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PART I
INTRODUCTION

Unless otherwise indicated, all references herein to (1) “BRF” are references to BRF S.A., a corporation organized under the laws of the Federative Republic of Brazil (“Brazil”), and its consolidated subsidiaries, (2) the “Company,” “we,” “us,” or “our” or “our company” are references to BRF, together with its consolidated subsidiaries, and (3) “common shares” are references to the Company’s authorized and outstanding common stock, designated ordinary shares (ações ordinárias), each without par value. All references herein to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil.  All references to “U.S. dollars,” “dollars” or “U.S.$” are to the United States dollars.  Sadia S.A. (“Sadia”), formerly our wholly-owned subsidiary, was incorporated by BRF on December 31, 2012.dollar.  All references to “euro” or “EUR” are to euros, the official currency of the Eurozone in the European Union. All references to “TRY” are to the Turkish lira, the official currency of Turkey. All references to “SGD” are to the Singapore Dollar, the official currency of Singapore.

U.S.$ amounts are disclosed for each transaction at the amount negotiated to be settled in U.S.$ at the initiation date of the transaction.

Market data and certain industry forecasts used herein were obtained from internal surveys, market research, publicly available information and industry publications. While we believe that market research, publicly available information and industry publications we use are reliable, we have not independently verified market and industry data from third-party sources. Moreover, while we believe our internal surveys are reliable, they have not been verified by any independent source.

We prepared our annual consolidated financial statements included in this annual report in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).  We have made rounding adjustments to reach some of the figures included herein.  As a result, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

Forward-Looking Statements

This Annual Report on Form 20-F contains information that constitute forward-looking statements.statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995.  Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words, such as “believe,” “may,” “aim,” “estimate,” “continue,” “anticipate,” “will,” “intend,” “plan,” “expect” and “potential,” among others.  Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. They appear in a number of places in this annual report, principally under the captions “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company” and “Item 5. Operating and Financial Review and Prospects” and include statements regarding the intent, belief, projections or current expectations of the Company, its directors or its executive officers with respectabout future events and financial trends affecting our business.  Many important factors, in addition to (i) the implementation of the principal operating strategies of the Company, including integration of current acquisitions as well as the conclusion of acquisition or joint venture transactions or other investment opportunities that may occurthose discussed elsewhere in the future, (ii) general economic, political and business conditionsthis annual report, could cause our actual results to differ substantially from those anticipated in our company’s markets, both in Brazil and abroad, (iii) the cyclicality and volatility of raw materials and selling prices, (iv)forward-looking statements. 

These factors include: (i) health risks related to the food industry, (v) the risk of outbreak of animal diseases (vi)including in connection with ongoing investigations and legal proceedings, (ii) more stringent trade barriers in key export markets and increased regulation of food safety and security, (iii) the risk of outbreak of animal diseases, (iv) risks related to climate change, (v) risks related to pandemics or human disease outbreaks, such as the novel coronavirus (COVID-19 virus), (vi) the risk of any shortage or lack of water or other raw materials necessary for our business, (vii) compliance with various laws and regulations, (viii) risks related to new product innovation, (ix) the implementation of the principal operating strategies of the Company, including through divestitures, acquisitions or joint ventures, (x) general economic, political and business conditions in our markets, both in Brazil and abroad, (xi) the cyclicality and volatility of raw materials and selling prices, including as a result of ongoing global trade disputes, (xii) strong international and domestic competition, (viii)(xiii) risks related to labor relations, (xiv) the protection of our intellectual property, (xv) the potential unavailability of transportation and logistics services, (xvi) the risk that our insurance policies may not cover certain of our costs, (xvii) our ability to recruit and retain qualified professionals, (xviii) the risk of cybersecurity breaches, (xix) risks related to our indebtedness, (xx) risks related to the Brazilian economy and to Brazilian politics, (xxi) interest rate fluctuations, inflation and exchange rate movements of thereal in relation to the U.S. dollar and other currencies, (ix) the declaration or payment of dividends, (x)(xxii) the direction and future operation of the Company, (xi) the implementation of the Company’s financing strategy and capital expenditure plans, (xii) the Company’s(xxiii) theCompany’s financial condition or results of operations and (xiii)(xxiv) other factors identified or discussed under “Item 3. Key Information––Information—D. Risk Factors.”

Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements.  The accompanying information contained in this Annual Report on Form 20-F, including without limitation the information set forth under the heading “Item 5. Operating and Financial Review and Prospects,” identifies important factors that could cause such differences. In light of the risks, uncertainties and assumptions associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Annual Report on Form 20-F not to occur.

Our forward-looking statements speak only as of the date of this Annual Report on Form 20-F or as of the date they are made, and except as otherwise required by applicable securities laws, the Company undertakes no obligation to publicly update any forward-looking statement, whether because of new information, future events or otherwise.

ITEM 1.           IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.           KEY INFORMATION

A.                 Selected Financial Data

We present below certain selected financial data derived from our consolidated financial statements as of and for the years ended December 31, 2015, 2014, 2013, 20122019, 2018, 2017, 2016 and 2011,2015, included herein, prepared in accordance with the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).IFRS. IFRS differs in certain significant respects from the accounting principles generally accepted in the United States, or “U.S. GAAP.”

