By Ana Mano
SÃO PAULO (Reuters) - JBS SA, the world's largest meatpacker, has vowed to keep the world fed during the coronavirus pandemic. Executives say the company has added more than 15,000 new workers in Brazil this year to crank out cuts of chicken, pork and beef, a lot of it for export. The meat giant's $629 million second-quarter net profit was almost twice what analysts expected.
But that windfall has come at a cost: More than 4,000 JBS employees in Brazil are known to have tested positive for coronavirus and at least six have died from COVID-19, according to records from local health authorities and information gathered by prosecutors and three employee unions investigating the company. Outbreaks have struck at least 23 plants in seven states, prosecutors, health officials and union representatives told Reuters, helping to fuel the pandemic across South America's largest country.
JBS, based in São Paulo, denied wrongdoing. The company repeatedly has defended its response to the pandemic in Brazil, saying publicly that the health of its workers is the "principal priority." It declined to comment on infections and fatalities, saying it shares COVID-19 data only with authorities.
With more than 4.1 million confirmed coronavirus cases, Brazil trails only the United States and India in the size of its outbreak; almost 127,000 Brazilians have died. Some JBS plants have become a locus of community spread, Brazilian health officials and prosecutors said.
JBS's initial brush with the virus came in its U.S. operations in March when it cut production at a Pennsylvania beef plant after managers displayed flu-like symptoms. The temporary closing of two JBS facilities due to major outbreaks, one at a Colorado beef plant, the other at a pork facility in Minnesota, also made headlines.
Less well-known are its difficulties in Brazil, where the company has become a magnet for litigation. Since April, prosecutors in some of the nation's biggest agricultural states have filed 18 lawsuits in the country's specialized labor courts to force JBS to implement stricter worker protections in at least 17 of the meatpacker's Brazilian plants that have experienced coronavirus outbreaks.
Other meatpackers, too, have battled the virus in their plants. Brazil-based companies including Marfrig and BRF have reached agreements with prosecutors to conduct systematic, ongoing testing of their workers to minimize spread and keep operating.
JBS, in contrast, largely has resisted prosecutors' calls to perform such testing, which is not expressly required under Brazilian law.
"There is no obligation coming from the government, the regulatory or the health agencies for meatpackers to carry out tests," JBS said in a statement.
Reuters reviewed judges' rulings and information submitted by prosecutors as part of their JBS investigations. The news organization also interviewed more than 30 people with knowledge of the infections at JBS plants in Brazil, among them prosecutors, former and current health officials, union leaders and workers.
Among the claims made by prosecutors as well as by government labor inspectors who documented conditions at two JBS plants: The virus spread at JBS because the company did not perform its own workplace testing, failed to provide frontline employees with sufficient masks and other safety equipment, and did not quickly isolate workers who tested positive or showed symptoms of COVID-19.
Prosecutors are seeking rigorous testing and quarantine protocols, adequate personal protective gear and greater spacing between laborers in the Brazilian meat factories. They are also asking JBS for damages ranging between 3 million reais ($566,091) and 20 million reais ($3.77 million) to help local communities near most of the affected plants procure medical equipment and fund social projects.
"JBS is a world leader in its industry and should set an example," said Heiler Natali, a prosecutor overseeing legal action against the company in southern Paraná state. "JBS does not want to test workers and take responsibility."
The legal disputes resulted in the temporary shutdown of six JBS plants in Brazil this year, according to prosecutors.
JBS said only five of its hundred-plus Brazilian facilities were affected by the shutdowns, and that the sixth factory cited by prosecutors was never closed.
The sixth plant is a pork operation in Três Passos in southern Rio Grande do Sul state. A local labor judge ordered that plant to furlough with pay for 14 days all workers who had tested positive for COVID-19, and to test the rest for coronavirus, according to a June 22 court order seen by Reuters.
Some 40% of that facility's workforce of 1,017 tested positive for coronavirus, and one died, according to prosecutors.
