Brazil: Temer says meat fraud scheme impacts small part of industry; China temporarily bars Brazilian meat

Photo: Presidência da República/Beto Barata

In a statement made Monday (Mar. 20), the Brazilian President Michel Temer said the issues uncovered at meat processing plants by the Federal Police as part of Operation “Weak Flesh” affect only a small part of the sector. “Agribusiness is of the utmost importance to us and must not lose its value on account of a small core, something that will shrink in size: it can be investigated, monitored, and punished whenever necessary. But we must not compromise the whole system we've been putting together over the years. We've been exporting to over 150 countries,” the president told an audience of investors at the headquarters of the American Chamber of Commerce, in São Paulo.

The crackdown was launched last Friday (17) and targeted some of the country's biggest food giants, like JBS, BRF, and Peccin, accused of committing a number of frauds to conceal the use of expired or low-quality material in food production.

Temer noted that the number of public officials implicated (33) is small compared to all 11 thousand officials in the Ministry of Agriculture. “Our sanitary assessment systems here in Brazil are extremely rigorous,” he stressed. The officials are being accused of pocketing bribes in exchange for releasing products that did not comply with the regulations. He went on to say that the number of plants under suspicion (21) is small, taking into consideration the whole of the sector, which includes over 4.8 thousand establishments.

The president further mentioned the several meetings he held in recent days both to become acquainted with the topic and to reassure the countries buying Brazilian foods. “I've been to a number of meetings in Brasília, first with the ministers from the areas involved in the issue, then with the associations of meat producers of all kinds, as well as the ambassadors from the countries importing Brazilian meat. We ended up in a fraternal atmosphere last night, eating barbecue with all the representatives of the countries in attendance,” he said.

China temporarily bars Brazilian meat from entry

China suspended the entry of Brazilian meat in the country until Brazil provides clarification regarding Operation “Weak Flesh”.

In a note, the Brazilian Ministry of Agriculture, Livestock, and Supply announced it will provide all clarifications to the Chinese as quickly as possible. “Until it received the information, China will not allow the meat from Brazil to land. Minister [Blairo Maggi] said he will hold a video conference with Chinese authorities to provide the clarifications,” the statement says.

According to news agency Xinhua, Brazil's exports to China nearly doubled in the first two months compared to the same period in 2016. In January and February, the exports raised $6.246 billion, mostly through the sale of oil and iron, soy, wood pulp, and beef. The value of Brazil's exports to China leaped 94.3%, driven by an increase in the price of raw materials like oil and iron.

On Monday morning, a ruling from the ministry removed federal superintendents for agriculture, livestock, and supply Gil Bueno de Magalhães in Paraná, and Júlio César Carneiro in Goiás. On Friday, after the launch of the Weak Flesh probe by the Federal Police, the government had announced the ouster of 33 government officials suspected of being involved in the irregularities being investigated.

The investigators believe that the processing plants implicated in the scheme “masked” spoiled meat and repackaged them to sell them. The companies bribed government-appointed inspectors in exchange for allowing the products to be traded without due inspection.

Chile and South Korea

China's was the only suspension confirmed by the Brazilian Ministry of Agriculture. However, according to news agency DPA, Chile's Agriculture Minister Carlos Furche announced that the country barred Brazilian meat from entry until further clarifications on the scope of the scheme are provided.

By contrast, South Korea overturned its decision to bar Brazilian meat imports. In his opening speech at the 2017 Latin American Cities Conference, in Brasília, Temer further said he is not familiar with all the details concerning the current position of the South Korean government, but he believes it came as a reaction to the clarifications provided by the Brazilian authorities.

The president noted he has already ordered the creation of a task force to further probe into the irregularities and mentioned the measures adopted to prevent the economy from suffering any more harm. “The officials [charged] were ousted by the minister of agriculture, Blairo Maggi, yesterday”.

Source: Agência Brasil

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Mexico is looking at Brazil and Argentina as an alternative for US corn while Mercosur talks with EFTA are advancing

In a response to Trump's trade policy, Mexican Agriculture Secretary said last Thursday he will lead a business delegation to Argentina and Brazil to explore buying yellow corn, part of a drive to lessen Mexico's U.S. dependence.

The trip will happen within the next 20 days, Agriculture Secretary José Calzada said, adding that the government could explore quotas and changing the tariff regime for imports from South America if needed.

On Sunday the Mexican senator Armando Rios Piter, who leads a congressional committee on foreign relations, says he would introduce a bill this week, to shift corn import demand to Brazil and Argentina instead of the United States.

“I'm going to send a bill for the corn that we are buying in the Midwest and...change to Brazil or Argentina,” Rios Piter told CNN.

On Wednesday Marisa Bircher, Argentina's Secretary of Agro-Industrial markets, said that the country hopes to increase exports to Mexico. Argentina exported less than 100,000 tons of corn to Mexico last year.

