Brazilian Meat Scandal Has A Global Impact On Food Trade

Brazil is the world’s largest producer and exporter of meat that is facing the brunt of a major meat scandal. The Brazilian police launched Weak Flesh probe to identify meat producers involved in the scandal. The allegation was that leading meat producers bribed inspectors of the federal agencies to get approval for sales and exports of spoiled meat. The food giants BRF SA and JBS SA are involved in the scandal. Both these food producers are capable of processing more than 5 million chickens every day.

The scandal immediately raised the concerns of global importers and several countries shunned the import of poultry and beef products from Brazil. The European Union is considering to ban the food products from the suspected giants. China combined with Hong Kong is also one of the largest importers of Brazil and the governments have already imposed restrictions on imposing meat from Brazil.

According to the reports of the investigation, about 21 meat companies in Brazil including the aforementioned food giants are proven to have bribed the inspectors. They paid a huge sum to 33 federal inspectors to keep quiet while exporting contaminated or spoiled poultry and meat. JBS has promised to take action against the employee suspected of bribing the inspectors. The government suspended a BRF plant in Goias as it shipped seven cargos full of meat contaminated by Salmonella to the Europe. However, BRF has commented that national and international standards are thoroughly followed.

Aside from the major food producers, small slaughterhouses that supply meat to the food giants are also suspected of adulteration. Pig heads and cardboard are often mixed with cold cuts and sausages. The spoiled smell is masked using acid. The sanitary inspection system of Brazil is highly regarded globally, but the new scandal has raised concerns. While the Brazilian police continue to assure that investigation is done on isolated cases, the importing countries are not willing to take the risk.

Brazil exports 20% of global beef and 40% of global chickens. Brazil generated 10% of its annual revenue in 2016 through the import of beef and poultry. The shares of Brazil food producers plummeted following the scandal. The exports totaled to about $74,000 immediately after the restrictions and bans. Brazil generated a daily average of $63 million in exports prior to the food probe.

Almost all the huge importers of Brazilian meat have either suspended imports or imposed severe restrictions on food from Brazil. This has created a higher demand for chicken and meat all over the world. The USA, another large producer of poultry is also incapable of meeting the demand after US chickens were affected by bird flu. Brazil and USA are responsible for about two-thirds of chicken trade globally. Practically, there is no other country in the world that could fill the void created by the ban on Brazilian meat. Competing producers like Argentina and others are trying to increase their exports to capitalize on the increased demand. Experts suggest that the demand for Brazilian meat owing to its high quality will dwindle quickly due to the scandal.