Five years ago, when JBS was on a Brazilian government-fuelled acquisition trail in the US, the Irish Farmers Journal wondered if the group would set its sights on Ireland. We have now learned that not only has it targeted us, it has decided to locate its global headquarters here.
In the business community, the move is being viewed merely as a tax play, aimed at taking advantage of our low corporation tax rate and as an attempt to provide financial shelter against the ongoing devaluation of the Brazilian real – a trend that was driving up the costs of servicing US dollar-denominated debt.
However, on pages 3 and 18, Eoin Lowry and Phelim O’Neill question whether tax regulations are the real reason the world’s largest meat processor decided to move here. While at present JBS is just a name plate in the IFSC in Dublin, the question for Irish farmers and the wider meat industry is: what next?
Although JBS doesn’t need to have an operational presence in Ireland to locate its global headquarters here, in practice companies such as Google, Apple and Facebook have availed of favourable tax rates and installed substantial operations here.
Even with that, it is a source of frustration in the US – and indeed our fellow EU members – that these global companies are judiciously managing their tax liabilities by locating in Ireland. We cannot expect it to go unnoticed in Brazil, Brussels or New York that the world’s largest meat company has headquartered in Ireland without processing a steer, lamb or pig in the jurisdiction. It does own the major poultry business in Northern Ireland but that is governed by UK tax legislation.
Whatever about the legal requirements on companies availing of Irish tax legislation, it is more than a possibility that the move by JBS to Ireland could be the start of something bigger. Certainly, the presence of JBS would be easier for the Government to defend in Brussels if JBS had significant operational interests here. For JBS, getting directly involved in the Irish meat processing business is a strategic fit given our status as a top five global beef exporter and the largest net exporter in the northern hemisphere. Europe is also the main area of the developed world where JBS has yet to develop a major market presence. The fit is perfect.
Listen to a discussion of JBS's move in our podcast below:
If a company 20 times the size of our largest beef processor, ABP Food Group, enters the industry, it will immediately set off alarm bells for farmers. It certainly makes the proposed ABP venture with Slaney look very minor. On page 18, we explore JBS in detail, how it has developed and how it could enter the Irish processing industry. While such a development may strike fear into Irish farmers, we need to be clever in how we respond, and perhaps even prepare for if a move from JBS becomes a reality. Irish farmers have never had real trust in the existing industry and if competition authorities were to approve any new takeover ventures, some clear ground rules need to be laid out in advance.
It is essential that the necessary structures are in place to protect competition in what is likely to become a more consolidated processing sector – whether this is in the form of ABP acquiring a 50% stake in Slaney Foods or JBS acquiring one of our big three processing groups.
First, every processing plant in the country should be required to publish a full breakdown of weekly kill data to allay farmer fears of manipulating price through supply management. Along with this, there should be full transparency as to where products are sold and for how much, with a clear insight into the profits being earned from the further processing of beef, lamb and pork.
Meanwhile, operationally, matters that have caused untold frustration for farmers – such as trim, grading and weighing supervision – should be addressed through the adoption of technology rather than personnel supervision. There is no reason why the same technology that allows a farmer monitor his calving shed remotely cannot be used to allow him monitor and record his animals being slaughtered.
On the wider trade issue, the headquartering of a highly profitable global meat firm in Dublin and the subsequent tax dividend must not be allowed to weaken the Government’s resolve in protecting Irish farmers in EU trade talks. We have seen the Government stand accused of allowing the pharmaceutical sector leverage its employment and corporation tax contribution in influencing national policy on drug prices. JBS would be well positioned to benefit if either the US or Brazil secured increased access for meat products into the EU market.
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Analysis: The biggest beef company in the world is coming to town
Five years ago, when JBS was on a Brazilian government-fuelled acquisition trail in the US, the Irish Farmers Journal wondered if the group would set its sights on Ireland. We have now learned that not only has it targeted us, it has decided to locate its global headquarters here.
In the business community, the move is being viewed merely as a tax play, aimed at taking advantage of our low corporation tax rate and as an attempt to provide financial shelter against the ongoing devaluation of the Brazilian real – a trend that was driving up the costs of servicing US dollar-denominated debt.
However, on pages 3 and 18, Eoin Lowry and Phelim O’Neill question whether tax regulations are the real reason the world’s largest meat processor decided to move here. While at present JBS is just a name plate in the IFSC in Dublin, the question for Irish farmers and the wider meat industry is: what next?
Although JBS doesn’t need to have an operational presence in Ireland to locate its global headquarters here, in practice companies such as Google, Apple and Facebook have availed of favourable tax rates and installed substantial operations here.
Even with that, it is a source of frustration in the US – and indeed our fellow EU members – that these global companies are judiciously managing their tax liabilities by locating in Ireland. We cannot expect it to go unnoticed in Brazil, Brussels or New York that the world’s largest meat company has headquartered in Ireland without processing a steer, lamb or pig in the jurisdiction. It does own the major poultry business in Northern Ireland but that is governed by UK tax legislation.
Whatever about the legal requirements on companies availing of Irish tax legislation, it is more than a possibility that the move by JBS to Ireland could be the start of something bigger. Certainly, the presence of JBS would be easier for the Government to defend in Brussels if JBS had significant operational interests here. For JBS, getting directly involved in the Irish meat processing business is a strategic fit given our status as a top five global beef exporter and the largest net exporter in the northern hemisphere. Europe is also the main area of the developed world where JBS has yet to develop a major market presence. The fit is perfect.
Listen to a discussion of JBS's move in our podcast below:
If a company 20 times the size of our largest beef processor, ABP Food Group, enters the industry, it will immediately set off alarm bells for farmers. It certainly makes the proposed ABP venture with Slaney look very minor. On page 18, we explore JBS in detail, how it has developed and how it could enter the Irish processing industry. While such a development may strike fear into Irish farmers, we need to be clever in how we respond, and perhaps even prepare for if a move from JBS becomes a reality. Irish farmers have never had real trust in the existing industry and if competition authorities were to approve any new takeover ventures, some clear ground rules need to be laid out in advance.
It is essential that the necessary structures are in place to protect competition in what is likely to become a more consolidated processing sector – whether this is in the form of ABP acquiring a 50% stake in Slaney Foods or JBS acquiring one of our big three processing groups.
First, every processing plant in the country should be required to publish a full breakdown of weekly kill data to allay farmer fears of manipulating price through supply management. Along with this, there should be full transparency as to where products are sold and for how much, with a clear insight into the profits being earned from the further processing of beef, lamb and pork.
Meanwhile, operationally, matters that have caused untold frustration for farmers – such as trim, grading and weighing supervision – should be addressed through the adoption of technology rather than personnel supervision. There is no reason why the same technology that allows a farmer monitor his calving shed remotely cannot be used to allow him monitor and record his animals being slaughtered.
On the wider trade issue, the headquartering of a highly profitable global meat firm in Dublin and the subsequent tax dividend must not be allowed to weaken the Government’s resolve in protecting Irish farmers in EU trade talks. We have seen the Government stand accused of allowing the pharmaceutical sector leverage its employment and corporation tax contribution in influencing national policy on drug prices. JBS would be well positioned to benefit if either the US or Brazil secured increased access for meat products into the EU market.
Read more
Analysis: The biggest beef company in the world is coming to town
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