In 2014,July 2015, we entered into an agreement with Lactalis for the sale ofsold the assets of our then dairy segment, including plants and trademarks, which deal was closedtoLactalis do Brasil – Comércio, Importação e Exportação de Laticínios Ltda. (“Lactalis”).

Following the financial and operational restructuring plan initiated in 2015. As a result, this segment isJune 2018, we concluded the sale of our operations in Argentina, Europe and Thailand in 2019.  The operations in Argentina, Europe and Thailand are reported in our financial statements as discontinued operations which requires the presentation of priorfor all periods of this segment as discontinued operations. Unless stated otherwise, the results and cash flows that we present in this annual report do not consider the results and cash flows from this discontinued operation (dairy segment).presented.

The summaryselected financial data should be read in conjunction with our consolidated financial statements and the notes thereto contained in this Annual Report on Form 20-F, as well as the information set forth under the heading “Item 5. Operating and Financial Review and Prospects.”

STATEMENT OF INCOME (LOSS) DATA

Even if our own products are not affected by contamination, our industry may face adverse publicity in certain of its markets if the products of other producers become contaminated, which could result in negative public perception about the safety of our products and reduced consumer demand for our products.  Moreover, outbreaks of animal diseaseproducts in Brazil maythe affected category. Significant lawsuits, widespread product recalls and other negative events faced by us or our competitors could result in foreign governmental actiona widespread loss of consumer confidence in the safety and quality of our products. Our sales are ultimately dependent on consumer preferences, and any actual or perceived health risks associated with our products could cause customers to close export markets to some or alllose confidence in the safety and quality of our products which may result in the destruction of some or all of these animals. Our poultry business in Brazilian and export markets could also be negatively affected by avian influenza.

Chicken and other birds in some countries, particularly in Asia but also in Europe and Africa, have become infected by highly pathogenic avian influenza.  In a small number of cases, the avian influenza has been transmitted from birds to humans, resulting in illness and, on occasion, death.  Accordingly, health authorities in many countries have taken steps to prevent outbreaks of this viral disease, including destruction of afflicted poultry flocks.

Between 2010 and the first week of 2016, there have been over 378 human cases of avian influenza and over 167 related deaths, according to the World Health Organization (WHO) and Food and Agriculture Organization (FAO). The cases reported were caused by the H5N1 and H7N9 viruses. In 2013, direct human-to-human transmission of the H7N9 virus was proven. Various countries in Asia, the Middle East and Africa reported human cases in the last five years and various European countries reported avian flu cases in poultry. In 2014, there were reports of human cases of avian influenza in Egypt, Indonesia, Cambodia, China and Vietnam. In the Americas, there were reports of human cases of avian influenza in both Canada and the United States. In early 2015, additional new cases of H5N1 and H5N2 were reported in the United States, which has already resulted in restrictions on U.S. exports.

To date, Brazil has not had a documented case of avian influenza, although there are concerns that an outbreak of avian influenza may occur in the country in the future.  Any outbreak of avian influenza in Brazil could lead to required destruction of our poultry flocks, which would result in decreased sales of poultry by us, prevent recovery of costs incurred in raising or purchasing such poultry, and result in additional expense for the disposal of destroyed poultry.  In addition, any outbreak of avian influenza in Brazil would likely lead to immediate restrictions on the export of some of our products to key export markets.  Preventive actions adopted by Brazilian authorities, if any, may not be effective in precluding the spread of avian influenza within Brazil.

Whether or not an outbreak of avian influenza occurs in Brazil, further outbreaks of avian influenza anywhere in the world could have a negative impact on the consumption of poultry in our key export markets or in Brazil, and a significant outbreak would negatively affect our net sales and overall financial performance.  Any outbreak could lead to the imposition of costly preventive controls on poultry imports in our export markets.  Accordingly, any spread of avian influenza, or increasing concerns about this disease, may have a material and adverse effect on our company.

We may also be subject from time to time to additional outbreaks of animal-related diseases, such as Porcine Epidemic Diarrhea and foot-and-mouth disease affecting cattle. See “Item 5: Operating and Financial Review and Prospects—A. Operating Results—Effect of Animal Diseases—Other Animal Diseases” for further information.

Climate change may negatively affect our business and results of operations.

A consensus has developed in the scientific community that global warming will continue to occur even if greenhouse gas emissions were to be slowed, thereby reinforcing the need to intensify actions to adapt to climate changes. We consider the potential effects of climate change when evaluating and managing our operations and supply chain, recognizing the vulnerability of natural resources and agricultural inputs that are essential for our activities.

The main risks we have identified relate to the alterations in temperature (average and extreme) and changes in rainfall (average and extreme, such as drought, flooding and storms), both of which could affect agricultural productivity, the quality and availability of pasture areas, animal wellbeing and the availability of energy. These changes could have a direct impact on our costs, raising the price of agricultural commodities as a result of long periods of drought or excessive rainfall, increasing operating costs to ensure animal wellbeing, increasing the risk of rationing and raising the price of electrical energy through water shortages and the need for other energy sources to supply the demand for electricity. We also consider potential regulatory changes and monitor trends in changes to licensing legislation for greenhouse gas emissions at the domestic and international levels.

Our operations are largely dependent on electricity, and energy-related expenses are our second highest fixed cost. A significant portion of Brazil’s installed electric generation capacity is currently dependent upon hydroelectric generation facilities. If the amount of water available to energy producers becomes increasingly scarce due to drought or diversion for other uses, as has occurred in recent years, our energy expenses may increase.

