Brazil meat scandal could benefit Canadian producers
Beef and pork prices could spike, industry might make inroads into Asia: analysts
Canadian agriculture producers could see higher prices for beef and pork this year depending on the outcome of an ongoing tainted meat scandal in Brazil, analysts say.
The South American country’s meat-packing industry is currently the subject of a federal police investigation into allegations that food safety inspectors were offered bribes to permit the sale and export of rotten meat. Since news of the criminal probe broke a week and a half ago, approximately 25 countries around the world have either increased inspections, stopped accepting meat from the 21 plants involved or temporarily suspended meat imports from Brazil altogether.
It’s unclear exactly what effect the scandal will have on global agriculture markets since the situation changes daily. China — Brazil’s biggest customer for meat exports — closed its borders last week to product from that country but has since lifted its blanket ban, as have Hong Kong, Egypt and Chile. However, the European Union is maintaining restrictions against products from the 21 plants and, according to a Reuters report, pressure is mounting on the United States government to join other nations blocking shipments of raw beef from Brazil.
Canada, which has suspended imports from two of the implicated plants, imports very little Brazilian meat product. But Brian Perillat — manager and senior analyst at Canfax, an arm of the Canadian Cattlemen’s Association — said Canadian producers could benefit from a price bump depending on how the scandal plays out.
“Australia and New Zealand are major suppliers to the North American market, and they’re probably going to see increased demand for their product in Asia and maybe the EU. So that could tighten North American beef supplies, which could help our cattle prices,” Perillat said.
Ron Davidson of the Canadian Meat Council said a price jump for both beef and pork is possible, but he cautioned that becomes less likely if more countries follow China’s lead and lift their blanket bans.
“Even if they have some plants out of the market, Brazil is still a huge exporter of meat products. They’ve got lots of other plants that are still eligible,” he said. “The bottom line is, unless there’s a lot less meat going out of Brazil, there’s not likely to be a big (price) impact for us.”
But Sylvain Charlebois — dean of the faculty of management and a professor in food distribution and policy at Dalhousie University — said Canadian agriculture could benefit in other ways. He said the Canadian beef industry offers a higher-cost, higher-quality product than Brazil and has the potential to make inroads into lucrative Asian markets as a result of the scandal.
“They (Asian consumers) don’t understand the difference between Brazilian beef and Canadian beef. Well, we can tell them now — our inspectors aren’t corrupt,” Charlebois said. “So there is an opportunity there, it’s just a question of whether we will embrace it and move to develop new markets.”
There’s no doubt Brazil’s tainted meat scandal will harm that country’s industry, said independent agriculture analyst Kevin Grier. Already known for a lower-cost, lower-quality product, the scandal will likely ensure Brazilian beef and pork retains its status primarily as a top choice for only the most price-conscious customers.
But Grier cautioned against viewing the scandal as an opportunity for Canada, warning that anytime a food safety scare makes it into the news, there is the potential for it to reduce consumer confidence for meat in general.
“It’s not good for anyone, anytime you have a meat scandal,” Grier said. “People have a tendency to say ‘oh, this is going to be good for Canada.’ Well, no. This kind of thing in the news doesn’t help anybody.”
One of the companies implicated in the tainted meat scandal is JBS, the parent company of JBS Food Canada, which operates the packing plant at Brooks. The Brazilian company has seen its share price fall 10 per cent since news of the tainted meat investigation broke on March 17.
However, Charlebois of Dalhousie University said JBS is a massive global company and it’s very unlikely the scandal will have any effect on that plant. He said in this case, the issues at play have more to do with corrupt Brazilian officials than anything else.
“The main issue revolves around the regulatory framework in Brazil related to inspections,” Charlebois said.