(Adds BRF’s comments in paragraph 9)
By Ana Mano
SAO PAULO, Feb 18 (Reuters) - JBS SA has ordered its first shipment this year of corn imported from Argentina for its southern Brazilian meat plants as government-set shipping costs drive up the price of domestic corn, a source with direct knowledge of the decision said on Monday.
The source, speaking on condition of anonymity because the information is not public, said the company resorted to importing corn for its plants in the state of Santa Catarina, renewing a practice that became common for several months starting last March.
The state’s proximity to Paraguay and Argentina gives local meat processors an incentive to source corn from abroad instead of buying from Brazil’s main grains belt, especially given government-set cargo prices which many in the market view as exorbitant.
JBS is slated to initially bring in some 30,000 tonnes of corn from Argentina, the source said, adding that other cargoes were being considered.
Last year JBS imported the equivalent of five ships from Argentina containing loads of between 30,000 tonnes and 35,000 tonnes of corn each, the source said.
The move suggests those meat processors with the ability to alternate suppliers stand a better chance of protecting operating margins given Brazil’s poor infrastructure and minimum shipping prices instituted last year after a truckers’ strike.
“Other players are looking for alternatives in the market,” said the source. “But they are slower to make decisions.”
JBS had no immediate comment.
A spokeswoman at rival BRF, the world’s largest chicken exporter, told Reuters importing corn was also part of its strategy, but declined to elaborate beyond confirming it had imported an unspecified volume to use as feed last year.
The source said overall companies were reluctant to take on freight risk given the Supreme Court has yet to rule on lawsuits challenging the government’s decision on cargo rates.
In 2018 Brazilian truck drivers protesting higher diesel prices brought the country’s economy to a halt, leading the government to introduce the minimum freight prices as part of a package of measures to end the strike.
As many as 167 meat-producing plants halted operations and at least 70 million chickens, out of a total of 1 billion, were culled during the strike.
The source said Brazilian farmers holding out for higher corn prices were another factor leading JBS to buy from Argentina.
“This, combined with more expensive freight in Brazil, makes importing (corn) attractive,” the source said. (Reporting by Ana Mano Editing by Tom Brown)