August 6, 2010
 

Brazil Agriculture Ministry suspends Brasil Foods' raw chicken sales

The government of Brazil has suspended the chicken sales of Brasil Foods SA as of August 2 after excess water was found in the meat, thereby increasing weight.

The company's shares plunged the most in a month. They will appeal the suspension saying that the restriction has "no legal basis" and that it questions the government's scientific criteria for the assessment.

"It's really a blow for the company. The company will lose a lot of time waiting for the government to verify and liberate the product," Matheus Almeida, an analyst for the poultry and hog industry at the University of Sao Paulo's Cepea research unit.

Brazil's Agriculture Ministry has stepped up inspections to prevent companies from pumping water into meat to increase the weight, which allows them to charge more for the product, Almeida said. Brasil Foods supplies about 30% of Brazil's chicken and 45% of exports, he said. Chicken accounted for about a quarter of the company's revenue from raw meat sales in Brazil in the first quarter.

Brasil Foods fell 0.4% at the close of trading in Sao Paulo at 4:07 p.m. New York time. It earlier dropped as much as 2.9%, the most since July 5.

The restrictions will end in about a week, Nelmon Oliveira, head of animal inspection at the Agriculture Ministry. The company did not break any laws and is revising the processes that led to the suspension of its chicken sales.

The Agriculture Ministry also suspended sales of raw chicken by Rigor Alimentos Ltda. and Cooperativa Agroindustrial Consolata. Copacol, as the cooperative is known, said that it did not interrupt sales or exports of chicken and denied the Agriculture Ministry found irregular amounts of water in its products. Messages left at Rigor seeking comment were not returned.