China JBS Red Meat Ban, page-11

Thanks Sqwark77 for your hard work.

So, in simple terms RFF owns the feedlots, water rights and cropping ground. Which they have leased back to JBS for 10 years.

and

RFM (the entity that manages RFF) has bought J&F. J&F (owned by RFM) will supply JBS with the Feed, cows and other inputs.

In other words RFF has all the stuff that can legally be put into the REIT (Land, water and feedlots). RFM (which owns J&F) provides all the services. In combination they service JBS needs.

So far so good.

The assets that RFF has were bought for $A127.7M. So if JBS breaks the 10 years lease. They would have to find another tenet. I assume that would be quite expensive to JBS, depending on the contract. If worse came to worse then RFF could sell the assets. I am not seeing much of an exposure here. Assuming humans still like steak and JBS can find another market all will be good.

While China might not want our beef, Japan has recently reduced its tariff barriers due to the TPP partnership. Could this be another market?

Also it's my understanding is that covid19 has been shutting down a disproportionate amount of abattoirs world wide due to the closeness of the work environment and migrant labor. This means that there is a bottle neck on the production of steak, world wide.

US : 20 slaughter houses shutdown
https://www.theguardian.com/environment/2020/apr/29/millions-of-farm-animals-culled-as-us-food-supply-chain-chokes-up-coronavirus

Germany : about 30% of the normal slaughtering capacity at one plant.
https://www.esmmagazine.com/coronavirus/german-abattoir-restarting-work-coronavirus-shutdown-98905

I am sure there are more. Sounds like Australian abattoirs might have an advantage, as long as they stamp out the covid19 infection nation wide and keep it stamped out. Is this a buying opportunity?