Initial analysis by Uruguay’s government has concluded that while a few businesses control a significant amount of the market in both the Uruguayan meat processing and tanning industries that doesn’t mean either sector is over consolidated.
In July, President of José Mujica mentioned the possibility that consolidation had reduced competition with these industries and requested the Agriculture, Industry, and Labor ministries analyze the situation.
In the August 6th cabinet meeting Roberto Kreimerman, Uruguay’s Industry minister presented an advance of the study Mujica had requested.
Eduardo Brenta, Uruguay’s Labor Minister briefed the Uruguayan newspaper El País on Kreimerman’s presentation. Brenta reported that within Uruguay’s meat processing industry three Brazilian firms (Marfrig, JBS, and Minerva) control 38% of the Uruguayan market. However, they’ve actually lost market share since 2005 when they controlled 40% of the market.
Brenta explained that JBS’s market share has increased, while Marfig’s has decreased. “From this point of view we don’t seem, in principal, to have a problem; it would be different if one company bought the other” Brenta said. “It seems clear that the participation of one or others is very linked to prices. They are negotiating with producers that are strong and the climate has helped enough, therefore those that pay more are slaughtering more [cattle]”.
Brenta also reported that in the tanning sector, Zenda (which Marfrig sold to JBS) and Paycueros (owned by Argentineans) control 50% of Uruguay’s market. The other 50% is divided between five firms that control approximate 10% of the tanning market each.
The cabinet found that neither the market distribution in the tanning sector nor in the meat processing sector was concerning, although both industries are still being analyzed.
“[The analysis] reassured [us that no company] has obtained a dominant position nor can a group of businesses effect the rules of the game in either of the two markets” Brenta said.
Meat processors have participated in Uruguay’s tanning market for several years. Brazilian ownership of Uruguay’s tanneries has led in many cases to processed hides being sold in Brazil.
This Uruguayan Business Reports news article is a summarized translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.
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