According to BRF SA (ADR) (NYSE:BRFS), Brazil’s agricultural ministry has temporarily suspended the production and certification of poultry exports from the BRF food processor having been hit by a food safety scandal. BRF said the ban only affected 10 out of 35 of its plants in Brazil.

BRF SA suspension

Through Luiz Rangel, the Brazil’s head of food safety, the ministry said that it anticipates to resolve the ban on poultry exports within a period of 30 days. The company is a target in an investigation having been accused of engaging in fraud to evade food safety checks. The agricultural ministry also stated that it scheduled a meeting to clarify and review the measures put in place.

After announcing the suspension for its export, BRF’s shares fell to their lowest since 2011. The company however managed to minimize much of the impacts that led to this loss and later stabilized to be only 1% less from its previous normal trade value. The head of food safety in Brazil, Luiz Rangel, said that they will negotiate with BRF in a slightly favorable environment after the suspension of the export certification. This however they believed would help maintain Brazil’s inspection services.

BRF suit

BRF’s woes began when one of the company shareholders sued BRF in the US allegedly for involvements in the food safety frauds. Some analysts feel the suspension is not desirable at the moment since the company still needs to reduce its debts and improve its margins. However, they still feel the suspension will affect less than 5% of the company’s sales volume.

ABPA in a statement said that, the Brazilian Chicken companies were able to export more than 5 million tonnes of meat to the European Union over the last ten years. BRF alone said that it shipped up to 278,000 tonnes of poultry and processed products to Europe.

The company however did not provide a breakdown for the shipments out of its plants in Brazil. However, the country being a long term partner to the European Union, it is expected that a solution shall be quickly found to enable the resumption of the exportations.

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