(Bloomberg) — Carrefour SA, the prominent French grocer, has ignited fierce backlash from Brazilian officials by announcing its decision to exclude meat supplied by the South American trade bloc Mercosur from its offerings in France. This move, perceived as a form of protectionism, has stirred up significant controversy in Brazil.
In direct response, Brazil’s lower house is set to vote on a pivotal new bill this week aimed at enforcing “economic reciprocity,” as outlined by Lower House Speaker Arthur Lira. The proposed legislation stipulates that Brazil will abstain from entering any trade agreements that could adversely affect or impose limitations on its exports unless counterpart nations or trade blocs implement equivalent legal measures in their jurisdictions.
“It’s not acceptable for the CEO of a major corporation like Carrefour to stand by a declaration that virtually disregards the purchase of animal proteins sourced from South America,” Lira expressed during an event in Sao Paulo on Monday. “Brazil, along with its National Congress, business community, and citizens, must respond unequivocally to this situation.”
Last week, Carrefour’s Chief Executive Officer Alexandre Bompard announced the company’s commitment to refrain from marketing any meat from Mercosur in France, highlighting solidarity with local farmers. This decision comes amid escalating protests from French farmers against a European Union free trade agreement with Mercosur, which includes Brazil, Argentina, Uruguay, and Paraguay.
The proposed trade deal is expected to facilitate increased access for South American meat suppliers to the French market. In his statement, Bompard expressed concerns that the agreement poses a risk of flooding France with meat products that may not adhere to the country’s stringent requirements and standards.
In a show of solidarity with Brazilian beef producers, Agriculture Minister Carlos Favaro publicly supported their decision to halt sales to Carrefour SA’s local branch as a countermeasure for the retailer’s stance.
“We will not tolerate distortions regarding Brazilian products. Brazil takes immense pride in the quality of what it offers to domestic consumers and markets worldwide,” Favaro proclaimed in a post on X, formerly known as Twitter.
Major companies suspending sales to Carrefour in Brazil include JBS SA, recognized as the world’s largest meat producer, and Minerva SA. This retaliation from Brazilian meat producers against Carrefour was first reported by local media sources.
The Carrefour subsidiary’s acknowledgment of an impending boycott on Sunday indicated that this situation will likely have ramifications for its customer base. The retail giant operates over 1,000 stores across Brazil, a market that constitutes more than 20% of its global sales, according to Bloomberg data. Following the fallout, Atacadao SA, which oversees Carrefour outlets in Brazil, experienced a dip of as much as 5.5% in share value in Sao Paulo before recuperating most of its losses. JBS shares reduced their declines after an initial fall of up to 1.2%, while Minerva recorded a 1.1% drop.
On Saturday, a coalition of 44 industry groups in Brazil penned a letter denouncing Carrefour CEO Bompard’s decision, claiming that his stance represents a “protectionist approach that contradicts the role of a global enterprise with extensive operations in interconnected markets.”
The Brazilian meat industry group ABPA criticized Bompard’s remarks as “unreasonable,” arguing that they contest the credibility of meat produced in Brazil concerning compliance with French regulations. Producers are now awaiting clear communication from Carrefour that acknowledges the “quality and sustainability” of Brazilian meat, as stated by ABPA President Ricardo Santin in a recent interview.
–With assistance from Clarice Couto and Gerson Freitas Jr..
(Adds ABPA president comment in last paragraph)
**What are the key factors influencing Carrefour’s decision to halt meat imports from Mercosur?**
**Interview with Alexandre Bompard, CEO of Carrefour**
**Interviewer:** Thank you for joining us today, Mr. Bompard. Your recent announcement to stop selling meat sourced from the South American trade bloc Mercosur has garnered significant attention, particularly in Brazil. What prompted this decision?
**Alexandre Bompard:** Thank you for having me. This decision is rooted in our commitment to supporting local French farmers and ensuring that the products we offer meet our high standards for quality and sustainability. Given the ongoing protests from French farmers about the EU trade agreement with Mercosur, it became essential for us to express our solidarity while also safeguarding the integrity of our food supply.
**Interviewer:** Brazilian officials have described your move as a form of protectionism and are now contemplating legislation that would impose economic reciprocity. How do you respond to these criticisms?
**Alexandre Bompard:** I understand the concerns raised in Brazil; however, our primary responsibility lies with our customers and local producers here in France. The legislation they propose might reflect their frustration, but our commitment is to provide our consumers with products that align with their values and expectations. We hope that this decision leads to a constructive dialog on international trade practices.
**Interviewer:** The Speaker of Brazil’s Lower House, Arthur Lira, stated that it’s unacceptable for a major corporation to dismiss animal protein sourced from South America. How do you think this tension will affect Carrefour’s business in Brazil?
**Alexandre Bompard:** We respect Brazil’s strong agricultural sector and the quality of its products. However, we believe that ethical considerations regarding sourcing and consumer preferences must guide our business decisions. If this leads to a reduction in cooperation with Brazilian suppliers, it is unfortunate, but our priority remains with our French customer base.
**Interviewer:** Agriculture Minister Carlos Favaro has indicated a strong stance in favor of Brazilian beef producers. What steps will Carrefour take to reassure your stakeholders in Brazil amidst this backlash?
**Alexandre Bompard:** We are committed to maintaining open lines of communication with our stakeholders in Brazil. We value our partnerships and will continue to explore opportunities to work together in ways that benefit both parties, even if our paths diverge on certain issues. It’s crucial that we address concerns transparently to foster mutual understanding.
**Interviewer:** looking ahead, how do you see Carrefour balancing international trade relationships while supporting local markets?
**Alexandre Bompard:** It is a complex challenge, but our approach will focus on building sustainable and ethical sourcing practices while considering the needs of both local and international suppliers. We recognize the interconnectedness of markets globally, and we are committed to navigating this landscape carefully to ensure that all parties are respected and heard.
**Interviewer:** Thank you, Mr. Bompard, for sharing your insights with us today. We look forward to seeing how Carrefour navigates this significant issue.
**Alexandre Bompard:** Thank you for the opportunity.
