China, EU cut imports of Brazil meat amid scandal


Reuters

UPDATE 3-China, EU cut imports of Brazil meat amid scandal


(Adds quotes from agriculture minister)
    By Brad Brooks and Dominique PattonSAO PAULO/BEIJING, March 20 (Reuters) - China and the
European Union curtailed meat imports from Brazil on Monday
after police, in an anti-corruption probe criticized by the
government as alarmist, accused inspectors in the world's
biggest exporter of beef and poultry 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 criticized the investigation by Brazil'sFederal
Police into meatpacking companies, calling their findings
"alarmist" and saying 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 added. "I pray, I hope, I work so that does
not happen," he said, speaking to reporters outside his office
in Brasilia.
    With other import curbs expected to follow, the scandal
stemming from a police operation codenamed "Weak Flesh" could
deal a heavy blow to one of the few sectors of Latin America's
largest economy that has thrived during a two-year recession.
    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 meatpackers allegedly paid off inspectors to
overlook practices including processing rotten meat, shipping
exports with traces of salmonella and simply not carrying out
inspections of plants.
    JBS is the world's largest meat producer and BRF 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. [nL2N1GX0GY]
    New allegations of unsavory business practices in Brazil
come as the country is still reeling from a massive graft
scandal centered on state-controlled oil company Petrobras
<PETR4.SA> that is widening into other sectors.
    Brazil's President Michel Temer has sought to downplay the
meatpacking probe, saying it involved only 21 of Brazil's more
than 4,800 meat processing units.
    But Francisco Turra, head of Brazilian beef producers
association ABPA, told reporters it had put the entire meat
industry in jeopardy and "destroyed" a hard-won image of quality
products. [nE6N1FM00X]
    China, which accounted for nearly one-third of the Brazilian
meatpacking industry's $13.9 billion in exports last year,
suspended imports of all meat products from Brazil as a
precautionary measure. [nL2N1GX0GY]
    The European Union suspended imports from four Brazilian
meat processing facilities, ABPA said, citing the nation's
agriculture ministry.
    Ricardo Santin, ABPA's vice president of markets, said two
of the suspended plants process poultry, one beef and the other
horse meat. One of the poultry plants is operated by BRF, said
Santin.
    In a statement, BRF said the company has not received any
formal notice from Brazilian or foreign authorities related to
the suspension of its plants.
    South Korea's agriculture ministry said in a statement that
it would tighten inspections of imported Brazilian chicken meat
and temporarily bar sales of chicken products by BRF.
[nL3N1GX2C3]
    More than 80 percent of the 107,400 tonnes of chicken that
South Korea imported last year came from Brazil, and BRF
supplied almost half of that.

    BRF SHARES SLIDE
    BRF closed down nearly 2.2 percent Monday, while JBS ended
the day up 0.75 percent as investors bet the scandal would have
less effect on the world's largest meatpacker.
    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 abroad, 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," Credit Suisse
Securities analyst Victor Saragiotto wrote in a Monday note to
clients.
    Chile is also temporarily banning imports of all Brazilian
meat products, the agriculture ministry said on Monday.
[nC0N1CV01E]
    The European Commission said the scandal would not affect
negotiations between the European Union and South American bloc
Mercosur about agreements on free trade. [nL5N1GX2UG]
    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?
    "It is an enormous waste. If I lived in the countryside, I'd
start raising my own cows and chickens!"

 (Reporting by Brad Brooks and Bruno Federowski in Sao Paulo,
Marcela Ayres and Stephen Eisenhammer in Brasilia, Dominique
Patton in Beijing, Robert-Jan Bartunek in Brussels, Jane Chung
in Seoul and Jo Winterbottom in Chicago.; Editing by Daniel
Flynn and Tom Brown)
 ((Brad.Brooks@thomsonreuters.com; +55-21-9-6749-5042; Reuters
Messaging: brad.brooks.thomsonreuters.com@reuters.net))

Keywords: BRAZIL CORRUPTION/FOOD (UPDATE 3, PIX, TV)



This article appears in: Economy , Commodities , Stocks , Commodities , World Markets , Stocks
Referenced Symbols: BEEF3 , BRFS3 , JBSS3 , MRFG3 , PETR4


More from Reuters

Subscribe






See headlines for BEEF3

Follow on:








Research Brokers before you trade

Want to trade FX?