JBS is to temporarily reduce the number of workers at ten plants in Brazil to adjust to a decline in domestic beef sales in the wake of the fraud allegations that have hit the sector.
The company, one of the meat packers at the centre of the corruption allegations, is to give a leave of absence to staff in five states that could last up to 30 days.
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“JBS is reporting that it is implementing a 20-day furlough from next Monday (4 April) at ten of its 36 beef units in Brazil – one in Sao Paulo, three in Mato Grosso do Sul, one in Goias, four in Mato Grosso and one in Para. The furlough may be extended for an additional 10 days,” the company said.
“This step is necessary because of the temporary embargoes on Brazilian meat by its biggest importers, as well as shrinking sales on the Brazilian beef market in the last ten days.
“The company would like to point out that it has no choice but to adjust production volumes in order to normalise inventories of product destined for the domestic market and reschedule shipments to foreign customers that were put on hold during this period, to avoid overloading their inventory and distribution systems. JBS is making every effort to safeguard the jobs of its 125 thousand employees throughout Brazil.”
Two weeks ago (17 March), Brazilian federal police announced an investigation into alleged corruption at a number of meat processors.
Police accuse executives from large meat processing companies of paying politicians and inspectors from Brazil’s Ministry of Agriculture to overlook unsanitary practices, allowing them to manufacture adulterated products. Police claim ministry officials in the states of Paraná, Minas Gerais and Goiás acted to protect the companies.
Brazil’s federal revenue agency allege the corrupt inspections resulted in adulterated products being allowed to be sold for human consumption circulating freely in the domestic market, serve as school snacks or being exported.
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By GlobalDataThe allegations prompted a number of the major international markets for Brazil’s meat exports to block or restrict shipments from the country, although some, including China, have since relented.
The Brazilian government has attempted to emphasise the probe is focusing only specific incidents and it has sought to talk up the quality of the country’s meat industry.
However, some export markets have restrictions in place, while domestic beef sales have been affected.
Last week, JBS suspended, for three days, the production of beef in 33 units of the 36 that the company maintains in Brazil. This week, all of JBS’ domestic facilities were run but with production cut by 35%.
Earlier this week, BRF, another meat packer in the spotlight, announced changes to the management structure at the top of the company.
BRF has created two divisions – response management and business management – to “strengthen [the] national and global operations of BRF to better serve its clients and sustain growth” and to “provide quick and transparent answers to the challenges” faced since the Carne Fraca, or “Weak Flesh”, investigation and allegations were announced.
