After 11 days of arrests, bribery allegations and a full-blown international food-safety scare, the worst may finally be over for Brazil's 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 an 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 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.
Brazil's Agriculture Minister Blairo Maggi, who's been on a diplomatic offensive since the meat scandal broke, announced 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 percent of the world's red-meat exports and 40 percent 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 bans, according to Agriculture Ministry data compiled by Bloomberg. Trade figures released Monday showed a 19 percent 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 percent of Brazil's meat exports last year, the government data show. Hong Kong said 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.
The European Union wants more information from Brazil about its investigations and there 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 today.
Brazil's biggest meat companies, JBS SA and BRF SA, appear to have weathered the storm, despite being implicated in the police inquiry. Both deny any wrongdoing.
JBS, which last week announced a self-imposed 35 percent cut in beef output in Brazil, is now planning to ease the reduction with a new plan taking effect on Monday, said a person with direct knowledge of the matter, who asked not to be identified because the information isn't public. The company is seeking to adjust inventory after temporary export bans and a drop in domestic sales, it said earlier in a statement.
BRF, Brazil's largest poultry supplier, is setting up a group to conduct an audit. Its stock has erased most of the losses since the investigation began March 17.
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 the investigation was important, 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.
Information for this article was contributed by Manisha Jha of Bloomberg News.
Business on 03/30/2017