Brazil meat scandal

Brazil’s US$10 bn chicken and beef exports reel from scandal

China and Hong Kong one of the biggest importers of both beef and chicken from Brazil

PUBLISHED : Thursday, 23 March, 2017, 12:55am
UPDATED : Thursday, 30 March, 2017, 2:42am

Brazil’s government fought Wednesday to save the country’s meat industry from getting consumed in a corruption scandal that has prompted several countries to pull Brazilian beef and chicken from the menu.

Agriculture Minister Blairo Maggi did not mince his words.

“What we are suffering now is a blow, a punch to the stomach,” he told the Senate.

“We have to recover, to reorganize our forces, to travel around the world and to show that what happened here was that a few people did wrong but that the system or the industry was not at fault.”

Brazil sells more than US$10 billion of chicken and beef a year but a scandal over rotten produce and faked inspections has prompted import bans, threatening the world’s biggest meat producer.

China and Hong Kong have suspended all Brazilian beef and chicken imports.

China was the second biggest chicken importer in 2016 with US$859 million in purchases. Hong Kong was the biggest beef client, buying US$718 million worth, followed closely by China which racked up a bill of US$703 million.

Hong Kong bans imports of Brazilian meat after food safety scandal

Chile has also suspended all meat imports. Although a relatively small market, Chile is part of the regional Mercosur trade group with Brazil and its decision prompted an angry reaction.

The European Union, which buys almost US$650 million in Brazilian beef and poultry, has blocked imports from the 21 businesses being investigated in Brazil. Only four of those companies were eligible to export to the EU.

Japan, Brazil’s third biggest market for chicken with US$720 million in sales, imposed a similar limited ban, while Mexico has stopped imports of chicken produced by the 21 companies under scrutiny.

Brazilian meat exports were worth US$63 million a day until last week’s announcement by police of “Operation Weak Flesh,” which revealed that some meat packers had paid crooked inspectors to pass off rotten and adulterated meat as safe.

That figure plummeted to about US$74,000 on Tuesday, the foreign trade ministry said.

Meat-loving Argentina and the United States are among countries holding off from banning imports. However, they have increased inspections.

Russia, which has heavily relied on Brazilian imports since banning US and European Union food imports, said it wanted clarifications from Brazil.

The big shoe yet to drop for Brazil is Saudi Arabia, which is the principal chicken importer to the tune of US$1.15 billion and has yet to take any action.

The Saudi Food & Drugs Authority ordered port inspectors to “intensify checks” and take samples of meat to make sure they meet standards, the official Saudi Press Agency said. Qatar’s Ministry of Public Health told port operators to hold meat until samples were taken, and validated.

Saudi Arabia imported 744,000 tonnes of Brazilian chicken meat in the period from February through January this year, making it the second biggest buyer after China and Hong Kong combined, according to Brazilian meat exporters group Abiec.

South Korea lifted a temporary suspension on the distribution of chicken already imported from Brazil, after authorities there confirmed that no tainted poultry had entered the country.

Brazil exported more than US$12 billion in all meat products in 2016, between six and seven per cent of total exports. There are clients in more than 150 countries.

Markets analyst Andrei Perfeito said Brazil’s fear is that competitors will try to gain ground while this cloud hangs over Brazilian products.

“It’s a very competitive market. The (agriculture) ministry has a huge job ahead of it,” he said.

Brazil’s government appealed Wednesday to the World Trade Organization’s 163 other members not to impose “arbitrary” meat bans.

With additional reporting from Bloomberg