Tyson Teams Up with Cactus Feeders and Cresud in Argentina Beef Venture; Companies form vertically integrated beef operation
Santa Rosa, La Pampa Province, Argentina – January 12, 2007 – Tyson Foods, Inc (NYSE: TSN) has entered into a joint venture in Argentina, which will create the first vertically integrated beef operation in the South American country. The venture is expected to produce both products for the domestic Argentine consumer and give Tyson access to European and other high value beef markets.
Tyson has teamed up with Cactus Feeders Inc., one of the world’s leading cattle feeding companies, and Cresud S.A.C.I.F. y A. (NASDAQ: CRESY), the leading agribusiness company in Argentina. The joint venture will use an existing feedlot operated by Cactus and Cresud to supply most of the beef for a beef slaughter and processing plant recently purchased by the joint venture. Both the feedlot and plant are located in central Argentina. Sales for the joint venture are expected to be in the range of $30 to $35 million in 2007.
Cactus and Cresud have successfully operated the feedlot, located at Villa Mercedes in the province of San Luis, since 1999. It currently has a one time capacity of 25,000 head, but the new venture has plans to expand its feedlot capacity in the region. The boxed beef plant, previously operated under the name Exportaciones Agroindustriales Argentinas S.A., is located in Santa Rosa in the province of La Pampa. It will be Tyson’s first participation in a beef operation outside of North America.
Currently, approximately 380 people work at the government inspected facility, which now has the capacity to slaughter and process about 9,500 cattle per month. The new company expects to expand the plant’s capacity to 15,000 head per month in the future.
As part of the joint venture, much of the plant’s production will gradually be converted from grass-fed to grain-fed beef using cattle from the Cactus-Cresud feedlot. The higher quality product will provide increased access to important export markets in Asia, as well as the European Union (EU). The plant already has approval to ship product to the EU, as well as other countries, and exports a majority of the mostly grass-fed, boxed beef it currently produces.
“At Tyson, we are excited to join two great business partners in Cactus Feeders and Cresud. We believe our combined expertise will create a great new company that will be able to produce products for domestic consumption as well as export,” said Rick Greubel, group vice president of international for Tyson. “Cresud’s involvement in grain and livestock production, the experience of Cactus in the feedlot business and Tyson’s success in processing and marketing beef will help capitalize on the strengths of Argentina’s beef industry. This is also an important first step for Tyson as we look to create a presence in South America.”
Paul Engler, chairman of the board of Cactus Feeders, Inc., said “We’re very pleased the reorganization of Cactus Argentina includes the ownership and active participation of Tyson. Developing a vertically integrated system with such a partner has been one of our ultimate objectives in Argentina. Having a U.S. meat processor with the stature of Tyson as an active participant will have a very positive impact on the growth of the cattle sector in the country.”
“We believe a vertically integrated system for finishing cattle and processing beef in Argentina is the perfect way to capitalize on the strengths of the country’s beef industry,” added Miguel De Achaval, vice president and general manager of Cactus Argentina. “The commitment of this venture is to work with the Argentine beef producers to offer a superior product at an affordable price for the domestic and the foreign markets.”
Argentina is the fifth leading producer of beef and veal in the world, after the U.S., Brazil, the European Union and China, and is the second leading exporter of beef. The country is known for its low beef production costs due to competitive livestock, labor and energy markets, as well as the high quality breeds of the cattle raised there.
About Tyson Foods
Tyson Foods, Inc. [NYSE: TSN], founded in 1935 with headquarters in Springdale, Arkansas, is the world’s largest processor and marketer of chicken, beef, and pork, the second-largest food production company in the Fortune 500 and a member of the S&P 500. The company produces a wide variety of protein-based and prepared food products, which are marketed under the “Powered by Tyson™” strategy. Tyson is the recognized market leader in the retail and foodservice markets it serves, providing products and service to customers throughout the United States and more than 80 countries. The company has approximately 107,000 Team Members employed at more than 300 facilities and offices in the United States and around the world. Through its Core Values, Code of Conduct and Team Member Bill of Rights, Tyson strives to operate with integrity and trust and is committed to creating value for its shareholders, customers and Team Members. The company also strives to be faith-friendly, provide a safe work environment and serve as stewards of the animals, land and environment entrusted to it.
About Cactus Feeders
Cactus Feeders, headquartered in Amarillo, Texas, has nine large-scale feedyards across the Texas High Plains & Southwest Kansas. Since its founding in 1975, Cactus Feeders has grown to become one of the world’s leading cattle feeding companies, employing approximately 500 people.
Cresud is a leading Argentine producer of basic agricultural products and the only such company with shares listed on the Buenos Aires Stock Exchange and NASDAQ. The company is currently involved in various operations and activities, including crop production, cattle raising and fattening, milk production and certain forestry activities. Most of its farms are located in Argentina’s pampas, one of the largest temperate prairie zones in the world and one of the richest areas of the world for agricultural production.
Certain information contained in the press release may constitute forward-looking statements, such as statements relating to expected sales of the joint venture and plans to expand the capacity of the feedlot and beef plant. These forward-looking statements are subject to a number of factors and uncertainties which could cause the company’s actual results and experiences to differ materially from the anticipated results and expectations, expressed in such forward-looking statements. The company wishes to caution readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Among the factors that may cause actual results and experiences to differ from the anticipated results and expectations expressed in such forward-looking statements are the following: (i) fluctuations in the cost and availability of inputs and raw materials, such as live cattle, live swine, or feed grains (including corn), and energy; (ii) the company’s ability to realize anticipated savings from its cost reduction initiatives; (iii) market conditions for finished products, including competition from other global and domestic food processors, the supply and pricing of alternative proteins, and the demand for alternative proteins; (iv) risks associated with effectively evaluating derivatives and hedging activities; (v) access to foreign markets together with foreign economic conditions, including currency fluctuations, and import/export restrictions and foreign politics; (vi) outbreak of a livestock disease (such as avian influenza (AI) or bovine spongiform encephalopathy (BSE)) which could have an effect on livestock owned by the company, the availability of livestock for purchase by the company, consumer perception of certain protein products or the company’s ability to access certain domestic and foreign markets; (vii) changes in the availability and relative costs of labor and contract growers, and the ability of the company to maintain good relationships with employees, labor unions, contract growers and independent producers providing livestock to the company; (viii) issues related to food safety, including costs resulting from product recalls, regulatory compliance and any related claims or litigation; (ix) changes in consumer preference and diets, and the company’s ability to identify and react to consumer trends; (x) significant marketing plan changes by large customers, or the loss of one or more large customers; (xi) adverse results from litigation; (xii) risks associated with leverage, including cost increases due to rising interest rates or changes in debt ratings or outlook; (xii) changes in regulations and laws (both domestic and foreign), including changes in accounting standards, tax laws, environmental laws and occupational, health and safety laws; (xiv) the ability of the company to make effective acquisitions and successfully integrate newly acquired businesses into existing operations; (xv) effectiveness of advertising and marketing programs; (xvi) the results of the Company’s on-going tax account balance review; and (xvii) the effect of, or changes in, general economic conditions.
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