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Meat war? Hong Kong grapples with ban on Brazil imports
A meat price war looms in Hong Kong, according to an industry source on Wednesday, a day after an immediate suspension of all meat imports from Brazil over health concerns with talk percolating that supply contracts may be torn up and tons of meat thrown away.
The move by Hong Kong's Food and Environmental Hygiene Department (FEHD) came on Tuesday, together with several other countries, including China, the European Union and Canada, which had announced partial or full import bans on Brazilian meat.
Restaurants and meat suppliers scrambled in Hong Kong on Wednesday after the surprise ban that has called into question the fate of existing stocks of chicken and other meats that for now are no longer on the menu at some establishments until clarity is gained, according to an industry source.
"Hotels and restaurants have contacted importers to look at the possibility of tearing up contracts, which would result in hundreds of tons of virtually worthless meat and trigger a price war," said a Hong Kong-based meat industry executive who declined to be named.
"Hong Kong imports a vast majority of meat from overseas. Other countries can cope but Hong Kong can't."
China is the largest consumer of Brazilian meat, followed by Hong Kong, according to Reuters.
The FEHD has not provided any more details about the ban, and has not responded to CNBC's request for comment.
The source added that importers are "furious at the FEHD's move to ban all Brazilian imports" and "angry that the FEHD contacted restaurant chains on Monday, but importers heard about the ban from the press."
Hong Kong importers have also had to deal with a lot of uncertainty and figure out what they needed to do in response, the source said.
The scandal stems from a two-year Brazilian police investigation, which revealed how meat-packers paid off inspectors and politicians to overlook practices which include processing rotten meat and shipping exports with traces of salmonella.
The police named BRF (Sao Paulo Stock Exchange: BRFS-BR)and JBS (Sao Paulo Stock Exchange: JBSS-BR), along with small meat producers, as parties involved in the investigation last Friday. JBS is the world's largest meat producer and BRF is the biggest poultry exporter.
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