Among the initiatives we have taken to reduce our exposure to climate change and to maintain our competitiveness in terms of costs is the monitoring of stocks in grains purchases and the constant monitoring of the weather in agricultural regions to guide buying decisions, as well as anticipating price movements in the commodity markets. We also undertake efficiency projects to develop more efficient processes that consume less energy. Other initiatives include technological innovations in the animal-raising installations to improve the environment and acclimatization and safeguard the animal´s wellbeing. We may fail to continue to implement programs to mitigate effects of climate change, which may affect our business, and results of operations, in the future.

financial condition and prospects.

The shortage or lack of water could materially adversely affect our business and results of operations.

A study conducted by the United Nations Food and Agriculture Organization (FAO) indicates that, in the next two decades, the demand for water will increase 50% on a global scale. In conenction with that, it is estimated that by 2025, 1.8 billion people will live in places with absolute shortage of water and two thirds of the global population will live in water-stressed places. By 2050, the demand for water will jump 55%, accordingWe have been subject to FAO, on a global scale, including some of our key markets, such as North Africa and the Middle East. Water is an essential raw material for our businesses, being present from the production of grains and inputs, the agricultural chain through our production processes. As a result, the shortage or lack of water represents a critical risk for our business. On thesignificant investigations relating to, among other hand, we are aware that the industrial use of water may adversely affect its availability.

In order to mitigate these risks, in 2015, we began developing a methodology to evaluate water-related risks in the locations where we have operations in order to understand the specific impacts of our company and others in those regions and, consequently, reduce our water consumption and exposure to water supply risks in each location. It is an initiative regarding water-related risks through which we can assess internal and external aspects impacting water supplythings, food safety and quality control, and generate a score for each unit. The objective is to carry out internal and external actions to reduce consumption and comply with applicable rulesan adverse outcome of any of these investigations could result in order to minimize our impact on the environment and the community. We conducted this methodology in four plants in Brazil– Toledo (PR), Rio Verde (GO), Lucas do Rio Verde (MT) and Carambeí (PR) – in 2015 as a pilot-project. We analyzed the and micro and macro watersheds composing the region, as well as the industrial activities and characteristics of the use of water resources, in order to understand the local demand growth, anticipating risks. In 2016, we expect to expand this assessment to the other plants in Brazil.

The shortage or lack of water could materially adversely affect our business and results of operations.

We rely on our governance structure and compliance processes to sustain our positive image and reputation in the marketplace.

BRF has a strong image related to solid corporate governance and is associated with values such as trust, ethics and transparency. We have a framework of antifraud initiatives - including anti-corruption - that supports all business segments and their commercial standards worldwide. However, we may not be able to mitigate all fraud risk entirely. In cases of bad publicity or acts that may negatively affect our image, we have a Crisis Committee that works with our stakeholders. Any negative reflection on our image or the strength of our brand from thesepenalties, fines or other activities could have a negative impact on our resultsforms of operations, as well as our ability to achieve our growth strategy.

We are required to comply with the lawsliability and regulations of Brazil and various jurisdictions where we conduct operations. In particular, we are subject to the Brazilian Anti-corruption Law nº 12.846, the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”), the United Kingdom Bribery Act of 2010, as well as economic sanction programs, including those administered by the United Nations, the European Union and the United States, including the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. As part of our business, we may deal with employees of certain entities who may be considered foreign officials for purposes of the FCPA. In addition, economic sanctions programs restrict our dealings with certain sanctioned countries, individuals and entities. Although we have internal policies and procedures designed to ensure compliance with applicable anti-fraud and anti-corruption laws and sanctions regulations, there can be no assurance that such policies and procedures will be sufficient or that our employees, directors, officers, partners, agents and service providers will not take actions in violation of our policies and procedures (or otherwise in violation of the relevant anti-corruption laws and sanctions regulations) for which we or they may be ultimately held responsible. Violations of anti-corruption laws and sanctions could have a material adverse effect on our business, reputation, brand, results of operations and financial condition

condition.

Brazilian authorities are investigating Brazil’s meat processing industry in the so-called “Our failureCarne Fraca Operation.” The investigation involves a number of companies in the Brazilian industry and, among other things, includes allegations relating to continually innovatefood safety and successfully launch new products, as well as maintain our brand image, could adversely impact our operating results.

Our financial success depends on our ability to anticipate changes in consumer preferences and dietary habits and successfully developing and launching new products and product extensions that consumers want. We devote resources to new product development and product extensions, however we may not be successful in developing innovative new products or our new products may not be commercially successful. To the extent that we are not able to effectively gaugeThird District of the directionState of Goiás filed a complaint against the industrial manager of our key marketsMineiros plant at the time of the events subject to investigation in theCarne Fraca Operation, and successfully identify, develop, manufacture and market new or improved productsagainst the former head of quality control at our Mineiros plant, who are both no longer working for BRF. Both of them were charged for allegedly committing crimes against consumers, as provided in these changing markets, our financial results and our competitive position may suffer.

