Brazil Toughens Rules to Avoid U.S.-Style Disruptions

• Brazil is bringing in new protocol to safeguard meat supplies
• Dias says country must deal with Amazon reputational challenge

Brazil, the biggest exporter of beef and chicken, is betting on a new set of safety standards to avoid the kind of mass processing disruptions that caused meat shortages and price spikes in America.

The South American farming giant plans to introduce new national guidelines that incorporate requirements from local authorities and labor prosecutors, Agriculture Minister Tereza Cristina Dias said in an interview. Until now, the industry has been operating under protocols set with the federal government.

Covid-19 outbreaks in U.S. slaughterhouses forced a wave of closures last month that led to a glut of animals and a more than doubling of wholesale pork and beef prices. While the Brazilian industry has avoided major disruptions so far, prosecutors and local authorities have halted a handful of facilities over safety concerns. On Monday, Marfrig Global Foods SA said 25 workers at a plant in Mato Grosso state tested positive and at least one died.

Keeping the meatpacking industry operating is a major focus of Dias. A supply-chain rupture would hurt local consumers at a time that Brazil becomes the new global virus hotspot. It could also tighten supplies in global poultry and beef markets.

“The worst scenario would be shortages,” she said. But that’s unlikely, “unless we lose control of the country.”

Meat packers such as JBS SA, BRF SA and Marfrig are distributing face masks to workers, boosting disinfection, installing physical barriers between staff, limiting groups in communal areas and in some cases hiring people to counter absenteeism.

Some companies have signed agreements with prosecutors that include commitments to test workers and not pay bonuses aimed at limiting absenteeism. Others, including JBS, have refused to sign such agreements. A single national protocol would lay out the same guidelines to all producers.

Another risk is the safety of inspectors. “If there are no inspectors, the meat plants must also close as inspection is an essential part of public health,” the minister said.

The nature of Brazil’s beef industry gives it an advantage over the highly concentrated U.S. industry in terms of minimizing the impact when shutdowns occur. Cattle in Brazil are fattened across extensive pastures, requiring a higher number of smaller abattoirs near farms.

Farm Credit

The minister’s main concern is to make sure the virus doesn’t harm small agricultural producers. She suggested the government should make credit more accessible to small- and mid-sized farmers to help them survive the crisis.

Dias, a lawmaker who’s been a minister since far-right president Jair Bolsonaro came to power in early 2019, expects Brazil to benefit from the pandemic in some ways. Agribusiness in the Northern Hemisphere is likely to be more impacted by circulation restrictions because it only has one harvest while Brazil has as many as three, she said.

But Brazil needs to address reputational challenges and solve old land regularization issues in the Amazon, for example, if it wants to overcome rising protectionism, especially in Europe, she said.

Bolsonaro has sparked global indignation over his government’s handling of deforestation and policies that prioritize business over indigenous rights. In a video released by the Supreme Court Friday, Environment Minister Ricardo Salles urged the government to push through further deregulation while people are distracted by the pandemic. Brazil is also often criticized for its loose regulation on pesticides and agro-chemicals.

The country’s deteriorating image has prompted some European agribusiness producers and lawmakers to attack a trade deal signed last year between the EU and the Mercosur bloc that includes Brazil.

“Besides a brutal ignorance on Brazilian agribusiness, Europe has antipathy toward Brazil,” Dias said. “The Europeans’ ill will is because they compete against our agribusiness and theirs is in decline.”

Dias has been at odds with some of Bolsonaro’s more radical far-right supporters, who accuse her of being too cozy with China, Brazil’s largest trade partner.

Local media outlets including UOL speculated she could be forced out after her fellow party member Luiz Henrique Mandetta was ousted as health minister after criticizing the president’s stance against isolation and support of controversial virus treatments.

“There’s gossip, but as long as the president wants me in the job, I’ll stay. If he doesn’t, life will go on.”

— With assistance by Tatiana Freitas, and Jen Skerritt