A Meat Giant Is Anxious as Virus Shuts Two Brazil Chicken Plants

(Bloomberg) —

Two giant meat companies in Brazil, the world’s top chicken exporter, were ordered to shut a poultry plant in the past 24 hours, and analysts warned more closures loom as the coronavirus threatens food supplies.

On Thursday, a JBS SA unit in Passo Fundo, Rio Grande do Sul state, was forced to halt operations for 15 more days by the city government after a two-week shutdown. On Friday, BRF SA’s Lajeado plant was ordered to close for 15 days by a judge, starting May 11. The company said it will appeal the order. Each factory has more than 2,500 workers.

“Brazil may be at an initial process of plant closures,” Wagner Yanaguizawa, an analyst at Rabobank Brazil, said in a telephone interview. “We are in a transition moment. The first coronavirus impact is on demand, and the next stage is an inevitable effect on production.”

A wave of virus outbreaks at meat plants in the U.S. ruptured the nation’s supply chain for protein, sparking shortages at grocery stores. Shutdowns at major slaughterhouses started in early April. Beef and pork prices soared, and farmers were forced to destroy tens of thousands of animals.

Rio Grande do Sul’s labor prosecutors are investigating other cases, including 11 with at least one irregularity uncovered, said Priscila Schvarcz, state labor prosecutor. Around 250 cases of Covid-19 were confirmed among workers from slaughterhouses in the state, she said. That doubled from the number reported by the health secretary in late April.

The JBS plant accounts at least 30 of the cases, while around 18 were reported at BRF’s unit. Another JBS chicken plant in Trindade do Sul, in the same state, has seven cases confirmed, according to a labor prosecutor. In the neighboring state of Santa Catarina, JBS and BRF face outbreaks at plants in Ipumirim and Concordia municipalities.

The companies didn’t confirm the number of confirmed cases, and they plan to appeal the closure orders, saying all the necessary measures for worker heath were adopted.

‘Isolated’

The shutdowns are considered “isolated” by Brazil’s authorities, though more closures “will happen,” Luiz Rangel, deputy coordinator at the Covid-19 commission from the Agriculture Ministry, said in telephone interview. “The virus spread is coming, and the slaughterhouses will suffer with that.”

Shutdowns probably won’t rise to the level of U.S. closures, which have triggered meat shortfalls, Rangel said. Brazil’s government built a protocol to deal with the outbreak and to resume operations faster than the U.S., he said.

The South American nation has learned about fighting the virus from rival producers, Rabobank’s Yanaguizawa said. Still, there’s no guarantee that the strategy will keep companies open for business should more workers fall ill, he added.

Meat companies moved early to reduce the virus risk. They curbed groups in cafeterias and transportation, while distributing masks, boosting disinfection and building physical barriers between workers. BRF and JBS have hired more people, which may help counter absenteeism.

Chicken-plant workers face a higher virus risk than those at beef or pork factories because more people work in poultry slaughter.

JBS, the world’s biggest meat producer, and BRF, Brazil’s top poultry and pork exporter, are both based in Sao Paulo.

Brazil’s first coronavirus case was confirmed in late February, behind the curve in Europe and the U.S. Now, the South American nation is fast emerging as the new global hotspot for the pandemic, trailing only the U.S. in daily deaths. The number of infections has almost tripled in the past two weeks to over 145,000, leaving 9,897 dead, government figures showed on May 8.

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