Refrigerators have a strong fall on the stock market after signals from Europe

The shares of meatpacking companies closed on a fall on the Stock Exchange this Wednesday (17), after a proposal by the European Commission to ban the import of agribusiness products considered strongly linked to deforestation and forest degradation.

Minerva shares led losses, down 3.34%, traded at R$8.67, while JBS shares retreated 1.73%, at R$36.35.

Marfrig’s shares, on the other hand, had a devaluation of 1.09%, quoted at R$25.43, and those of BRF retreated 0.62%, at R$22.49. The Ibovespa closed down 1.39%, at 102,948 points.

The European Commission proposed on Wednesday (17) to prohibit the importation of agribusiness products considered strongly linked to deforestation and forest degradation, among them some of the most exported commodities by Brazil, such as soy and beef.

According to Paschoal Paione, commodities manager at Garin Investimentos, the announcement from Europe weighs even more on the sector’s shares, which had been under pressure since mid-October, after China maintained its veto on the purchase of Brazilian beef.

“Minerva has a sharper decline as it is the largest exporter of cattle originating in Brazil”, says Paione.

He recalls that Marfrig has its plant based in the United States, and JBS and BRF have the most diversified business in the pork and poultry fronts.

“Our Stock Exchange is going through a phase of realization, resulting from political and economic uncertainties, and with investors focusing on fiscal risk. This situation increases risk aversion”, says Pedro Galdi, analyst at Mirae Asset.

“We have about 2.5 million cattle raisers, and none of the three slaughterhouses monitors their indirect suppliers well, which can be a problem, because they could end up producing cattle in areas considered to be deforestation, which is precisely what Europe does. he doesn’t want to,” says Rodrigo Crespi, a market specialist at Guide Investimentos.

The necessary change in terms of internal controls and governance necessary for companies to adapt to the requirements of international investors should generate an increase in company costs, with negative pressure for the profitability of operations, forecasts Crespi.

Results of a 2020 audit by the Federal Public Ministry of Pará, published in October 2021, indicated that about a third of the cattle purchased by JBS between January 2018 and June 2019 would have come from areas with deforestation problems or other non-conformities.

According to the auditor, JBS factories in the Amazon region would have purchased 940,617 heads of cattle in the period, coming from the State of Pará, with 31.99% showing evidence of irregularity. This represents more than three times the 9.95% tolerance index stipulated by the MPF-PA for the 2020 audit.

Also, in July of last year, global asset manager Nordea Asset Management excluded investments in JBS shares from all of its funds. The risk of deforestation in the supply chain, corporate governance and anti-corruption measures, as well as employee health and safety in relation to Covid-19, were identified among the reasons for the disinvestment at the time.