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HomeFT SelectMost export bans targeting Brazil meat are lifted

Most export bans targeting Brazil meat are lifted

China, Chile and Egypt lifted suspensions on Brazilian meat imports on Saturday in a victory for the Latin American country`s third-biggest export industry, the Brazilian government said. 

China, which accounts for about one-third of Brazil`s meat exports, as well as major customers Chile and Egypt lifted the bans in spite of ongoing investigations into allegations of corruption between health inspectors and the operators of regional plants. 

“This can be treated as categorical testament to the solidity and quality of the Brazilian sanitary system,” said Brazilian agriculture minister Blairo Maggi. 

The export suspensions, which led to meat piling up at China`s ports, were instituted over the past week after federal police announced a probe into 21 meatpacking companies and plants. 

The investigation, launched on March 17, alleged that some regional operators used rotten meat or otherwise violated regulations in preparing processed goods. 

The probe hit the Brazil-based JBS and its peer BRF, the world`s biggest poultry exporter, and their shares plunged after the allegations were revealed. 

Police alleged that some regional plants of JBS and BRF were involved in the scam. They say some officials of both companies conspired with a ring of corrupt health inspectors to pay bribes in exchange for certificates. 

JBS and BRF have denied wrongdoing and say they do not tolerate corruption in their operations. They have also denied selling poor-quality products. 

The police are not investigating whether JBS or BRF sold rotten meat, instead focusing on allegations of such practices among smaller operators.

The government and the industry have sought to paint the violations highlighted by the scandal as mainly concerning irregularities in bureaucratic processes rather than poor-quality meat. 

“China is a market of the highest importance for the Brazilian animal protein sector,” said the Brazilian animal protein association, ABPA. 

“It is the second-largest importer of chicken meat and the third largest of pork,” ABPA said. “The reinstatement of shipments after the explanations provided by the Brazilian government shows the confidence that China has in our production system to provide for the food security of her population.” 

The lifting of the suspensions are good news for the government of President Michel Temer, which is wrestling with the country`s worst recession in more than a century. 

The economy was expected to recover this year, but a prolonged ban on meat exports may have delayed any turnaround until 2018, economists say. 

Even while the government was basking in the good news of the renewal of exports to China, the ongoing investigation into the alleged violations at the agriculture ministry was bad news, analysts said. 

Members of the government and its ruling coalition were already implicated in a kickback scheme at state-owned oil producer Petrobras and one of its major contractors, construction company Odebrecht. 

Mr Temer has needed all the credibility he can muster to pass difficult reforms through congress, including an overhaul of Brazil`s expensive pension system, analysts said.

Via FT