Brasília, 1/15/2004 (Agência Brasil - ABr) - Nestle of Brazil says it is studying the possibility of using milk that would have been purchased by Parmalat. The collapse of the Italian dairy giant is being felt in Brazil where Parmalat was using 5% of Brazil's dairy production (that works out to around 1.2 billion liters per year).

The president of Nestle of Brazil, Ivan Zurita, met with minister of Agriculture, Roberto Rodrigues, yesterday to discuss the matter. Nestle uses 8% of Brazilian milk production (1.7 billion liters/year).

According to Zarita, at the moment it will be difficult for Nestle to expand purchases of milk because this period of the year is the height of the milk production season and the company is operating at full capacity. He said that when production falls off in two months (during Brazil's dry season), Nestle should be able to purchase an additional 500,000 liters per day.

Zarita pointed out that normally Brazil imports milk when domestic production falls seasonally and that it may be possible to reduce imports if Nestle can use milk that Parmalat would buy.

As for taking over Parmalat plants, Zarita said that was improbable because the two companies used different production systems.

Nestle has 26 plants in Brazil and has plans to invest US$150 million in them this year. It is estimated that the company will grow 7% in 2004, that is, twice estimated GDP growth. Last year the company had sales of US$9 billion.

This month Nestle will inaugurate its biggest instant coffee plant (the company operates in 97 countries). It is located in Araras, São Paulo, and will create 200 direct jobs and another 2,000 indirect jobs. The plant cost R$115 million and will consume 2.5 million sacks of coffee annually. Production will be exported to Russia and Ukraine. (AB)