Export bans hit Brazil's meat industry after scandal

15:31 | 21/03/2017 Global Economy

The fallout from Brazil's rotten meat scandal accelerated Monday when China, a huge client, suspended imports and the European Union demanded a partial ban.

The agriculture ministry said in an online statement that China had suspended imports of meat from Brazil over police claims that Brazilian exporters had sold tainted products - AFP

Brazil is the world's biggest beef- and poultry-exporting nation and the row is especially unwelcome when the country is struggling to overcome its worst recession in history.

Market analysis group Capital Economics warned the scandal over Brazil's meat exports could derail the country's economic recovery.

"Brazil is facing a potential loss of export revenues of about US$3.5 billion. That's the equivalent of about 0.2 per cent of GDP," Capital Economics said.

"The economic impact will depend to a large extent on how long any bans stay in place. There are some reasons for optimism here."

Officials are arguing that there is no systemic corruption or health problem in the meat industry and that the police operation uncovered only a few bad apples.

"Agribusiness is extremely important for us in Brazil," Temer said in an address Monday. "It cannot be discredited just because of a small group."

The scandal also broke just days before the start of negotiations to seek a free-trade accord between the European Union and several South American countries including Brazil.

Brazilian meat is exported to more than 150 countries, with principal markets also including Japan, Saudi Arabia and Russia.

Sales in 2016 reached US$5.9 billion in poultry and US$4.3 billion in beef, according to Brazilian government data. Total meat exports amount to about seven percent of exports and 0.7 per cent of gross domestic product, according to Capital Economics.

France and other European countries are wary about opening up the EU meat market to countries in the South American Mercosur bloc, which includes major exporters Brazil and Argentina. Paraguay and Uruguay are the other members.

Theo Channelnewsasia