We also seek to maintain and extend the imagearticle 7, item II of our brands through marketing, including advertising, consumer promotions and trade spending. Due to inherent risks in the marketplace associated with advertising, promotions and new product introductions, including uncertainties about trade and consumer acceptance, our marketing investments may not prove successful in maintaining or increasing our market share. Continuing global focus on health and wellness, including weight management, and increasing media attentionLaw 8,137/90. According to the rolecomplaint,

laboratory tests (dripping tests) detected excessive levels of food marketing could adversely affectwater absorbed by the chicken products collected by authorities at our brand imageMineiros plant. The Attorney General’s Office of the Third District of the State of Goiás alleges we produced chicken products with higher quantities of water than the limits permitted by the Brazilian Ministry of Agriculture, Livestock and Food Supply (Ministério da Agricultura, Pecuária e Abastecimento, or lead“MAPA”), with potential damages to stricter regulations and greater scrutinycustomers, considering they would potentially be acquiring chicken meat products with a weight lower than that indicated on the packaging, since part of food marketing practices.

Our success in maintaining, extending and expanding our brand image also depends on our ability to adapt to a rapidly changing media environment, including increasing reliance on social media and online disseminationthe weight of advertising campaigns. The growing usethe frozen chicken would consist merely of social and digital media increases the speed and extent that information or misinformation and opinions can be shared.

Negative posts or comments about us, our brands or our products on social or digital media could seriously damage our reputation and brand image. If we do not maintain or extend our brand image, then our product sales, financial condition and results of operations could be materially and adversely affected.

Recent and future acquisitions or joint ventures may divert management resources or prove to be disruptive to our company.water contained therein.

We regularly review and pursue opportunities for strategic growth through acquisitions, joint ventures and other initiatives. We have completed several acquisitions outside  Brazil in recent years, such as Golden Foods Siam (“GFS”) in Thailand, Qatar National Import and Export Co. (“QNIE”)On March 5, 2018, BRF learned of a decision issued by a federal judge of the First Federal Court of Ponta Grossa in the State of Qatar, Campo AustralParaná, which authorized the search and seizure of information and documents from us and certain current and former employees and the temporary detention of certain individuals.  In what media reports have identified as the “Trapaça Operation,” eleven current and former employees of BRF were temporarily detained for questioning, including former Chief Executive Officer Pedro Faria and former Vice President for Global Operations Helio Rubens.  All such current and former employees were released from custody and those who are still our employees are on leaves of absence from BRF. A number of other BRF employees and former employees were identified for questioning. The primary allegations in Argentina,theTrapaça Operation involve alleged misconduct relating to quality violations, improper use of feed components and acquiredfalsification of tests at certain trademarks in Argentina.For more details on theseBRF manufacturing plants and other transactions, see “Item 4. Informationaccredited labs. 

On October 15, 2018, the Brazilian Federal Police issued the final report on the Company—A. History and Developmentinvestigation of the Company—Trapaça Operation with accusations against 43 people, among which 23 are current or former BRF employees, including former Chief Executive Officer Pedro Faria, former chairman of the board of directors Abilio Diniz, and three former vice presidents. Those who are still our employees are on leaves of absence from BRF. Allegations against these senior employees generally focused on communications relating to alleged dioxin contamination. Since then, the police investigation has been under review by the Brazilian Federal Prosecutor responsible for the case to determine whether to bring criminal charges. See “Item 8. Financial Information—A. Consolidated Statements and Other Acquisitions and Investments in 2015.” Acquisitions, new businesses and joint ventures, especially involving sizeable enterprises, may present financial, managerial and operational risks and uncertainties, including:Financial Information—Legal Proceedings” for additional information.

·challenges in realizing the anticipated benefits of the transaction;

·diverting management attention from existing businesses;

·difficulty with integrating personnel and financial and other systems;

·difficulty identifying suitable candidate businesses or consummating a transaction on terms that are favorable to us;

·challenges in retaining an acquired company’s customers and key employees;

·increased compensation expenses for newly hired employees; and

As a result of these factors,theTrapaçaOperation, on March 5, 2018, we were notified by MAPA that it immediately suspended exports from our Rio Verde/Goiás, Carambeí/Paraná and Mineiros/Goiás plants to 13 countries with specific sanitary requirements related to Salmonella spp. As a precautionary measure, MAPA also suspended exports from 10 other BRF plants to the European Union on March 15, 2018. On May 14, 2018, the European Union announced the decision to suspend 12 of our production facilities in Brazil by revoking the export approval of meat products from such facilities to the European Union’s countries due to increasing pressure from domestic producers’ organizations, supposedly demanding the measure for local market protection. The European Union generally has stricter requirements related to salmonella levels and other food safety standards compared to Brazil and the international markets in which we operate. Given the import ban  applied to our production facilities, we are unable to export meat from such facilities to the European Union. Our results of operations and financial conditionmay be further adversely affected due to the need to redirect the production capacity of such facilities, originally destined for the European Union, to other markets at similar prices or margins.

On December 4, 2019, with respect to theTrapaça Operation, criminal charges were brought against former or inactive BRF employees for allegedly committing, in the regions where we have productionmanufacture of animal feed and distribution activities may be adversely affected,PREMIX compound (supplement added to animal feed), aggravated larceny by fraud, false representation, wrapper or container with false labelling, forgery of substance or food product, forgery of product intended for therapeutic or medicinal purposes and we may experience incriminal association, at least during the future significant variability in our revenueperiod between 2012 and 2018. The defendants were notified of the criminal charges on both an annualJanuary 21, 2020, and a quarterly basis from those operations. The impactthe proceeding is currently pending responses by the defendants to the charges.

