Bridging markets: The flourishing Brazil-GCC halal partnership

Pride in Brazilian production, investments, and the capacity to deliver "very high-quality" halal goods were part of the statement that Brazil’s President Luiz Inácio Lula da Silva made at the opening of the 2nd Global Halal Brazil Forum held in October in São Paulo, Brazil.

Lula highlighted that in 2022 alone, Brazil shipped $17.74 billion worth of goods to Arab League states in a trade balance that surpassed $32.7 billion. “These figures reflect not only the trust of the Arab countries in the quality of Brazilian goods but also our ability to meet the demands of such a vibrant market,” said Lula.

He attributed this growth to the trust of the Muslim countries in the quality of Brazilian goods and Brazilian companies' ability to meet the demands of such a vibrant market.

The Emergence of Brazil as a Halal Meat Powerhouse

Brazil became the largest halal meat exporter through a combination of factors, including government support, industry innovation, and adherence to halal certification standards.

The emergence of Brazil as the leading halal meat exporter was supported by the government from the 1960s onward and the country's resources from immigrant groups were utilized to create a modern halal sector of the industry. The first shipment of halal food from Brazil took place in 1976 when 650 tons of chicken meat were shipped to Saudi Arabia and Kuwait.

The adherence to halal standards to export to the Middle East and some African countries was carried out in Brazil by trusted Brazilian Islamic Centers and Certification Companies like FAMBRAS Halal. This process was supported by government regulation, the local Arab Brazilian Chamber of Commerce (ABCC), the National Association of Chicken Producers, and constant interaction with religious authorities from the major importing countries to guarantee the validity of the certification and the correct training of Brazilian Muslim inspectors. By 2014, it was estimated that 44% of Brazilian chicken exports were certified Halal-labeled, and by the second decade of the current century, Brazil became the leading halal meat exporter in the world.

Today, Brazil is the leading supplier of halal animal protein to the world’s 57 Muslim-majority nations, as well as Islamic communities in other countries. The surge in sales of Brazilian beef, poultry, and byproducts to the Gulf Cooperation Council (GCC) countries in 2022, totaling $5.328 billion, reflects the country's robust presence in the region's food market.

The Brazil Factor

Brazilian agribusiness is possibly the most competitive in the world. Brazil has a favorable climate for agriculture, wide availability of water, and arable land.

“In the 1970s, the Brazilian government established research institutions that enabled soil correction techniques, the adaptation of cultivars to different regions and climates of the country, and continuous improvement of cattle and poultry breeds that favored successive production records,” Tamer Mansour, the Secretary-General of the Arab Brazilian Chamber of Commerce (ABCC), told Salaam Gateway.

Mansour also attributes Brazil’s success to its diplomatic ties with the Islamic world, which he says is based on dialogue and non-belligerence, crucial for Brazilian products to have a good reputation among Arab and other Muslim consumers.

“Companies in the protein production chains were able to serve their customers in the GCC continuously for decades, without disruptions, even amid the COVID-19 pandemic, in the demanded quantities, at affordable prices, following the required standards and certifications, including halal.”

One of the best things about the commercial relationship between Brazil and the GCC countries is complementarity. On the one hand, Brazil is a major food supplier to the region, playing a vital role in the food security of millions of Arabs living in the Gulf. On the other hand, the GCC is one of the leading suppliers of fertilizers for the Brazilian market, a product that, in turn, is essential to the competitiveness of Brazilian agribusiness, the most important economic sector in Brazil, and also to the production of grains that will later feed halal poultry.

“Very few countries have a bilateral trade relationship that is so beneficial for both sides,” Mansour said.

Furthermore, GCC investment funds have significant stakes in Brazilian agribusiness companies. These exchanges are even evolving to include halal segments, such as the recent joint venture between Brazil’s BRF and Saudi Arabia’s Halal Products Development Company (HPDC), a subsidiary of the Public Investment Fund (PIF), the Kingdom's sovereign wealth fund.

JBS, the leading global protein-based food company and the parent company behind Seara is another Brazilian company with a huge presence in the GCC. JBS currently has a plant in Dammam and another unit under construction in Jeddah. Once the Jeddah facility is operational, JBS will boost capacity in Saudi Arabia to 40,000 metric tons of processed chicken products per year, four times the current levels.

