers engaging in illegal deforestation and cattle laundering numerous times.

Laundering involves raising cattle on illegally deforested lands and subsequently moving them for purchasing to evade law enforcement. JBS bought over 49,000 illegal cattle between 2013 and 2016; half of them directly from embargoed pastures and the rest by three-way “laundering” transactions to disguise the source.

JBS bought 84 percent of all cattle from deforested lands. 2014 emails between deforestation researchers and a JBS executive show that the company knew such cattle purchases were routine despite JBS’ previous self-policing commitment.

Fires

In the 2017 “Cold Meat” scandal investigation by IBAMA (the Brazilian government’s environmental agency), extensive evidence revealed JBS sourced cattle from protected areas. IBAMA found that JBS violated both the Brazilian government policies and its own policies by buying cattle from AgroSB, one of Brazil’s most powerful farming empires, raised in areas linked to deforestation and then transported to “clean ranches” to evade the requirements.

Accordingly, IBAMA suspended operations at two JBS meat packing plants and 13 other plants for buying cattle raised on pastures cleared by slashing and burning the forest. AgroSB was also found guilty and earned the company the dubious honor of receiving the largest fines for illegally deforesting land in the Amazon of all time.

A 2018 investigation by The Guardian, Reporter Brasil, and the Bureau of Investigative Journalism confirmed that AgroSB had been using environmentally protected land known as Lagoa do Triunfo to graze cattle. The company was fined over $18 million.

NASA and INPE showed that 2019 has been the most active fire year for the Brazilian Amazon in nearly a decade. From July to September, there were more than 554,000 satellite fire alerts in the Brazilian Amazon with nearly half of them in the estimated buying zones of JBS.

Huge gaps in the audit trail mean more than half of the cattle JBS buys could have been bred or raised elsewhere. The company accepts that it cannot know the origin of many animals because livestock are often moved between breeding, raising, and fattening ranches.

Overall, Chain Reaction Research found that fires and deforestation continue to take place on properties in JBS’ supply chain despite the company’s policies and international commitments.

The negative consequences of deforestation in the Amazon are numerous. Locally, this deforestation displaces indigenous communities, inhibits ecological services, and exacerbates the transmission of malaria in the area.

Internationally, deforestation reduces carbon sequestration and destroys biodiversity. Ultimately, JBS’ inability to control its Brazilian beef supply chains is responsible for deforestation in the Amazon and the loss of lands belonging to indigenous people. The company must be held accountable.

Regulation

Through funding secured through bribes, JBS entered the US marketplace, displaced and disempowered US small farmers, endangered the public through food-borne illness, and encouraged cruel and environmentally harmful production methods worse than most factory farming.

JBS’s involvement in the deforestation of the Amazon is reprehensible, but the company’s actions as a whole reveal a business seeking profit over all else, no matter the negative consequences for humanity and the planet.

The USDA and FDA have a responsibility to keep such Brazilian meat out of the US, and to adequately monitor and regulate food safety, environmental risks, and animal welfare across the JBS supply chain.

Further regulatory measures could involve proper oversight over government bailout funds to ensure they go to farmers in need rather than large transnational corporations.

Cory Booker’s Farm System Reform Act would help right some of these wrongs by cracking down on huge meat conglomerates that receive funding intended for small, sustainable ranchers.

It would also provide additional funding to help conventional meat producers switch to sustainable production practices and prevent foreign meat companies from labeling meat raised in other countries as a product of the United States.

Tell your representatives in Congress to support the Farm Systsem Reform Act now!

These Authors

Jaydee Hanson is policy director at the Center for Food Safety. Julia Ranney is research and policy intern at the Center for Food Safety.

Image: JBS slaughterhouse cattle in the Amazon. © Greenpeace / Daniel Beltrá