Any of these changes on our ability to deliver on our planned projects and execute our strategy cannot be ascertained withexisting investigations or any degree of certainty, and these changes may, therefore, have an adverse effect on our operations and financial results.

Deterioration of general economic conditionsother future investigation could negatively impact our business.

Our business may be adversely affected by changes in Brazilian and global economic conditions, which may result in increased volatility in our marketspenalties, fines or other forms of liability and contribute to net losses. Since the end of 2015, the oil price hasdeclined significantly and has led to lower economic growth in relevant oil dependent regions, such as several countries in the Middle East, Russia, Venezuela and Angola. Thus, per capita meat consumption in these areas could be affected as well. In addition, concerns about the Chinese economy and its inability to grow at rates as high as the ones we had in prior years could affect the prices and consumption of all commodities, including chicken and hogs.Because of the global nature of our business, we remain subject to the risk of economic volatility worldwide, and economic and political disruptions around the world can have a material adverse effect on our business, and results of operations.

Ourreputation, brand, results of operations are subject to cyclicality and volatility affecting both our raw material prices and our selling prices.

Our business is largely dependent on the cost and supply of corn, soy meal, soybeans, hogs and other raw materials, as well as the selling prices of our poultry, pork and beef. These prices are determined by supply and demand, which may fluctuate significantly, and other factors over which we have little or no control. These other factors include, among others, fluctuations in local and global poultry, hog and cattle production levels, environmental and conservation regulations, economic conditions, weather, animal and crop diseases, cost of international freight and exchange rate and interest rate fluctuations. 

Our industry, both in Brazil and abroad, is generally characterized by cyclical periods of higher prices and profitability, followed by overproduction, leading to periods of lower prices and profitability.  We are not able to mitigate these risks entirely.

Natural disasters, pandemics or extreme weather, including floods, excessive cold or heat, hurricanes or other storms, as well any interruption we can observe in our plants that may require the temporary re-allocation of plant functions to other facilities could impair the health or growth of livestock or interfere with our operations due to power outages, damage to our production and processing facilities or disruption in transportation channels or information systems, among other issues.

Our international sales are subject to a broad range of risks associated with international operations.

International sales account for a significant portion of our net sales in line with our global strategy, representing 48.1% in 2013, 46.8% in 2014 and50.2% in 2015. Our major international markets include the Middle East (particularly Saudi Arabia), Asia (particularly Japan, Hong Kong, Singapore and China), Europe, Africa and Americas (particularly Argentina), where we are subject to many of the same risks described below in relation to Brazil. Our future financial performance will depend, to a significant extent, on the economic, political and social conditions in our main export markets.condition.

Our future ability to conduct business in our export markets could be adversely affected by factors beyond our control, such as the following:

·exchange and interest rate fluctuations;

·commodities price volatility;

·deterioration in international economic conditions;

·political risks, such as turmoil, government policies, difficulties to transfer capital  and political instability;

·decreases in demand, particularly from large markets such as China;

·imposition of increased tariffs, anti-dumping duties or other trade barriers;

·strikes or other events affecting ports and other transport facilities;

·compliance with differing foreign legal and regulatory regimes;

·strikes, not only of BRF’s employees, but also of port employees, truck drivers, customs agents, sanitary inspection agents and other government agents at the Brazilian ports from which we export our products; and

·sabotage affecting our products.

The market dynamics of our important export markets can change quickly and unpredictably due to these factors, the imposition of trade barriers and other factors, which together can significantly affect our export volumes, selling prices and results of operations.

Any of these risks could adversely affect our business and our results of operations.  In addition, flooding and similar events affecting the infrastructure necessary for the export of our products could adversely affect our revenues and our results of operations.

Morestringent trade barriers in key export markets may negatively affect our results of operations.

Because of the growing market share of Brazilian poultry, pork and beef products in the international markets, Brazilian exporters are increasingly being affected by measures taken by importing countries to protect local producers. The competitiveness of Brazilian companies has led certain countries to establish trade barriers to limit the access of Brazilian companies to their markets. Trade barriers can consist of both tariffs and non-tariff barriers. In our industry, non-tariff barriers are aof particular concern, especially sanitary and technical restrictions.

As a result of the regulators’ inquiries and the public announcement of allegations of wrongdoing involving BRF and other companies in the Brazilian meat industry in the context of theCarne Fraca Operation andTrapaça Operation, some export markets have been temporarily closed, and our average selling prices for some products and in some markets have decreased. For additional information, see “—Health risks related to our business and the food industry could adversely affect our ability to sell our products” and “—We have been subject to significant investigations relating to, among other things, food safety and quality control, and an adverse outcome of any of these investigations could result in penalties, fines or other forms of liability and could have a material adverse effect on our business, reputation, brand, results of operations and financial condition.”

Some countries, such as Russia and South Africa, have a history of erecting trade barriers to imports of food products. In Europe, another of our key markets,Also, the European Union has adopted a quota system for certain chickenpoultry products and prohibitive tariffs for certain products that do not have quotas in order to mitigate the effects of Brazil’s lower production costs on local producers over European producers. In addition,Other countries have also imposed trade barriers against our products. For example, in August 2017, the European Union has a banChinese government initiated an antidumping investigation in connection with Brazilian exports of whole chicken and chicken parts, including BRF’s exports. The investigation ended in February 2019, and Brazilian exporters agreed to certain minimum export prices for sales to China. Additionally, in August 2018, Iraq increased the tariff on certain types of Brazilian meat, including pork, fresh cuts and some premium cuts of frozen beef backs.poultry products from 10% to 60%.

