Dive Brief:
- Mantiqueira USA, a Brazil-based egg supplier co-owned by meat giant JBS, said it is buying Hickman's Egg Ranch, one of the 20 largest producers in the U.S.
- The acquisition is an "important milestone" in Mantiqueira's plan to become a leading player in the U.S. egg industry, the company said. Financial terms of the deal, which is expected to close by the end of the year, were not disclosed.
- The sale of Arizona-based Hickman's, which is also the largest egg producer in the Southwest, comes as the farm struggles to rebound after losing 95% of its flock to bird flu earlier this year, according to local news reports.
Dive Insight:
Rising beef prices have pushed meat companies to diversify their portfolios and find other ways to feed into Americans' appetite for protein.
In January, JBS acquired a 50% stake in Mantiqueira Brasil, one of the largest egg producers in South America, in a bid to compete in the U.S. market. That deal came following efforts by JBS to expand into seafood and alternative protein markets.
Egg producers have commanded significant profits in the past few years due to higher prices and the demand for protein. However, as bird flu continues to ripple through flocks, larger companies with farms around the country have proven to be more resilient.
Hickman's, a smaller producer with farms largely concentrated in Arizona, laid off 85 workers in June after disclosing that it lost nearly its entire chicken flock to bird flu. Around 6 million birds were lost and it was the first time in 81 years the company couldn't fulfill orders, according to AZ Family.
“The trauma of going from 6 million chickens down to nothing in a period of three weeks is more than our family wants to take a chance on again,” Glenn Hickman, the company’s president and CEO, told local news station ABC15 on Monday.
Hickman told the station his company will be the "launchpad" for JBS' egg ambitions in the U.S. The CEO is hopeful the meat giant can restore its flocks and eventually expand operations.
Murilo Scarpa Pinto, president of Mantiqueira USA, said the deal provides a "strong foundation" for the company's U.S. ambitions.
“Hickman’s heritage, quality, and customer relationships—paired with global experience, resources and scale — give us the ability to provide exceptional service and grow with purpose," he said.
Cattle shortages and higher beef prices have weighed on JBS’ earnings, increasing pressure on the company to diversify its portfolio. Last week, JBS Beef North America reported a 50% decline in gross profits due to higher production costs despite posting record sales.