“Corn is obviously a sector that is on the list to have greater access and gain a bit more space for Argentina, regardless of the presence of the US market,” Ms. Bircher said.

Ms. Bircher said there was also potential for poultry and beef exports to Mexico.

Mexico last year imported 13 million tons of yellow corn, of which 12.75 million tons were provided by US farmers with a bill of US$ 2.3bn.

EFTA/Mercosur talks: confirmed to begin next June

The first round of formal trade negotiations between Mercosur and EFTA, European Free Trade Association, is scheduled to take place in Buenos Aires next June according to information from Brussels where there was a preliminary encounter between the two sides. “It will be in June, and talks will be at chief negotiators level”, confirmed EFTA and Mercosur sources.

The Brussels meeting was headed by Argentine ambassador Guillermo Daniel Raimondi, in representation of Mercosur and Norway's Sveinung Roren for EFTA, which is made up of Iceland, Liechtenstein, Norway and Switzerland, none of them EU members.

“It was also agreed a second meeting in August and the necessary exchange of information, such as nomenclature, stats, trade legislation and policies”, added Mercosur sources. Bilateral trade between the two blocks reached 8.7bn in 2015 when the first contacts were started. Last January in Davos Economic Forum the round of discussions was first agreed.

EFTA exported mostly pharmaceutical products (US$ 1.4bn); organic chemicals (US$ 764m), and machinery (US$ 462m), while Mercosur countries shipped US$ 1.9 bn in precious stones and metals; US$ 859m in inorganic chemical products; US$ 357 in food and US$ 259m in coffee, tea and species.

“We are optimistic about this coming round, which is part of the opening of Mercosur to the world”, said the South American source, which last week was also involved in negotiations with the EU-28 ahead of the Buenos Aires round in March.

“The purpose of this trip and technical talks to Brussels was precisely to get ready for Buenos Aires and concentrate in the chapters of government procurement, market access, animal and plant sanitary measures plus services and investments”, added the source.

European Commission sources indicated that negotiations agreed “to intensify the technical work” in anticipation of Buenos Aires but also working on a tentative timetable of reaching an agreement at the end of the year. This last leg of EU/Mercosur negotiations took off in 2010, following several years of suspension.

Sources: Agência Brasil, Mercopress Agency

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Brazil: excellent prospects for agribusiness and export in 2017

Brazil is getting ready for a blockbuster 2017 harvest and booming exports, amid favorable weather forecasts, according to recent estimates. With a plentiful harvest expected, Brazil’s National Grain Association predicts grain exports will rebound, with soybean exports of 60 MT in 2017, compared with some 51 MT for 2016. Corn exports will increase to 30 MT, compared with some 18.5 MT in 2016, the association reported.

Brazil’s crops are in very good condition across the country’s vast 4 million-square-kilometer cropland region. Dryness in southern Brazil’s Mato Grosso do Sul state and the western Bahia are “setbacks, that do not present irreversible loss of productivity”, according to reports by Globo Rural magazine. The magazine estimates that 77.6% of soybeans have been planted so far.

Meanwhile, the consultancy Agrural puts plantings at 83% complete, while Agroconsult estimates plantings at 85% complete, with a 1.4% increase in soybean acreage.

Brazil’s farm economy will rebound in 2017 with a record harvest pushing up grain exports and expanding the country’s livestock industry, according to analysts’ forecasts. An estimated record grain harvest of 213.1 million tons would be 14% larger than last year, when crops were devastated by drought, according to Brazil government estimates. The harvest will start in January.

 “Contrary to the Brazilian economy, agribusiness points to a positive performance in 2017 because of the improved agriculture revenue. We have relatively stable prices ahead … and we have increased grain production,“ the managing partner of MacroSector, Rabo Silveira said.

According to another Brazilian marketing firm, Safras & Mercado, Brazilian soybean production in 2016/17 could increase by 9.2% to 106.085 million tons, according to news reports. That would be roughly 4 million tons higher than USDA’s estimates.

In its largest supply and demand report Dec. 9, USDA raised Brazil’s estimated corn harvest 3 million tons to 86.3 million tons, but left soybean production unchanged from November at 102 million tons. USDA also left Argentina’s corn and soybean production unchanged, at 36.50 million tons and 57 million tons, respectively.

“Agribusiness has a very good scenario for a year in which the economy of the country will go sideways. It is not that agribusiness will be immune, but it has some rules of its own,” Silveira says.

Poultry producers project a production increase of 3 to 5%, and pork producers of 2%, according to the Brazilian Animal Protein Association, partly because of a larger projected supply of corn, a staple of animal feed.

However, despite increased crop production uncertainties about the exchange rate, the national economy and politics could negatively impact the farm economy, according to some agribusiness leaders.

“The most difficult factor for 2017 is the unpredictability,” said Cario Carvalho, the president of the Brazilian Agribusiness Association.

Sources: Globo Rural, Mercopress Agency

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