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European Union blocks some Brazilian poultry exports

Mike Wilson 042618JBSBrazilianSlaughterhouse1540x800.jpg
Brazil-EU chicken kerfuffle could lift U.S. commodity demand.

As you wait to get corn planted, consider the upside news that your market could grow this year, in the form of broilers and turkey exported to the European Union.

That’s because while you stare down the gun barrel of possible tariffs on your beans and corn to China—a major market—20 of the biggest Brazilian poultry slaughterhouses have been banned from exports to the EU. So maybe U.S. poultry producers will get a bigger beak-ful of the EU market to fill in the gap. After all, poultry feed rations are basically corn and beans. And selling more chicken to Europe means selling more corn and beans—by way of those chickens—to the EU.

Big market at stake

Brazil’s 2017 poultry sales to the E.U. came to 201,000 tonnes, according to an industry association. That’s around 7.5% of all Brazilian poultry exports. If Brazil gets knocked out of one of its top bird markets, the reason will have officially been sanitary issues, though the Brazilians claim the supposed sanitary problems are really just protectionism masked as a health issue (artificial trade barriers are a favorite trick of the EU).

The EU claims the 20 big Brazilian poultry plants are putting European consumers at risk for salmonella.

This all springs from ongoing corruption in Brazil’s meat inspection service (see my blog on this from last Fall.) The “weak flesh” scandal I wrote about was compounded by a second federal investigation ending last month—this one using the code name ‘Operation Trapaca’ (Trapaca means ‘cheat’ in Portuguese; you’ve got to give the Brazilian authorities credit for cool code names). It surfaced evidence that one of the two big Brazilian poultry exporters cited in the EU’s banned list had faked laboratory results of tests for salmonella.

Not buying it

But the Brazilians aren’t buying that reasoning. The Brazilian Animal Protein Association fired off a statement “lamenting” the EU’s decision, and saying it had nothing to do with food safety. They said Brazil would take the issue up with the WTO. The association called the EU’s concerns “groundless.”

While the EU action should cut Brazilian domestic chicken prices as more Brazilian birds stay in Brazil, and help combat inflation, poultry is Brazil’s sixth-largest source of export income. According to Brazil’s National Agriculture Confederation, 130,000 farm families produce poultry, a domestic industry generating 4.1 million jobs according to O Globo, a Brazilian newspaper.

Most of the 20 exporting slaughterhouses affected are owned by two big players in Brazil’s poultry sector, and the national animal protein association says some 5,000 workers from the affected plants have already been laid off.

Any salmonella detected in Brazilian chicken, one market observer says, is the kind that dies when the bird is cooked at a temperature above 160º F, just as the USDA demands for all chicken cooked in the United States. They say salmonella testing is extensive, and that chicken is the number one meat consumed domestically—with no problems.

But problems for Brazil could mean opportunities for that corn you’re itching to get planted—just as the Brazilians are hoping to make some money with their whole soybeans in the wake of the U.S.-China trade flap.

The opinions of the author are not necessarily those of Farm Futures or Farm Progress.

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