Federal government placed a preventive embargo on sales to certain countries following confirmation of case in Rio Grande do Sul
07/19/2024
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Carlos Fávaro — Foto: Leo Pinheiro/Valor
The Brazilian government has preventively suspended sales of chicken meat, eggs, and other poultry products to some importing countries following confirmation of an outbreak of Newcastle disease on a commercial farm in Anta Gorda (Rio Grande do Sul).
Sales of poultry and poultry products from all over Brazil to Argentina and European Union countries have been temporarily suspended. The self-embargo of sales to 32 other markets, including China, is for specific poultry products from Rio Grande do Sul only.
There are also countries to which exports of chicken meat and other products originating in regions 50 km from the outbreak site are suspended. The restrictions follow the pre-established requirements in the International Health Certificates (ISC), agreed with each importing country. Valor learned that there may be changes.
Anticipating this scenario of export restrictions, investors drove down the shares of the meatpackers on exchange B3 on Thursday and led BRF, JBS, Marfrig, and Minerva to lose a combined R$6 billion in market capitalization
The outbreak of the disease was confirmed on Wednesday on a commercial farm. According to a market source, the poultry farmer is part of the integrated chain of BRF, which has slaughterhouses in Marau and Lajeado (Rio Grande do Sul)
After a meeting with farmers in Porto Alegre, Agriculture Minister Carlos Fávaro said on Thursday that the focus seemed to be an “isolated case”, but admitted that there could be restrictions from importers.
“As the disease needs to be notified to the World Organization for Animal Health (WOAH), it could lead to trade restrictions and embargoes,” said the minister. According to Mr. Fávaro, the government has already contacted all the buying markets to report the situation.
The last time Brazil had an outbreak of the disease, which is caused by a virus, was in 2006.
JBS, which owns Seara, did not immediately respond to a request for comment. BRF said that the position would be taken by the sector, by the Brazilian Animal Protein Association (ABPA). The two companies are the country’s largest chicken exporters.
ABPA and the Rio Grande do Sul Poultry Association (Asgav) said in a statement that the federal and state authorities acted quickly to identify the case and halt the farm, ensuring that no birds left the place. “The official protocols established to mitigate the specific situation have been activated and the surroundings are being monitored,” they said.
On the stock exchange, BRF was the most affected company in the sector, losing R$3 billion in one session. As a result, the company’s market capitalization fell to R$35 billion. JBS then lost R$1.8 billion and its market capitalization reached R$69.8 billion.
Considering a scenario of export restrictions, Gustavo Troyano and Bruno Tomazetto, with Itaú BBA, said in a report that “the operations of BRF and Seara will probably be affected by a scenario of oversupply in the domestic markets”.
The two companies would have to redirect shipments, increasing the product mix of the Rio Grande do Sul units for the domestic market, said Citi analysts Renata Cabral and Tiago Harduim.
XP Investimentos noted that neither BRF nor Seara have plants in Anta Gorda. BRF has three poultry plants in Rio Grande do Sul, while Seara has only one. The nearest BRF plant is located approximately 55 km from the municipality with the focus, while the Seara plant is around 80 km away. Thus, the impacts would be indirect and market-related.
BRF’s parent company, Marfrig, also lost R$1 billion on B3, and its market capitalization fell to R$10.5 billion.
Despite having no exposure to the poultry segment, Minerva felt the pressure on a bad mood day in the market. The company lost R$190 million in market capitalization, to R$4 billion.
Minister Fávaro said that the outbreak of Newcastle disease was identified in just one bird from a commercial farm with 14,000 animals in Anta Gorda.
After a meeting with farmers in Porto Alegre to discuss the situation of those affected by the floods in May, he said that the other birds on the property had no symptoms and were being monitored. “We think it’s an isolated case. There was a hailstorm on the property, the roof of the farm collapsed, and 7,000 animals died. The remaining animals show no symptoms of the disease,” he said.
According to Mr. Fávaro, the area of occurrence is isolated, and no spread of the virus has been identified on the property or in its surroundings. “It’s important to emphasize that we haven’t yet assessed it as an epidemic because it’s one animal that was found, from an accident that occurred on this farm, in a total of 14,000 animals,” he said.
The biosafety protocols provide for the sacrifice of other birds in the event of contamination. Still, when he made the statements, the minister noted that there would only be a cull if the virus spread, which would not have happened.
Valor has learned, however, that the cull of the animals at the farm in Anta Gorda will begin soon. The measure is indemnifiable by the state’s Sanitary Defense and Development Fund (Fundesa), but there is a possibility that BRF will assume the costs to speed up the process. The measure could speed up the extinction of any possible trace of the outbreak in the remaining animals.
*Por Rafael Walendorff, Nayara Figueiredo — Brasília, São Paulo
Source: Valor International