JBS and pension funds create afforestation company
O Estado de S. Paulo
The J&F Holding, parent company of JBS S/A, announced yesterday another step towards the diversification of the businesses, with the creation of an eucalyptus afforestation company for commercial aims, Florestal Brasil. The company is established with a capital of R$ 1.1 billion (US$ 611.1 million) and it will have the pension funds of Petrobrás (Petros), and of Caixa Econômica Federal (Funcef), and MCL Empreendimentos, a company of the field of rural properties, as partners.
Joesley Batista, CEO of JBS Friboi, affirmed the new undertaking features of low risk, since the Brazilian companies are growing fast, but the availability of wood for energetic purposes is not growing at the same pace. "Taking into consideration that there is the risk of a forest black out in Brazil, we noticed this would be a good segment to invest", he affirmed.
The new company starts with a eucalyptus farm in Andradina, in the interior of São Paulo, with capacity to produce 6 million seedlings a month. Part of the production, nearly 20%, should be used to supply the boilers of the FBS slaughtering and processing units. The excess of wood will be sold in the market for companies that use firewood as biomass or for pulp production. It is foreseen the creation of 2 thousand direct jobs. The business model of Florestal Brasil foresees the management of 335 thousand hectares of land in the States of Mato Grosso and Mato Grosso do Sul. 76 thousand hectares of which belong to the company, and 152 thousand hectares are located in areas of permanent preservation that belong to third parties. The expectation of the partners is that the company outsources the planting of trees to farmers who need to make environmental compensations and do not have lands to do it.
Besides, Florestal Brasil also foresees making profit with the sale of carbon credits in the international market, especially in voluntary carbon exchanges, where currently the ton of CO2 is traded at nearly US$ 15 to US$ 20. From the point of view of two of the main pension funds of Brazil, the investment is considered low risk with satisfactory return. The estimate is that, for every R$ 5 (US$ 2.8) invested, there is expected return of R$ 20 (US$ 11.1).