Brazil scrambles to contain fallout from meatpacking scandal
Brazilian officials rush to reassure key export markets after several countries suspend imports
Brazilian officials are scrambling to limit the
fallout from allegations the country’s biggest
beef and poultry producers may have bribed food inspectors to
approve the sale and export of tainted meat.
More than a dozen companies in Brazil, including
JBS, the world’s leading meatpacking company, and
BRF, the world’s largest poultry exporter, are
being targeted in the probe.
News of the investigation, first announced on
Friday, led China and South Korea to halt some imports of
Brazilian meat. The EU said it will shut off market access to
any company that is implicated in the investigation. Chile has
imposed a temporary ban on Brazilian meat imports.
Brazil’s agriculture ministry said in
a statement on Monday that it will hold a videoconference with
Chinese authorities to update them on the situation. China is
one of the biggest export markets for the Brazilian meat
industry, a sector that has thrived despite a deep economic
recession at home.
The investigation comes as JBS is planning
IPO in the US market of its international
operations, JBS Foods International, and its Brazilian poultry
unit Seara Alimentos, JBS CEO Wesley Batista has said.
President Michel Temer on Sunday invited foreign
ambassadors out to dinner at a Brazilian steakhouse, hoping to
tamper concerns after he and Agriculture Minister Blairo Maggi
held meetings to assure them that Brazilian meat is safe.
Brazil's major meatpackers have denied any
wrongdoing in the two-year probe called "Weak Flesh." Police
say the are investigating whether more than a dozen companies
paid bribes to government officials to obtain safety inspection
certificates for their products, some of which were believed to
have been tainted.
News of the investigation comes as Temer is
struggling to reignite Brazil’s economy. Neil
Shearing, the chief emerging markets economist at Capital
Economics, said the investigation could "plausibly derail" an
"This has the potential to deliver a sizable hit
to GDP," Shearing said in a research note. "Brazil exported
around $12.6bn of meat last year – around 7% of total
exports and equivalent to about 0.7% of GDP."
Shearing added that the probe was unlikely to have
any effect on first-quarter GDP figures since the import
suspensions happened in the late March. But if the bans are
extended for a full year, they could potentially shave off 0.2%
off GDP, he said. "It goes without saying this is the last
thing that Brazil’s economy needed," he said.