In addition, manyMany developed countries use direct and indirect subsidies to enhance the competitiveness of their producers in other markets. In addition, local producers in some markets may exert political pressure on their governments to prevent foreign producers from exporting to their market, particularly during unfavorable economic conditions. Any of the above restrictions could substantially affect our export volumes and, consequently, our export sales and financial performance. If new trade barriers arise in our key export markets, we may face difficulties in reallocating our products to other markets on favorable terms, and our business, financial condition and results of operations might be adversely affected.

Trade disputes between other countries also creates uncertainties that may adversely affect Brazilian exports and our operations. For instance, the United States and China engaged in a trade dispute for almost 18 months, which has affected the global economy. On January 1, 2020, the United States and China signed the first phase of a trade agreement expected to alleviate the tensions between the two countries. A second phase of the agreement is expected to be even more difficult to achieve. There can be no assurances that the trade dispute will be fully resolved and that the global economy will not be further affected by it. The United Sates is expected to maintain the 25% tariffs on a wide range of U.S.$250 billion of Chinese industrial goods and components used by the U.S. manufacturing sector. Both improvements in the countries’ commercial relations and new mutually beneficial trade agreements at the expense of other countries may have a material adverse effect on our results of operations.

In addition, in April 2018, Saudi Arabia instituted a no-stunning requirement for the animal slaughtering process. Saudi Arabia claimed that Brazilian companies’ chicken slaughtering practices violated Halal principles due to the use of an electric shock to stun the birds. BRF and other Brazilian companies were therefore required to migrate their production processes to non-stunning slaughters in order to supply the Saudi Arabian market. We have incurred, and expect to incur, additional costs in connection with these requirements for exporting to Saudi Arabia. In January 2019, the Saudi Arabian Food and Drug Authority published a report authorizing 25 Brazilian facilities to produce chicken meat for the Saudi Arabian market, which included eight of BRF’s plants. One of BRF’s plants (Lajeado, Rio Grande do Sul) that had previously produced chicken meat for the Saudi Arabian market was not included as an authorized plant. The continuous shifting of our production of chicken meat for Saudi Arabia to the authorized plants may result in decreased revenues and additional expenses.

In August 2019, Saudi Arabia imposed an embargo on seasoned chicken meat produced in our Kizad facility, in Abu Dhabi, which was restricted from exporting to Saudi Arabia. The embargo was a result of Saudi Arabia’s Saudi Vision 2030 plan, announced in April 2016 as a national campaign to reduce the country’s dependence on oil, diversify its economy and substitute imports with local production. Saudi Arabia then expanded the embargo to the other products from our Kizad facility. In October 2019, we announced that we had executed a non-binding Memorandum of Understanding with the Saudi Arabian General Investment Authority – SAGIA regarding the construction and operation by BRF of a poultry processing plant in Saudi Arabia. We estimate that the investment amount will be around R$634 million (US$120 million, translated toreaisat the exchange rate of R$5.2837 as of April 20, 2020). The location, capacity, investment schedule, capital structure and other conditions related to this plant are still being discussed. There can be no assurance that the Saudi Arabian government will not further restrict our ability to export our products to Saudi Arabia, which may result in a material adverse impact on our business, financial condition and results of operations. In February 2020, we received notification from the Saudi Food and Drug Authority (“SFDA”), the Saudi Arabian sanitary authority, regarding a report temporarily suspending two of our facilities, specifically the Dois Vizinhos, State of Paraná and Francisco Beltrão, State of Paraná plants, from exporting chicken meat to Saudi Arabia. The SFDA informed us that the measure is temporary and, among other measures, requested that the Brazilian authorities provide more details about the investigations carried out between 2014 and 2018 regarding alleged violations by BRF in the production of animal feed and PREMIX compound. For more information about these investigations, see “—We have been subject to significant investigations relating to, among other things, food safety and quality control, and an adverse outcome of any of these investigations could result in penalties, fines or other forms of liability and could have a material adverse effect on our business, reputation, brand, results of operations and financial condition.” Additionally, the Saudi government has been implementing, since January 2020, a previous import licenses system, which is still not fully in effect at the moment. In the future, this system may adversely affect our exports to the country, since it might be used by local authorities as a means to control the entry of products and thus, artificially affect demand and offer and, consequently, prices, which run counter to basic principles of international trade rules and regulations.

Outbreaks, or fears of outbreaks, of any animal diseases may lead to cancellation of orders by our customers and create adverse publicity that may have a material adverse effect on consumer demand for our products. Moreover, outbreaks of animal diseases in Brazil may result in foreign governmental action to close export markets for some or all of our products, which may result in the loss of some or all of these animals.

