Brazilian meat giants facing rotten meat scandal

Following a 2-year investigation, known as ‘Operation Weak Flesh,’ police found evidence of meatpackers bribing inspectors and politicians to overlook unsanitary practices such as processing rotten meat and shipping exports with traces of salmonella, police said. Dozens of arrest warrants have been issued; with 3 arrests coming from BRF employees, 2 from JBS, as well as more than 20 public officials.

Plants temporarily closed

Reuters reports that Brazil’s Agriculture Ministry temporarily closed 3 plants cited in the investigation, 1 run by BRF and 2 by smaller rival Grupo Peccin, and began removing their meat products from supermarkets.

Eumar Novacki, the ministry’s executive secretary, said there was some concern that other countries would begin blocking shipments of Brazilian meat. Brazil’s President, Michel Temer held emergency meetings over the weekend seeking to reassure foreign trade partners that the corruption scandal engulfing the country’s meat industry does not mean its products are unsafe.

Minimal risk for consumers

Despite allegations by police that some producers had sold rotten and adulterated meat products, Luis Eduardo Rangel, a senior Agriculture Ministry official, said: “There is no sanitary risk.” The allegations, he added, were “worrisome from a corruption and crime point of view,” but “from a health perspective we are very confident that the sanitary issues alleged do not represent a risk for consumers or exports.”

“Only 21 units out of 4,837 in Brazil subject to government inspection are facing allegations of irregularities. And only 6 of them have exported in the past 60 days,” confirmed President Temer.

Huge blow to image of Brazilian meat industry

Authorities warned that the case was a severe blow to the international image of Brazil’s agribusiness sector, which officials have been counting on heavily for helping Brazil recover from its worst recession in decades. The scandal could potentially threaten $12 billion (€11.16 billion) in annual exports should the US, China and the EU ban meat imports from Brazil.

Brazil exported $6.9 billion (€6.41 billion) of poultry and $5.5 billion (€5.11 billion) of beef last year, according to industry groups, as producers ramped up shipments to China and started sending fresh beef to the United States.

Repercussions in the market

Shares of JBS and BRF plunged 11.0% and 7.0%, respectively, in Sao Paulo. JBS, the world’s biggest meat producer, booked net revenue of 170 billion reais ($55 billion – €51.15 billion) last year from sales in 150 countries. BRF, the largest poultry exporter, booked net revenue of 39 billion reais in 2016.