June 14, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

JBS SA has signed an agreement to fully acquire Rivalea – comprised of Rivalea Holdings and Oxdale Dairy Enterprise – from Singapore’s QAF Limited for an enterprise value of A$175 million (US$135 million). 

As a vertically integrated hog breeding and processing company in Australia – with breeding and production operations in Southern New South Wales and Victoria – Rivalea accounts for 26 percent of the total hogs processed in the country through its Corowa and Melbourne plants.

It also accounts for about 15 percent of the country’s national pig herd, having bred 1 million piglets in 2019, and its three mills produce about 350,000 tons of feed for the pig, dairy, poultry and sheep industries per year.

Originally established on the New South Wales/Victoria border by Bunge in 1971, Rivalea was acquired by QAF in 2001, who in 2009 renamed the business Rivalea Australia. Today, the company’s brands include Family Chef, Murray Valley Pork, Riverview Farms, St. Bernard’s, and High Country Pork. along with premium offals, which are supplied to retailers and wholesalers.

The intention to sell Rivalea, after owning it for nearly 20 years, was made public by QAF last September stating that the sale would enable it to better focus on its bakery and food distribution business in Asia. 

In preparation for placing Rivalea on the market, QAF invested $8 million to upgrade its processing plant in Melbourne to lift capacity and add three on-farm effluent-powered electricity generators, making the company “an ideal platform for a new owner with a strong focus on the animal protein segment to take the business to the next level”.

And JBS plans to do just that. Brent Eastwood, JBS Australia CEO, stated that JBS planned to make significant investment in the business to expand channels of opportunity for both fresh and value-added Australian pork products in both Australia and abroad.

“Rivalea is a leader in the Australian pork sector with a strong team and track record of sustainable pork production,” said Eastwood. “JBS Australia is committed to building on these strong foundations and growing the business through new opportunities for Australian-grown pork.”

“Our acquisition of Rivalea will enable us to expand into the breeding, growing, fattening and finishing of pigs, an area where JBS Australia does not currently operate.”

The deal will enable JBS to further diversify in Australia by expanding its value-added product lines using pork meat through its Primo business, and also will add key brands to JBS’ portfolio, positioning the company to accelerate growth in the value-added and braided businesses in the country.

Eastwood continued, “We intend to grow the use of domestic pork in JBS Australia’s operations, particularly within our Primo business, through further value-adding and processing, while unlocking new opportunities for Australian pork in international export markets.”

“JBS has a long and proud history of supporting and growing its Australian businesses – investing heavily in its local operations and domestic brands, while at the same time providing employment opportunities and supporting the regional economies in which we operate.”

Rivalea also holds a majority position in Diamond Valley Pork, the largest pig abattoir in Victoria, and small-scale pig farmers are raising concerns that this deal may reduce their ability to get their pigs processed if JBS begins refusing “small kills”, report Stock and Land. 

However, Tim Kingma, president of the Victorian Farmers Federation Pig Group, sees the deal in a different light, saying, “I can’t see why they would say they are not going to take our pigs, they need the throughput.”

“I look for the positives – JBS exports a lot, and Australia doesn’t do much of that.”

Like all large-scale transactions in Australia’s ag sector, this deal will require regulatory approval from the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB). And currently, the Australian Food Sovereignty Alliance (AFSA), representing small-scale pig producers, is putting together a submission to the ACCC outlining a number of concerns.

Tammi Jonas, president, AFSA said, “They have a fiduciary duty to shareholders to provide them with a profit. If that profit is more readily derived by processing imports for smallgoods – 70 percent of Australian pork smallgoods are made with imported products – then that is what JBS will do.”

But, JBS stated that once the transaction secures approval, the company is looking forward to working with Rivalea’s existing management, its 1,200 employees, and its existing customers, suppliers, and contractors.

“With total annual sales of circa AU$400 million (US$310 million), an EBITDA of AU$37 million, two facilities and more than a thousand employees, Rivalea already has sustainability as the focus of its business strategy,” said Eastwood. “The company sells well-known Australian consumer brands such as Riverview Farms, Family Chef and St. Bernard’s that will strengthen our presence with consumers and customers.”

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain News. She can be reached at lkiernan@globalaginvesting.com.