Brazilian cattle industry fights to prove its green credentials

Brazil wants to export fresh beef to the US, but investors are concerned about deforestation

 

Anna Gross, Financial Times

May 14, 2019

 

When Brazilian meat companies were investigated for selling rotten goods at home and abroad, many wondered if their international reputations would ever be repaired.

 

The “Weak Flesh” operation of March 2017 found that certain staff at food-processing companies JBS and BRF were guilty of bribery. It also found that an individual at JBS had changed use-by dates, while at BRF some workers had faked export documents. This prompted multiple countries to suspend imports of Brazilian beef.

 

Soon after, JBS was facing another scandal: Joesley Batista, its now ex-chairman, admitted corruption and shared secret recordings of then President Michel Temer as part of a plea bargain. As the scandals subsided, Europe, China and Russia have eased their import bans, but the US has yet to follow their lead.

 

With Jair Bolsonaro now president of Brazil, and high hopes of a bright future of trade with the US, farmers are optimistic that access to the US market is just around the corner. A delegation of US inspectors will visit meatpacking plants across Brazil in June as Brazilian meat companies try to prove that they are free from corruption and fraud.

 

“What it comes down to is a question of justice,” said Orlando Leite Ribeiro, secretary of commerce for Brazil’s ministry of agriculture. “The problems that led to the rejection of Brazil’s products don’t exist any more.” BRF said it had granted leave to all employees involved in the “Weak Flesh” investigation and was co-operating with authorities, while JBS said the case should not raise doubts about the quality of its products.

 

While the US suspended the import of fresh beef from Brazil, it has continued to import processed beef. Between January and March 2019, Brazil exported 8,000 tonnes of beef to the US, mostly in products such as corned beef and jerky, according to ABIEC, Brazil’s beef export association.

 

Brazilian companies already have a strong foothold in North America. More than half of revenue for Brazil’s two biggest meatpackers, JBS and Marfrig, comes from the US. JBS has a US subsidiary, while Marfrig recently expanded its US presence by acquiring beef processor Iowa Premium for $150m.

 

But reopening of fresh beef imports is about more than just trade between the US and Brazil: it would also be a stamp of quality for other markets and Brazil is hoping to cater to Japanese and Canadian beef demand.

 

However, consumers and investors in the US are growing increasingly concerned about cattle farming’s contribution to climate change and attacks on the human rights of indigenous people in the Brazilian Amazon and neighbouring Cerrado savannah. The fear is that renewed US imports of beef, alongside rising demand in China, will speed up deforestation, eliminating carbon sinks and heightening land conflicts with indigenous populations.

 

Cattle farming is responsible for up to 80 per cent of deforestation in the Amazon forest, according to Chain Reaction Research…

 

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https://www.ft.com/content/9225a0a0-5d2d-11e9-840c-530737425559