Brazil Official Promises to Take Necessary Measures to Resume Beef Exports to U.S. -- Update

By Jeffrey T. Lewis Features Dow Jones Newswires

SÃO PAULO -- Brazil's agriculture minister promised Friday to take the measures necessary to reopen the U.S. market after the U.S. Department of Agriculture suspended imports of Brazilian beef over concerns about its safety.

Continue Reading Below

The decision by the USDA, announced Thursday, came after Brazil suspended beef exports to the U.S. from five Brazilian slaughterhouses. Some of the beef from those abattoirs was found to have abscesses caused by a vaccine against hoof-and-mouth disease. Brazil's agriculture ministry said the abscesses aren't a health risk.

Brazilian agriculture minister Blairo Maggi said he is ready to travel to the U.S. to hold talks to re-establish exports. Mr. Maggi said in a statement there has been "strong pressure" from U.S. beef producers to block beef from Brazil, but added the Brazilian government agrees with the U.S. position and intends to correct the problems.

The ministry said it would introduce more rigorous inspections, and will make changes to the hoof-and-mouth vaccine to try to avoid the problem with abscesses, among other actions.

"We have to fight [to resume exports] because it's an important market," Mr. Maggi said.

The USDA had no immediate response for comment Friday.

Continue Reading Below

The USDA said Thursday that since the agency began analyzing all meat shipments from the country in March inspectors have rejected about 11% of Brazilian fresh beef products because of "public health concerns, sanitary conditions, and animal health issues."

The rate of rejection of beef shipments from the rest of the world is only 1%, the USDA said.

Beef from Brazil, one of the world's biggest exporters of the meat, came under increased scrutiny three months ago after the Brazilian authorities unveiled a corruption probe targeting food inspectors.

Brazil's biggest agricultural association, National Confederation of Agriculture and Animal Husbandry, questioned the USDA's reasons for the suspension, saying the issues pose no risk to Americans' health.

"We hope the U.S. government will divulge the technical and scientific justifications upon which they based the decision, which can also be seen as a protectionist measure," the group said in a statement.

The U.S. only allowed imports of fresh Brazilian beef to resume last year after a 13-year ban, and is still a small market for the South American country's cattlemen. The U.S. only bought 3% of Brazilian beef exports in the first five months of this year, according to exporters group Abiec.

The biggest potential problem for the Brazilian beef industry is that other countries representing much bigger markets will also ban imports, said Kevin Good, senior market analyst at Colorado-based Cattlefax, a producer-owned organization that deals primarily with analyzing beef and other animal protein markets.

"You could see more damage if there's a lack of confidence from other export markets," said Mr. Good. "That's the risk, is there a domino effect or not."

When the investigation of sanitary inspectors was announced in March, China, the European Union and other countries issued temporary bans or increased scrutiny on Brazilian meat shipments. No countries have announced new bans since the USDA's announcement Thursday.

Shares of Brazilian meatpackers JBS SA and Marfrig Global Foods SA declined Friday.

JBS, the world's biggest animal protein producer, was down 1.6% in early afternoon trading. Marfrig had fallen 0.6% at the same time, while meatpacker Minerva SA's shares were up 0.6% after falling 2.2% in early trading. Shares in U.S. meat producers rose Friday, with Tyson Foods Inc. and Hormel Foods Corp. both up around 2%.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

(END) Dow Jones Newswires

June 23, 2017 14:04 ET (18:04 GMT)