JBS declined to comment on pending litigation. It defended the measures it has taken, telling Reuters that, among other steps, it has hired consultants to advise it on health protocols such as proper physical distancing at plants. The company in July arranged for mass testing of workers at a pork plant in the southern city of Dourados in southwestern Mato Grosso do Sul state under a deal worked out with prosecutors.
Chief Executive Officer Gilberto Tomazoni said on an August 14 earnings call that he was "proud" of JBS's response to the crisis, which he said included $400 million in investment worldwide to safeguard workers and communities surrounding its facilities.
All told, JBS operates 135 facilities in Brazil, including beef, chicken, pork and leather plants, as well as offices and distribution centers. Those operations account for about one-fifth of its global revenue. JBS employs 240,000 people worldwide, including 135,000 in Brazil.
BROKEN PROMISES
Coronavirus is the latest headache for JBS, which has been rocked by graft and food-safety scandals in recent years. Those woes battered its stock price, pushed back a coveted U.S. share listing and led to massive fines.
Global demand for animal protein has bolstered JBS, though. It reported record profits last year. When the virus hit in early 2020, the incentive to keep its Brazil plants running was high. Shutdowns at its U.S. facilities led to production cuts in that key market. A weakened Brazilian currency, meanwhile, made meat produced in Brazil cheaper for foreign buyers. JBS' Brazilian beef exports to China, for example, rose by 53% in dollar terms in the second quarter. The company sells in 190 countries.
In a March conference call, CEO Tomazoni promised investors he'd keep the product flowing, but said employee health would come first. He announced measures for JBS plants worldwide, including paid furloughs for employees in high-risk groups, deep cleaning of factories and increased spacing on company buses that transport workers to its plants.
Tomazoni said those actions might not be implemented in all countries due to local laws, but JBS later confirmed to Reuters that all the steps mentioned would apply in Brazil. In addition, Tomazoni said on that call that JBS would screen its Brazilian workers for fever, vaccinate them for H1N1 to boost their immunity and increase employee spacing in common areas of plants.
In Brazil, JBS has not always followed its own pledges, according to court documents and interviews with prosecutors, unions and employees.
One example is a mid-May audit by government labor inspectors of a JBS chicken plant located in Ipumirim, a city in southern Santa Catarina state. The audit report, reviewed by Reuters, found that JBS sent at least one plant employee with a confirmed coronavirus infection back to work, and kept 42 workers with underlying conditions such as hypertension on duty -- seven of whom later tested positive for COVID-19.
Inspectors found 86 confirmed COVID-19 cases at Ipumirim after reviewing workers’ medical records, representing 6% of the facility's workforce, their report said.
JBS declined to comment on the report.
A JBS worker at a beef plant in Colíder, in Mato Grosso state, became the first confirmed COVID-19 case in that town in May, according to public health data cited by prosecutors in court documents. Of the facility's 602 workers, 84 had tested positive for coronavirus as of June 17, an infection rate almost 12 times higher than that of the town itself, prosecutors alleged.
JBS denied wrongdoing at Colíder. It said it followed federal rules as well as advice from renowned medical institutions to deal with potential infections there.
At a beef facility in the city of Araputanga, also in Mato Grosso, prosecutors said the situation was “out of epidemiological control,” with 51 infections among a workforce of 1,070, court filings dated Aug. 4 show.
JBS disputed the Araputanga infection tally, but did not elaborate.
WORKING 'SHOULDER-TO-SHOULDER'
Brazil's meat sector, like that in much of the world, has been hit hard by COVID-19. Federal health officials in Brazil do not track cases by industry, so the total number of meatpacking infections is unknown. National food workers' union Contac-CUT in August estimated that as many as 25% of the nation's 500,000 slaughterhouse workers had been infected, based on its surveys of local chapters.
The Brazilian Association of Animal Protein (ABPA), an industry group representing pork and poultry processors, called those figures "disinformation" based on estimates.
Prosecutors allege JBS has lagged rivals in implementing steps to thwart coronavirus at its facilities.
