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2016 Brazilian beef exports

Brazilian beef exports take a hit as scandal breaks

Scandal at Brazilian beef packing plants has turned the global beef trade upside down.

Last week’s news that Brazilian officials had raided multiple meat processing facilities over quality scandals has certainly created a stir for world beef and poultry trade. The raids stemmed from an ongoing 2-year investigation called “Operation Weak Flesh” of key Brazilian packers BRF SA and JBS SA in which individuals allegedly provided bribes to governmental health inspectors.

The international response was swift. Due to concern regarding safety and wholesomeness of beef and poultry sourced from Brazil, many of Brazil’s export partners immediately suspended trade until further notice. Brazilian officials are working hard to provide some reassurance around the situation and reestablish commerce continuity.  

Surprisingly, though, Hong Kong, South Korea, China, Chile and Egypt have already lifted their suspensions and are once again allowing product into their countries. Meanwhile, many countries have implemented only partial bans – that is, product from specific plants will not be allowed into the country.  

To that end, this week’s graph, adapted from Global AgriTrends, highlights Brazil’s 10 largest beef customers from a tonnage perspective. Additionally, the graph also depicts the percentage of beef sourced from Brazil for each country respectively. For example, Hong Kong imported nearly 275,000 metric tons from Brazil – representing just over half of Hong Kong’s total beef imports. 

The situation will require some time to play out. Nevertheless, Brazil’s shortfall will certainly create an opening for other exporters to try to get a foothold in some of the key markets.

What do you make of this situation? How do you see it playing out in the weeks and months to come? Do you foresee the U.S. beef industry making gains in replacing some of the Brazilian product, or will those customers likely turn to alternative sources like Australia? Leave your thoughts in the comments section below.

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