“Halal demographics will keep on growing, and we intend to keep on growing with the Halal market, being one of the major suppliers for this growth,” Marcelo Siegmann, Export Director at Seara, told Salaam Gateway.

Challenges

According to the Federation of Muslim Associations in Brazil (FAMBRAS), there are around 1.5 million Muslims in Brazil.

"Considering that Brazil is a non-Muslim country, one of the challenges facing Halal certification in Brazil is demystifying the market and the Halal concept,” Ali Hussein El Zoghbi, Vice-President of FAMBRAS, told Salaam Gateway.

Many Brazilian companies don't even know what Halal certification is and only seek it out when there is customer demand, he said.

Although Brazil is the largest exporter of Halal food in the world, only a few companies are part of this market, with the major players dominating the landscape. Another challenge, El Zoghbi says, is finding specialized labor for Halal processes, for example, Muslim slaughterers for animal slaughter or Muslim supervisors for inspections.

“One way of tackling this challenge has been through partnerships with organizations supporting refugees, and many of those who seek shelter in Brazil, through FAMBRAS, get a job working in the Halal market,” he told.

Another challenge Brazilian companies face is the supply chain and operational challenge.

Tamer Mansour of ABCC says that the average transit time from Brazil to the GCC region is 45 days. The longest routes leaving Brazilian ports pass through European ports, and only then cross the Mediterranean towards the Suez Canal, crossing the Red Sea to reach the Gulf.

“For some time now, we have been trying to make direct shipping routes between Brazil and the Gulf viable, consolidating regular cargo shipments to the region to justify the structuring of the lines. We hope to be successful in this goal in the future,” Mansour said.

The Halal Brazil Project

Halal do Brasil or The Halal Brazil initiative, launched jointly by the Arab Brazilian Chamber of Commerce and ApexBrasil in September 2022, seeks to motivate food and beverage companies in Brazil to obtain halal certification and tap into the lucrative Muslim market.

“Since the beginning of the project, we have organized missions with Brazilian companies to halal food shows in Saudi Arabia, the United Arab Emirates, Malaysia, Germany, and Indonesia,” Mansour told Salaam Gateway.

The Project facilitates buyers from Muslim countries to business rounds with Brazilian companies and visits to companies with structured projects with pre-mapped interests on both sides.

“Halal do Brasil has sought to encourage Brazilian companies to invest in the certification of processed foods, aiming to meet precisely the demand we identified in GCC countries and other Muslim markets. On this front, we have already sensitized over 300 companies, some of which are already in talks with Brazilian halal certifiers to certify their products.”

Halal do Brasil’s actions will last 36 months, after which the project results will be evaluated jointly by ApexBrasil and the ABCC and, possibly, renewed or expanded.

From the perspective of Brazilian companies, halal certification is essential for accessing Muslim markets and, above all, gaining consumer trust. If there is one thing that Brazilian companies need to preserve, it is the trust they have gained among Muslim consumers regarding the quality of their products and their halal status.

To ensure this, ABCC is setting up a pilot project with Brazilian certifiers and a blockchain-specialist company to develop a traceability system that will link, for example, a package on the shelf of a supermarket in a Muslim country to the animal in Brazil that was used in the product, with information about the farm where it lived, the management it received, the slaughter and processing in the slaughterhouse, and the export logistics to the consumer’s home.

“The Muslim consumer wants this level of detail and transparency, and we are working to deliver,” Mansour said. He said that major animal protein companies such as BRF, Seara, Minerva, and others in the segment contributed to consolidating the image of the Brazilian product in the GCC as high-quality, reliable, and halal-certified.

“Now, we are using this reputation to leverage the insertion of other halal products from Brazil in these markets.”

He believes that there are many other areas in which Brazil can operate, such as cosmetics, fashion, entertainment, and tourism, in which the country has a share in exports to the OIC, but still very small.

“To achieve this, however, Brazil must advance in standardizing production processes, certifying them as halal-compliant,” he said.