BRAZIL’s meat industry has been rocked by scandal, after arrests were made following a two year investigation into corruption.
Writing in his Agri Commodities Daily Alert, Commbank economist Tobin Gorey says police conducted a series of raids across seven Brazilian states, arresting scores of individuals connected with corruption in the meatpacking industry.
“The two‑year investigation revealed that health inspectors and politicians had been bribed to overlook unsanitary practices and falsified export documents,” Mr Gorey writes. “Three processing plants have had their operations suspended and authorities have placed 21 others under special scrutiny. More than 30 individuals have also been detained.”
It is understood more than 1100 police officers were involved in some 194 raids in an anti-corruption operation known as ‘Operation Flesh Is Weak’.
The central allegation is major meat processing companies JBS and BRF were bribing government officials to keep rotten meat on the market. Investigators said chemicals had been used to improve the appearance and smell of expired meats. Rotten meat was also mixed with fresh meat to be sold to consumers.
Mr Gorey said Brazil's Agricultural Ministry had claimed the issue was not systemic, but reports of rotten and chemically‑adulterated meat being sold in domestic and export markets is the stuff of PR nightmares.
“The scandal could cause large and lasting reputational damage to the world's largest beef and poultry exporter,” Mr Gorey said.
“Brazil only just last year regained beef access to the US market following 17 years of negotiations. And it, along with the other members of South America's Mercosur group, is currently in talks with the EU over a free trade agreement. Concerns over meat safety have long been a sticking point of the Mercosur‑EU deal.”
“How Brazil's major trade partners respond to the scandal remains to be seen, but its $12 billion meat export industry is clearly now plunged into a period of uncertainly. That will sting all the more given Brazil's booming agricultural sector has long been considered one of the bright spots of the economy.”
