Trade | Brazil may lose up to USD1.5 billion in meat exports on probe

Blairo Maggi, Brazilian agriculture minister

Brazilian meat companies may lose as much as USD1.5 billion in exports this year after a corruption scandal that raised concerns on product quality led several nations to restrict purchases last month, Brazil’s agriculture minister said.

“It wouldn’t surprise me” if Brazil immediately lost five percent to 10 percent of its share in global meat exports, Blairo Maggi said in an interview in Sao Paulo, adding that the estimate is still preliminary. The impact could be softened as bird flu outbreaks in other countries including the U.S. curb supplies, he said.

Maggi, who’s been on a diplomatic offensive since allegations that meat companies bribed sanitary inspectors to clear meat sales and exports were made public last month, said that the first phase of the meat crisis is finally over as most of the export bans that followed the scandal were lifted. Still, regaining consumers’ confidence is “work in progress,” he said.

“The next step is the most complicated one,” Maggi said. “It involves the consumer who, at the point of sale, chooses between one product or another.”

Federal police in Curitiba in Brazil’s Parana state announced their so-called Carne Fraca (“Weak Flesh”) investigation on March 17. They said 21 companies including top producers JBS SA and BRF SA 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 South American nation’s meat exports are facing stricter inspections in importing nations, a move that Maggi sees eventually demonstrating that safety procedures held by Brazilian authorities and companies are appropriate.

Saudi Arabia is finishing its audit of Brazil meat plants, and representatives met Maggi to discuss their findings. Maggi and agriculture ministry representatives are also going to travel to Europe and countries including China, Hong Kong, Saudi Arabia in the coming weeks and months to reassure importers of the quality of Brazilian meat.

Brazil accounts for 20 percent of global beef exports and almost 40 percent of chicken exports. Beef, poultry and pork accounted for almost 10 percent of Brazil’s export revenues last year, and BRF and JBS are among the largest companies in the country.

JBS’s shares have tumbled 13 percent since March 17, when news on the probe broke. BRF shares fell 3.8 percent in the same period. Gerson Freitas Jr., David Biller and Julia Leite, Bloomberg