Worst may be over in Brazil meat scandal

BRAZIL – After 11 days of arrests, bribery allegations and a full-blown international food-safety scare, the worst may finally be over for Brazil’s embattled meat industry.

Having been shut out of some of its most important markets, Brazilian meat companies have regained access to most of them in recent days. Hong Kong, the largest destination for Brazilian beef, was the latest to ease restrictions.

“It brings relief for the industry,” said Francisco Turra, a former minister of agriculture who now heads the Brazilian Animal Protein Association.

The move also “reduces the possibility of supply glut in domestic market”.

Federal police in Curitiba in Brazil’s Parana state announced their so-called Carna Fraca (“Weak Flesh”) investigation on March 17.

They said 21 companies were involved in the bribing of federal meat inspectors, and provided lurid details of contaminated and adulterated meat.

The intense domestic attention garnered by the revelations was soon followed by a massive media campaign mounted by Brazil’s meat sector and a government push to reassure the public.

The overall impact on domestic demand for beef and chicken is seen as limited so far. No evidence of tainted meat from samples

Brazil’s Agriculture Minister Blairo Maggi, who’s been on a diplomatic offensive since the meat scandal broke, announced on Tuesday that none of the 174 samples collected in 22 states since the scandal emerged provide evidence of meat that’s unfit for human consumption.

That’s good news for what is one of Brazil’s most important industries, at a time when the country is still struggling to emerge from its worst recession.

Brazil accounts for 20% of the world’s red-meat exports and 40% of its chicken.

Domestic demand is also vital for Brazilian meat companies, with low-cost beef a staple of lunch and dinner.

A total of 45 nations implemented some kind of restrictions on imports from Brazil at some point, from increased checks to an outright ban, according to Agriculture Ministry data compiled by Bloomberg.

Related Articles: Brazilian firms probed over bribery at meatpacking facilities

Trade figures released on Monday showed a 19% plunge in weekly meat-product shipments.

But as of Tuesday, only 13 markets remain closed, among them Mexico and Qatar.

Altogether those nations accounted for just about 5% of Brazil’s meat exports last year, the government data show.

Hong Kong said on Tuesday that it had narrowed the scope of its import suspension to 21 plants under investigation.

Brazil’s Agriculture Ministry had said that Hong Kong reopened the market.

European meetings

The European Union wants more information from Brazil about its investigations and their is strong pressure from European nations for stricter measures, Agriculture Minister Maggi said on Wednesday after a meeting with the European Commissioner for Health and Food Safety Vytenis Andriukaitis in Brasilia.

There is a further meeting planned for Thursday.

Brazil’s biggest meat companies, JBS SA and BRF, appear to have largely weathered the storm, despite being implicated in the police probe (both deny any wrongdoing).

While its shares are down 12% since the crisis began, JBS, the world’s biggest meat company, said on Monday it may now restore production at its shuttered slaughterhouses.

BRF, Brazil’s largest poultry supplier, closed 4.2% higher on Tuesday, its biggest gain since July, helping to make up for the most of the losses since March 17. The company is setting up a group to conduct an audit.

As concerns ease over the impact on Brazil’s meat exports and its producers, attention has turned back to the police and their investigation.

Investigators have tried to shift the focus toward the alleged corruption and away from the sanitary aspects amid growing criticism from the government, meat companies and even from within the police.

While Weak Flesh is an important probe, the way it was announced was “jumbled” and exaggerated, Louis Boudens, the head of the national federal police association, said in a March 25 note posted on the group’s website.

“That is when the operation stopped to be a service for society to become a threat to the economy and the country’s institutional relations,” Boudens said.

March 29, 2017: Fin24

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