Our operations involve raising poultry and hogs and processing their meat, which requires us to maintain certain standards of animal health and control disease. We could be required to dispose of animals or suspend the sale or export of some of our products to customers in Brazil and abroad in the event of an outbreak of disease affecting animals, such as the following: (1) in the case of hogs and certain other animals, foot-and-mouth disease, influenza (H5N1) and African swine fever; and (2) in the case of poultry, avian influenza and Newcastle disease. In addition, if the Porcine Reproductive and Respiratory Syndrome (PRRS), which has broken out in Europe and the United States in 1990 and 1985, respectively, the Porcine Epidemic Diarrhea (PEDV), which has broken out in Europe and the United States in 2014 and 2013, respectively, or the African swine fever which broke out in China in 2018, were to break out in Brazil, we could be required to dispose of hogs. While there have been outbreaks of Classical Swine Fever in Brazil, and although none have occurred in the free zones where we source our hogs for production, any such occurrence could require us to dispose of affected hogs. Disposal of poultry, hogs or other animals would preclude recovery of costs incurred in raising or purchasing these animals and result in additional expense for the disposal of such animals and loss of inventory. An outbreak of foot-and-mouth disease or other similar diseases could have an effect on livestock we own and the availability of livestock for purchase. In addition, the global effects of avian influenza or other similar diseases would impact consumer perception of certain protein products and our ability to access certain markets, which would adversely affect our results of operations and financial condition.

Chicken and other birds in some countries, particularly in Asia but also in Europe, the Americas and Africa, have on occasion become infected by highly pathogenic avian influenza in recent years. In a small number of highly-publicized cases, avian influenza has been transmitted from birds to humans, resulting in illness and, at times, death. Accordingly, health authorities in many countries have taken steps to prevent outbreaks of this viral disease, including disposal of afflicted poultry flocks.

In recent years, some human cases of avian influenza and related deaths were reported, according to the World Health Organization (“WHO”). The cases reported were caused by the H5N1 virus. In 2013, direct human-to-human transmission of the H7N9 virus was proven. Various countries in Asia, the Middle East and Africa reported human cases in the last five years and various European countries reported avian influenza cases in poultry. In 2014, there were reports of human cases of avian influenza in Egypt, Indonesia, Cambodia, China and Vietnam, among other countries. In the Americas, there were reports of human cases of avian influenza in both Canada and the United States. In early 2015, new cases of H5N1 and H5N2 reported in the United States resulted in restrictions on U.S. exports. In 2016, new outbreaks occurred in bird populations across Northern Europe, including France, the Netherlands, Switzerland, Finland and Germany. Middle Eastern and African countries also had outbreaks during 2016. In early 2017, Chile, a neighboring country to Brazil, confirmed the occurrence of avian influenza. In 2019, several countries within Europe, Asia and Africa and Mexico reported cases of highly pathogenic avian influenza in poultry.

Even though Brazil has not yet had a documented case of avian influenza, there are concerns that an outbreak of avian influenza may occur in the country in the future. Any outbreak of avian influenza in Brazil could lead to the required disposal of our poultry flocks, which would result in decreased sales in the poultry industry, prevent recovery of costs incurred in raising or purchasing poultry and result in additional expense for the disposal of poultry. In addition, any outbreak of avian influenza in Brazil would likely lead to immediate restrictions on the export of some of our products to key export markets. Preventive actions adopted by Brazilian authorities, if any, may not be effective in precluding the spread of avian influenza within Brazil.

Whether or not an outbreak of avian influenza occurs in Brazil, further outbreaks of avian influenza anywhere in the world could have a negative impact on the consumption of poultry in our key export markets or in Brazil, and a significant outbreak would negatively affect our results of operations and financial condition. Any outbreak could lead to the imposition of costly preventive controls on poultry imports in our export markets. Accordingly, any spread of avian influenza, or increasing concerns about this disease, may have a material and adverse effect on our company.

Climate change may negatively affect our business and results of operations.

We consider the potential effects of climate change when evaluating and managing our operations and supply chain, recognizing the vulnerability of natural resources and agricultural inputs that are essential for our activities. The main risks we have identified with respect to climate change relate to the changes in temperature, changes in rainfall, including drought, flooding, storms and lack of water, which may affect agricultural productivity, animal welfare and the availability of energy. These changes may adversely affect our costs and results of operations, including by raising the price of agricultural commodities as a result of long periods of drought or excessive rainfall, increasing operating costs to ensure animal welfare, increasing the risk of rationing and raising the price of electricity. We may fail to effectively implement programs to reduce our exposure to climate change, which may adversely affect our business and results of operations in the future.

We are also subject to regulatory changes, such as carbon pricing or taxation, and changes to licensing legislation for greenhouse gas emissions at the domestic and international levels. Any such changes may increase our costs and adversely affect our results of operations

Our operations are largely dependent on electricity, and energy-related expenses are one of our highest fixed costs. Energy costs have historically fluctuated significantly over time and increases in energy costs could result in reduced profits. A significant interruption in energy supply or outright loss of energy at any of our facilities could result in a temporary disruption in production and delivery of products to customers and additional costs, materially adversely affecting our results of operations.

A significant portion of Brazil’s electricity generation capacity is currently dependent upon hydroelectric facilities. Hydroelectric production is vulnerable to a variety of factors, including the variability of precipitation. There can be no assurance that our efforts to increase our energy efficiency and reduce electricity demand will be successful. If the amount of water available to energy producers becomes increasingly scarce due to drought or diversion for other uses, as has occurred in recent years, our energy expenses may increase and our results of operations may be materially adversely affected.

Any shortage or lack of water, and any failure to comply with applicable rules and regulations related to water usage and management, could materially adversely affect our business and results of operations.

