(Recasts to lead on worries about market concentration, adds comment from consultant on ranchers insistence on receiving cash payments from JBS starting in paragraph 8; Changes slug)
By Ana Mano
CUIABÁ, Brazil, May 25 (Reuters) - Brazil’s agriculture minister said on Thursday he had long worried about the size of bribery-scarred meatpacker JBS SA and criticized state development bank BNDES for helping it build a dominant market position.
“I was always critical of the BNDES for having allowed this market concentration that exists in Brazil,” Blairo Maggi said at an agribusiness conference in Cuiaba, a city in Brazil’s agricultural heartland. He called JBS’ current predicament a “delicate moment.”
“I don’t know what’s going to happen with this company,” added Maggi, also a billionaire soybean producer.
Joesley and Wesley Batista, JBS’ controlling shareholders, transformed the company from a regional slaughterhouse into Brazil’s dominant beef producer and a sprawling multinational group, helped by some 8 billion reais ($2.44 billion) in government funding.
The billionaire brothers more recently touched off a political firestorm after admitting they bribed hundreds of Brazilian politicians to advance their businesses interests in a scandal that has ensnared President Michel Temer. They are now trying to negotiate a leniency deal with prosecutors that would allow them to stay astride their holding company J&F Investimentos SA.
Maggi added that the government is seeking to determine the location of any plants that JBS has closed in hopes of encouraging other players to join the meat processing market.
JBS’ shares have lost one-third of their value over the last month, although they have rebounded in recent sessions, bolstered by reports the brothers are mulling the sale of some assets, possibly including the meatpacker itself.
The stock was up 9 percent in afternoon trading and was the top gainer on Brazil’s Bovespa.
Separately, a major cattle industry consultant said Brazilian ranchers were starting to demand that JBS pay in cash because they are worried about the fallout from its involvement in the bribery scandal.
“People are risk-averse,” said Agriffato director Lygia Pimentel. “Producers aren’t selling to JBS, and those who are, are doing their utmost to get cash in return.”
JBS, on the other hand, recently told cattle ranchers in the state of Mato Grosso, the country’s biggest cattle-growing region, that it preferred to make payments in installments or with a 30-day post-delivery period. The effort has made little progress with ranchers, according to trade group Acrimat.
JBS has bought many rivals in important cattle-producing regions in Brazil in recent years. In some places it is the only processor, leaving ranchers with no other buyers.
JBS confirmed it was seeking to stretch out payments over longer periods, but said the initiative dated back to before the bribery scandal broke. ($1 = 3.2849 reais) (Additional reporting by Roberto Samora; Writing by Silvio Cascione and Christian Plumb; Editing by Chizu Nomiyama and Jeffrey Benkoe)