Investigation implicates JBS in ‘cattle laundering’

For years, JBS, the world’s largest meatpacking company, has claimed it is unable to monitor indirect suppliers and ranchers accused of illegal activities. The claims have allowed the company to dodge responsibility for ‘cattle laundering’, the well-known practice of moving cows from ‘dirty’ farms linked to illegal deforestation to reputable ones, before then sending to abattoirs, creating the appearance of a ‘clean’ supply chain. But a new investigation by Repórter Brasil, The Bureau of Investigative Journalism (TBIJ) and the Guardian has found evidence that the company, whose sales to Europe and Asia have boomed in recent years, might be directly implicated. The report found photographic evidence from July 2019 that a JBS truck hauled cattle from a farm embargoed from grazing cattle because of illegal Amazon deforestation to a clean farm with the same owner, an approved JBS supplier. 

The embargo, imposed by Brazil’s main environmental protection agency Ibama, is both a punishment and a protective measure to allow deforested land to recover.

The findings come as the Brazilian government and agribusiness are under increasing pressure from international and local investors to fight deforestation, especially in the Amazon. Under Brazil’s far-right president Jair Bolsonaro, deforestation has skyrocketed, and researchers expect this year’s fire season to break records. 

In a statement, JBS said the report “does not reflect its operating standards”. The company also told TBIJ it had investigated the evidence and found that the collection farm was not shown to be within any embargoed area, according to its own system. JBS said it introduced a new system on July 1 that it expected to make “a significant impact” in the reduction of cattle laundering. “We are working towards a completely transparent supply chain,” the company said.

The investigation uncovered a July 2019 Facebook post by driver picturing him in a JBS uniform alongside images of at least four four or five trucks in transit from one farm to another. In the post, the driver says his team is transporting cattle from the Estrela do Apurinã farm, which was fined over 2,200,000 BRL (US$420,000) in 2012 for illegal deforestation, to Estrela do Sangue, which supplies JBS.

According to Repórter Brasil, 39% of the Estrela do Apurinā farm is under embargo, leaving 61% that could rear cattle legally. Documents show 7,000 cattle were transported between the Estrela do Apurinā and Estrela do Sangue farms between June 2018 and August 2019, the report says.

The image was cross-checked against official cattle transport records showing that Estrela do Sangue transferred roughly 3,000 cows to two JBS processing plants in the state of Mato Grosso between November 2018 and November 2019. 

The two plants — in the cities of Juína and Juara — are approved to export beef to Hong Kong.

According to data released by supply chain monitoring initiative Trase, almost 4,000 tonnes of beef from JBS logistics hubs in those two cities ended up in Hong Kong in 2017, almost 2% of sales to that destination that year. 

In recent months, JBS has become a major beef supplier to China, as growing incomes changed traditional diets and, more recently, the swine fever outbreak pushed local suppliers to source other forms of animal protein from foreign markets.  

If China signaled that it cared about this, it would make a difference

Brazil’s beef exports to China grew 53% in 2019 and continued to grow in 2020. The result was that, even as deforestation rates soared last year, JBS’s market value shot up. Although, more recently, the Covid-19 pandemic has curbed gains. 

Researchers have long suspected that JBS had a role in cattle laundering. Paulo Barreto, a senior researcher at Imazon, an Amazon-based think tank that tracks deforestation, said that the evidence in the report takes the connection to a new level. 

He said the findings merit an investigation by Brazilian authorities and investors demanding better practices from agribusiness companies.

“I don’t have expectations the company will make any great changes unless there are concrete implications,” he said.

JBS has previously said it uses an audit conducted independently by DNV GL, a Norway-based auditing company, that concluded all its direct suppliers in the Amazon meet socio-environmental criteria. 

But the auditor always said the company has failed to track its indirect suppliers. In messages exchanged with Amnesty International following a recent investigation, DNV representatives stressed that its audit does not represent evidence of good practices in JBS’s supply chain.

JBS has been implicated in using suppliers connected to illegal practices in the past. In April 2017, Ibama, Brazil’s main environmental protection agency, embargoed several of JBS’s plants and one exporter, as it faced allegations it bought 20,000 cattle from farms that had been punished for illegal deforestation. But favourable court decisions meant JBS has yet to pay any fines.

Barreto said no previous investigations or threats from investors have yet resulted in significant punishments against JBS. But he says Chinese buyers are in a privileged position to force the company to make changes since farmers often dismiss investigations and complaints by international NGO’s and investors from Europe. 

“They normally say: ‘we will just sell to China instead,’” he said. “If China signaled that it cared about this, it would make a difference.”