Brazil-Selling cattle for less than cost.

BRAZIL-SELLING CATTLE FOR UNDER COST PRICE.

The fourth largest Brazilian slaughterhouse, Independência has filed for bankruptcy and closed its 12 plants (with a total slaughter capacity of 10,800 head per day.

According to the company’s major stakeholders and managing director, the main factors which led into Monday’s action were: significant payment default of external creditors, increased cash flow needs as suppliers reject credit sales, lower spread between cattle and beef prices, lower demand, increased competition between beef suppliers in domestic and international markets, and a general lack of liquidity.

These factors, which have been affecting the whole Brazilian beef industry, appeared to have worsened during 2009, with some companies selling product below cost.