Brazil stops BRF poultry exports to EU

SAO PAULO (Reuters) - Brazil has temporarily halted production and certification of poultry exports from scandal-hit food processor BRF SA to the European Union, the company and the country’s Agriculture Ministry said on Friday.

Meatpacking company BRF SA's logo, which is one of the biggest food companies in the world, is pictured in Lucas do Rio Verde, Mato Grosso state, Brazil, July 27, 2017. REUTERS/Nacho Doce

The ministry expects to resolve the temporary ban on poultry exports in about 30 days, according to Luiz Eduardo Rangel, head of Brazil’s food safety service. BRF is a target in an investigation, accused of engaging in fraud to evade food safety checks.

The export suspension affects 10 out of 35 BRF plants in Brazil, BRF said. The company said Brazil’s Agriculture Ministry has scheduled a meeting next week in Brussels to clarify and review the measures.

“We will negotiate in an atmosphere slightly more favorable after today’s export certification suspension,” Rangel said, adding the temporary export halt maintains the credibility of Brazil’s inspection services.

After BRF announced the export stoppage on Friday morning, its shares fell to their lowest since 2011. They erased much of that loss and were down by less than 1 percent in later trade.

BRF, Brazil’s largest chicken processor, said the ministry suspended production and certification “preemptively.” The company said its products shipped to Europe before March 16 could still be sold and consumed without restriction.

This week, a shareholder sued BRF in the United States, accusing it of concealing its involvement in food safety fraud.

The temporary suspension will affect less than 5 percent of the company’s total sales volumes, according to a bank analyst who cannot speak to the press.

Still, the analyst said, the suspension is undesirable considering the company needs to improve margins and reduce debt.

Brazilian chicken companies exported more than 5 million tonnes of that kind of meat to the European Union in the last 10 years, trade group ABPA said in a statement on Friday.

“Brazil is a long-term partner of the European Union. We expect a solution is found to resume exports,” ABPA said.

BRF said it shipped 278,000 tonnes of poultry and processed products to Europe last year. It declined to provide an exact breakdown of how much was shipped out of its plants in Brazil.

Shares tumbled more than 6 percent to a session trough of 23.70 reais in early morning trading, the lowest level since August 2011. They later recovered to 25.06 reais, down about 0.8 percent.

Reporting by Ana Mano and Paula Laier; Editing by Bernadette Baum and David Gregorio