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China, EU ban meat exports from Brazil following anti-corruption probe
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Wednesday, 22 March, 2017, 08 : 00 AM [IST]
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Sao Paulo
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China and the European Union (EU) curtailed meat imports from Brazil recently after police, in an anti-corruption probe criticised by the government as alarmist, accused inspectors in the world’s biggest beef and poultry exporter of taking bribes to allow sales of rotten and salmonella-tainted meats.
As the scandal deepened, Brazil’s agriculture minister Blairo Maggi said the government had suspended exports from 21 meat processing units.
But he also criticised the investigation by the country’s Federal Police into meat packing companies, calling their findings alarmist, and stating that they used a few isolated incidents to tarnish an entire industry that maintains rigorous standards.
“An all-out ban on Brazilian meat exports would be a disaster,” Maggi said, adding, “I pray, I hope, I work so that does not happen.”
With other import curbs expected to follow, the scandal, stemming from a police operation code-named Weak Flesh, could deal a heavy blow to one of the few sectors of Latin America’s largest economy that thrived during the recession that lasted two years.
Police on Friday named BRF SA (BRFS3.SA) and JBS SA (JBSS3.SA), along with dozens of smaller rivals, in a two-year probe into how meat packers allegedly paid off inspectors to overlook such practices as processing rotten meat, shipping exports with traces of salmonella and simply not carrying out inspections of plants.
While JBS is the world's largest meat producer, BRF is the biggest poultry exporter.
The companies have denied any wrongdoing, and authorities have said no cases of death or illness have been linked to the tainted meat investigation.
New allegations of unsavoury business practices in Brazil have emerged, as the country is still reeling from a massive graft scandal, which was centred around state-controlled oil company Petrobras (PETR4.SA) and widened into other sectors.
Brazilian president Michel Temer sought to downplay the meat packing probe, saying it involved only 21 of Brazil’s 4,800-plus meat processing units.
But Francisco Turra, who heads the Brazilian beef producers’ association (ABPA), stated that it had put the entire meat industry in jeopardy and destroyed a hard-won image of quality products.
China, which accounted for nearly one-third of the Brazilian meat packing industry’s exports (which were estimated to be worth $13.9 billion) last year, suspended imports of all meat products from the South American nation as a precautionary measure.
“The European Union suspended imports from four Brazilian meat processing facilities,” ABPA said, citing the nation’s agriculture ministry.
Ricardo Santin, vice president, markets, ABPA, said, “Two of the suspended plants process poultry, one beef and the other horse meat. One of the poultry plants is operated by BRF.”
BRF stated that it had not received any formal notice from Brazilian or foreign authorities related to the suspension of its plants.
South Korea's agriculture ministry stated that it would tighten inspections of imported Brazilian chicken meat and temporarily bar sales of chicken products by BRF.
More than 80 per cent of the 1,07,400 tonnes of chicken that South Korea imported last year came from Brazil, and BRF supplied almost half of that.
BRF shares slide
On the day the meat exports were curtailed, BRF closed down nearly 2.2 per cent, while JBS ended the day up 0.75 per cent as investors bet the scandal would have less effect on the world’s largest meat packer.
“BRF could prove more vulnerable to the scandal, since a larger share of its operations are physically based in Brazil, while JBS derives most of its sales from overseas,” according to a report by Goldman Sachs analysts, led by Luca Cipiccia.
Shares of Minerva SA (BEEF3.SA) and Marfrig Global Foods SA (MRFG3.SA), which are not involved in the investigations, also fell as traders fretted over the possibility of further import bans.
“The scandal could be enough to compromise temporarily Brazilian protein’s acceptance worldwide,” Victor Saragiotto, analyst, Credit Suisse Securities, informed clients.
“Chile is also temporarily banning imports of all Brazilian meat products,” the agriculture ministry said.
The European Commission said, “The scandal would not affect negotiations between the European Union and South American bloc Mercosur about agreements on free trade.”
On the streets of Rio de Janeiro, Brazil's second largest city, the scandal left many consumers in doubt.
“My freezer at home is full of meat, and I don’t know what to do,” said Maria Fonseca, a saleswoman. “Should I eat it or just throw it all away?” she asked.
“It is an enormous waste. If I lived in the countryside, I’d start raising my own cows and chickens,” Fonseca added.
(Source: Reuters)
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