Watch Out For Europe Restrictions On Brazil Beef – Forbes

Pedestrians pass in front of a BRF SA market in Sao Paulo, Brazil, on Saturday, March 18, 2017. Federal authorities announced Friday they’re investigating evidence that companies including JBS SA and BRF SA, the nation’s largest meat producers, bribed government officials to approve the sale and export of soiled meat. (Photographer: Victor Moriyama/Bloomberg)

Monday is a big day for Brasil Foods (known as BRF), the biggest trade in the Brazilian food space for American investors on the NYSE. That’s when European beef importers will have their pow-wow with Brazilian authorities over yet another (can you believe it?!) scandal in the country. This time it’s not about politicians ransacking the national oil company Petrobras; its about privately held and publicly traded beef exporters — some of the biggest in the world — selling shoddy beef.

“We need to know more about this and urgently,” E.U. Ambassador Joao Cravinho told Folha de Sao Paulo newspaper on Sunday. “If their explanation isn’t good enough, public opinion pressure and our obligation to protect the consumer could, in this case, lead to measures that impact trade between the European Union and Brazil,” he was reported saying.

Translation: beef and chicken embargo. The E.U. is Brazil’s biggest market for those two items.

Brasil Foods (BRFS) shares fell 7.7% on Friday because of it. They could likely fall much lower if Europe hits Brazil with a beef ban. ┬áBrazil is the world’s leading beef exporter.

A ban on Brazil beef would impact Brasil Foods even though Brasil Foods has a healthy domestic market. Moreover, a ban on Brasil beef and, likely, chicken would be greeted positively in countries like the U.K. and France which is facing a ban on most food exports into Russia.

Brazil has, once again, shot itself in the foot.

According to the results of yet another police raid by the Federal Police (Brazil’s FBI), 37 people we arrested at meat packing facilities for selling bad beef. Brasil Foods, owners of the brands Sadia and Perdigao, was one of the companies involved in the sting operation. Others include Brazilian publicly traded firm JBS, which owns meat packing facilities in the United States. The current investigation is only regarding Brazilian food processing plants and not operations abroad. A total of 30 companies were caught in the operation, known as Operation Bad Beef.

Watch Out For Europe Restrictions On Brazil Beef – Forbes