Back
March 23, 2017

Brazilian Meat Sector Scrambles to Contain Damage from Scandal

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

After the announcement last Thursday that tainted meat had been sold by some Brazilian food companies, many countries such as China, Hong Kong, Chile, Egypt, Japan, and the European Union have temporarily banned Brazilian meat imports. While the United States has not banned Brazilian meat, the USDA has announced that they are inspecting Brazil meat products for potential contamination.

The Brazilian government and industry representatives are scrambling as they try to contain the damage from the scandal and the loss of confidence by consumers in Brazilian meat products. Industry representatives feel the ban on Brazilian meat products will be temporary and it will be lifted as soon as more details of the investigation reveal the extent of problem. Discussions are already underway to lift the ban and some countries have limited the ban to products from meat processing facilities implicated in the investigation. Thus far, it appears that the sale of tainted meat products was confined to a limited number of processing facilities.

Some of the countries involved in the ban are highly dependent on affordable and high volume meat imports from Brazil. For example, the countries of China, Hong Kong, the European Union, and Egypt together in 2016 purchased 56% of the 1.4 million tons of Brazilian beef exports. Industry representatives feel these countries would be hard pressed to find alternatives for Brazilian beef.

Meat exports represent 15% of Brazil's total exports and the Brazilian Meat Exporters Association (Abiec) and the Brazilian Animal Protein Association (Abpa) report that annually Brazil exports approximately 262,000 containers of meat to more than 160 countries.

Industry representatives are highly critical of the way the Federal Police announced the investigation. In their bombshell announcement last Friday, they did not specify the extent of the scandal. Instead, there seemed to be a blanket indictment of the entire food inspection system in Brazil.

Since the scandal broke, the President of Brazil, the Minister of Agriculture, the Minister of Commerce, state governors, and industry trade groups have emphasized that the vast majority of meat products in Brazil are safe to consume and the inspection problems were confined to a few dozen inspectors at relatively few processing facilities.