Marfrig and BRF, both headquartered in São Paulo, are among 30 firms operating a total of 98 slaughterhouses and employing more than 185,000 people that reached settlements with prosecutors in recent months that largely enabled them to keep operating.
A key commitment agreed to by all those companies: They would pay for ongoing, routine testing of workers to spot cases early. Marfrig said it started testing all its 18,000 employees on June 1. BRF, which employs about 90,000 people in Brazil and is the nation's largest chicken exporter, told Reuters it has conducted 11,000 tests at its Toledo plant alone, located in Paraná state.
JBS often has opted to fight in court. Prosecutors say they have had to obtain court orders to force JBS to shut plants temporarily, and to make changes such as stricter physical distancing.
"Closing a plant is a measure of last resort," said Priscila Schvarcz, a prosecutor in Rio Grande do Sul state. She is directing litigation against JBS over conditions at a poultry facility in the city of Passo Fundo. That plant was closed for almost a month starting April 24 after some workers fell ill with COVID-19. At least 305 workers ultimately tested positive for coronavirus after two outbreaks there, Schvarcz said.
JBS told Reuters it prefers not to settle with prosecutors because it complies with all regulations set down by the federal government for operating in the pandemic. It said it would continue to defend its "robust" safety protocols in the nation's courts.
The company has had some success with its approach. On July 3, a state appeals court judge ordered the Passo Fundo poultry plant reopened, ruling that keeping it closed "could cause job losses, reduce tax collection and threaten food supplies."
Some JBS workers told Reuters they feared getting sick but couldn't quit because they needed the paycheck. Two employees at JBS chicken plants in Santa Catarina state - one in Ipumirim, the other in Nova Veneza - said in July the company provided them and their colleagues with one single-use face mask each to last five working days. JBS also rationed masks at the Passo Fundo poultry plant and the Dourados pork slaughterhouse in Mato Grosso do Sul state, according to a prosecutor and an attorney for a workers' union in Dourados.
"My colleague caught the virus," said the Ipumirim worker, speaking on condition of anonymity. "We really worked shoulder-to-shoulder and the company refused to test us."
JBS declined to discuss allegations that it rationed masks or that employees at Ipumirim worked in close proximity.
COMMUNITY SPREAD
Some JBS plants have been linked to community spread. In São Miguel do Guaporé, a small town in the western Amazon (NASDAQ:AMZN) state of Rondônia, 266 workers at a JBS beef plant were infected as of June 6, representing more than 60% of the town's cases, prosecutors said. They secured a May 26 court order to close the facility temporarily to stem the outbreak.
"The plant is the main source of contamination and transmission in this little town,” Wadler Ferreira, a local labor judge, said in his ruling. The São Miguel do Guaporé plant, which employed 900 people when the outbreak happened, is the town's largest employer.
In Mato Grosso do Sul state, JBS workers from the Dourados pork plant started falling ill around May. Rather than seek a court order to close the plant, prosecutor Jeferson Pereira worked out a deal with JBS and local health officials to perform mass testing in July, funded mainly by the state. Nearly a quarter of the 4,300-person workforce tested positive, driving one of the state's worst outbreaks, prosecutors said.
Dourados, a city of 223,000, has been hit hard. Some 6,058 citizens have tested positive for COVID-19, while 82 people have died, according to Health Ministry data as of Sept. 7. In addition to JBS, other meat plants in the area experienced outbreaks.
"The entire pandemic in Dourados started at the meatpackers. This is an epidemiological fact," said Julio Croda, an epidemiologist and former head of the federal Health Ministry's department of immunization and transmissible diseases.
ABPA, the industry trade group, disputes Croda’s assessment. It said the industry has always acted to control the virus as it works to maintain meat supplies.
A union representing JBS workers at the Dourados plant filed suit July 14 to force the company to pay healthcare costs for employees who contracted coronavirus. That suit is pending.
JBS defended its actions. It said testing at Dourados "yielded good results as it efficiently prevented and controlled COVID-19 at that plant."