China clears 25 Brazil meat plants for export, lifting shares

BRASILIA/SAO PAULO (Reuters) - China granted export licenses to 25 Brazilian meatpacking plants, Brazil’s Agriculture Ministry said on Monday, allowing the country’s fast-growing protein industry to feed more people in the Asian nation where disease has hurt local supply.

FILE PHOTO: Meat processing company BRF SA's logo is pictured in its unit in Fortaleza, Brazil January 10, 2019. REUTERS/Paulo Whitaker/File Photo

The news drove up the stocks of licensed-plant owners BRF SA, Minerva SA and Marfrig Global Foods SA.

Brazil’s Agriculture Ministry said the plants - including 17 for beef exports, six for chicken, and one each for pork and donkey meat - “can already export immediately.”

China is Brazil’s largest export market for beef, chicken and pork, with demand surging since last year as an African swine fever outbreak has decimated China’s pig herds.

Brazilian pork exports to China soared 48% in the first eight months of the year, according to Brazil government statistics, while beef exports to China are up 17% and chicken exports rose soared 37%.

Orlando Ribeiro, trade and foreign relations secretary at Brazil’s agriculture ministry, said at an event in Sao Paulo that the government would welcome additional plant approvals, suggesting the country might be able to streamline the evaluation process by “pre-listing” some meatpacking plants, a move that requires Beijing’s approval.

Under that system, the Brazilian government would create and audit a list of potential suppliers to China who could be preapproved if they meet that country’s sanitary and quality requirements, he said.

The expanded opportunity in China comes as Brazil’s meatpackers face tougher scrutiny from markets such as Europe over how a boom in cattle ranching has contributed to deforestation and fires in the Amazon rainforest and other sensitive habitats.

Brazil’s biggest meatpackers say they monitor their supply chains to avoid buying cattle from illegally deforested land.

Brazil meatpackers Minerva and Marfrig said in separate securities filings that they each have two plants authorized to export beef to China.

In a list released by the ministry, a BRF plant in Mato Grosso was authorized to export chicken and pork to China.

Minerva said its two newly authorized plants have a combined capacity of 3,500 head of cattle per day.

Marfrig’s two plants are the Tangara de Serra and Varzea Grande units in the state of Mato Grosso.

Marfrig shares closed 3.9% higher on Monday, while Minerva shares closed up 5.6%.

BRF’s shares rose 3% before paring gains to settle up 1.5%. All far outperformed the broader Bovespa index, which closed 0.24% higher.

Reporting by Jamie McGeever and Jake Spring in Brasilia and Ana Mano in Sao Paulo; Editing by Richard Chang and Matthew Lewis