China suspends beef imports from Brazil in the wake of inspection scandal

While the Chinese market remains closed to U.S. beef, a major contributor to China’s beef supply, Brazil, has been banned from the market as a result of recent scandal.

“China has temporarily suspended red meat and poultry imports from Brazil,” reported the Daily Livestock Report (DLR) on March 20. “The decision appears to follow the widening scandal in the Brazilian meatpacking industry.”

Inspection scandal

On March 17, federal police in Brazil found evidence that meat packers in the country had been selling rotten and sub-standard meat for several years.

BBC News reported, “On March 17, federal police raided meat-producing plants and arrested more than 30 people. The government suspended more than 30 senior civil servants who should have spotted the unhygienic and illegal practices.”

“They are being investigated for corruption,” BBC News continued.

In addition, three meatpacking plants have been closed in the country, and 21 more are being investigated.

Operation Weak Flesh, as the effort was termed, was launch on March 17 after a two-year investigation in six Brazilian states.

“The investigators allege that some managers bribed health inspectors and politicians to get government certificates for their products,” added BBC News.

The Brazilian federal police were quoted as saying, “They used acid and other chemicals to mask the aspect of the product. In some cases, the products used were carcinogenic.”

Industry leaders

In the U.S., American-owned meatpacking company JBS also has a branch in Brazil, and on March 18, they clarified that none of their brands or products were implicated in the incident.

In a full-page advertisement released by the company, JBS said, “Quality is the foremost priority of JBS and its brands.”

However, JBS competitor BRF was questioned in the incident. BRF Executive Roney Nogueria turned himself into police for questioning following the incident.

“BRF never sold rotten meat,” the company said, adding that the implications were tied to smaller meatpackers in the country.

Around the world

In 2016, China imported 30 percent of its beef from Brazil, with 27 percent coming from Uruguay, 19 percent coming from Australia and 12 percent from New Zealand.

“China does not allow beef imports from the U.S., so the U.S. does not appear to benefit from this change in Chinese policy,” DLR analysts wrote. “However, we would argue that this move does indeed support U.S. beef exports.”

DLR further explained that China’s other two largest sources of beef – Australia and Uruguay – are stiff competitors of the U.S. in Japan and South Korea.

“As Chinese buyers start to compete more aggressively for Australian beef, this will make life more difficult for Japanese and South Korean buyers and shift more of that demand towards U.S. products,” they explained.

DLR analysts further asserted that, if the scandal reveals more systematic and extensive food safety issues, China may re-evaluate their policies in favor of longer-term solutions to meat deficiencies.

At the same time China issued a ban, other countries began to suspend meat imports from Brazil, including South Korea and the European Union.

“The European Union (EU) has announced it was suspending imports from four facilities,” DLR said, summarizing a Reuters report. “If the scandal widens, we could see EU authorities act more forcefully, but for now, officials want to be careful about disrupting trade.”

Impacts

“The reason this is such a major issue is because it brings into question the integrity of the food safety inspection a key global producer,” DLR said.

Scandal and corruption is not unfamiliar to Brazil, they noted, mentioning that the Brazilian president was kicked out of office and charged with corruption.

However, Brazil has also emerged as a major supplier of global red meat and poultry products.

“According to USDA data, exports of Brazilian chicken accounted for almost 40 percent of exports from the major supplying countries,” DLR defined. “China and Hong Kong accounted for 18 percent of Brazilian chicken exports in 2016.”

As smaller countries search for supply to replace Brazilian product, DLR also noted that U.S. product may be more expensive or importers have not yet developed relationships with U.S. exporters to allow them to easily replace the product.

“We don’t know how this will play out, but it is one of those issues that bears watching,” DLR said.

U.S. imports of Brazilian beef are minimal, emphasized DLR, adding that the majority of Brazilian beef imports are fully cooked and comprise only 0.5 percent of imported beef to the U.S. this year.

Saige Albert, managing editor of the Wyoming Livestock Roundup, compiled this article from a multitude of news sources, including reports, press releases and industry analyses. Send comments on this article to roundup@wylr.net.