The world’s largest beef producer, JBS, has moved swiftly to distance its European operations from the rapidly escalating horsemeat substitution scandal sweeping the UK and continental Europe.

A statement issued to the financial market overnight said the company’s commercial arm in Belgium, JBS Toledo, had been informed on February 18 that meat produced by the German company Schypke, and marketed by JBS Toledo was alleged to contain traces of horse DNA.

JBS stressed that Schypke, a traditional German manufacturer of processed meat products, was not in any way part of the JBS Group.

“To add flexibility and a just-in-time service to some of its European clients and as a precaution against possible future legal, trade or sanitary barriers, JBS Toledo developed in conjunction with its customer base alternative lines of additional supply from European sources,” the statement said.

“JBS Toledo's clients actively participated in the selection process, auditing and approving prospective European suppliers. In this specific case, from the outset of supply, all operational and logistical processes were carried out by the German supplier who delivered the product to the final client,” JBS said.

JBS Toledo has since suspended all contracts with Schypke and would not market European meat until confidence was restored in the European beef supply chain, the company said.

“No case of co-mingling of species has been identified in products produced in or at JBS factories,” JBS stressed.

As a sign of confidence from its customer base, there had been no suspension or interruption of supply contracts, and products were being delivered as contracted from JBS Toledo’s own production facilities.

“JBS will take all necessary legal measures to assure that no losses will be incurred as a consequence of this isolated occurrence, and will continue to serve its customers with quality products, generating value to shareholders and stakeholders alike,” the statement said.

Yesterday, some media in Europe and North America reported that Schypke, the German third-party contractor had sold beef under the JBS name to global food giant, Nestle.

Nestle began removing ready-to-eat pasta meals from store shelves in Italy and Spain after discovering what the Swiss-based food company described as traces of horsemeat in two chilled products sourced from Schypke on behalf of a JBS subsidiary in Belgium.

Pulling products that contained meat made up of more than one percent of horse DNA was not an issue of food safety and more of an issue of product mislabelling, Nestle officials said.

JBS said it will not sell processed beef in Europe through third parties until its production and delivery systems are secured, as the company tries to fill orders using its own production lines.