In the last century, water use has grown globally at more than twice the rate of the population increase, and an increasing number of regions in the world are reaching the limit at which water services can be sustainably delivered. According to a study by the Food and Agriculture Organization of the United Nations (“FAO”), by 2025, an estimated 1,800 million people are expected to be living in countries or regions with “absolute” water scarcity (under 500 m³ per year per capita), and two-thirds of the world population may be under “stress” conditions (between 500 and 1,000 m³ per year per capita). Water is an essential input for our businesses and is used in the production of grains and other agricultural inputs required for our production processes. The industrial use of water may also adversely affect its availability. As a result, the shortage or lack of water represents a critical risk for our business and may materially and adversely affect our business and results of operations.

The procedures that we have developed to reduce our water consumption, comply with applicable rules and regulations, and minimize our impact on the environment and the community may fail or be insufficient. Additionally, our assessments of the micro and macro watersheds in the regions in which we operate and the industrial activities and characteristics of the use of water resources may be inaccurate in understanding the local water demand growth. We may fail to accurately assess the water supply or anticipate water-related risks, and the increased industrial use of water by water intensive businesses may also adversely affect the continuing availability and quality of water in Brazil. This may result in us or our key suppliers encountering water shortages. Any of these factors may materially adversely affect our business and results of operations.

We may fail to ensure compliance with relevant anti-fraud, anti-corruption, anti-money laundering and other international laws and regulations.

We are subject to anti-fraud, anti-corruption, anti-money laundering and other international laws and regulations. We are required to comply with the laws and regulations of Brazil and various jurisdictions where we conduct operations. In particular, we are subject to the Brazilian Anti-Corruption Law nº 12,846, the U.S. Foreign Corrupt Practices Act of 1977 (“FCPA”) and the United Kingdom Bribery Act of 2010. The FCPA prohibits providing anything of value to foreign officials for the purposes of obtaining or retaining business or securing any improper business advantage. As part of our business, we may deal with entities and employees that are considered foreign officials for purposes of the FCPA. In addition, we participate in certain public tenders and competitive bidding rounds for contracts involving public authorities in Brazil and potentially in other markets where we operate, which activities are typically subjected to heightened regulatory scrutiny and often require compliance with specific anti-fraud, anti-corruption, anti-money laundering and other international laws and regulations.

Although we have internal policies and procedures designed to ensure compliance with applicable anti-fraud, anti-corruption, anti-money laundering and other international laws and regulations, potential violations of law have been identified on occasion as part of our compliance and internal control processes. In addition, we were notified of allegations involving potential misconduct by some of our employees in the context of theCarne Fraca Operation,TrapaçaOperation and other investigations. For more details, see “Item 3.—D. Risk Factors— Risks Relating to Our Business and Industry—We have been subject to significant investigations relating to, among other things, food safety and quality control, and an adverse outcome of any of these investigations could result in penalties, fines or other forms of liability and could have a material adverse effect on our business, reputation, brand, results of operations and financial condition” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.” As a result of theCarne Fraca Operation andTrapaça Operation and related matters, we incurred expenses and recorded provisions for losses in inventories in the total amount of R$79.9 million in 2019 and R$ 492.8 million in 2018, which negatively impacted our results of operations. Additionally, these or other proceedings may result in penalties, fines, sanctions or other forms of liability. Furthermore, any negative reflection on our image or our brand from these or other activities could have a negative impact on our results of operations, as well as our ability to achieve our growth strategy.

Given the size of our operations and the complexity of our production chain, there can be no assurance that our internal policies and procedures will be sufficient to prevent or detect all inappropriate or unlawful practices, including fraud or violations of law or violations of our internal policies and procedures by our employees, directors, officers, partners or any third-party agents or service providers. Furthermore, there can be no assurance that such

persons will not take actions in violation of our policies and procedures (or otherwise in violation of applicable laws and regulations) for which we or they may ultimately be held responsible. Violations of anti-fraud, anti-corruption, anti-money laundering or other international laws and regulations could have a material adverse effect on our business, reputation, brand, selling prices, results of operations and financial condition, including as a result of the closure of international markets. We may be subject to one or more enforcement actions, investigations or proceedings by authorities for alleged infringement of these laws. These proceedings may result in penalties, fines, sanctions or other forms of liability. Potential negative developments in theCarne FracaOperation,TrapaçaOperation and other investigations may also negatively affect the market price of our common shares and American Depositary Receipts (“ADRs”).

We are subject to antitrust and competition laws and regulations and we may fail to ensure compliance with such laws and regulations.

We are subject to antitrust and competition laws and regulations in the jurisdictions in which we operate. Consequently, we may be subject to regulatory scrutiny in certain of these jurisdictions. For instance, on March 14, 2019, the Turkish Competition Authority (“TCA”) announced a decision regarding its investigation into our Turkish subsidiary Banvit and other producers for alleged anticompetitive practices in connection with chicken meat production in Turkey. The TCA imposed an administrative fine equivalent to R$22,507 thousand (TRY 30,518 thousand) against Banvit. For additional information, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Civil, Commercial and Other Proceedings.”

There can be no assurance that our internal policies and procedures designed to ensure compliance with applicable antitrust and competition laws and regulations will be sufficient to prevent or detect all inappropriate or unlawful practices. As a result, we may be subject to one or more enforcement actions, investigations or proceedings by authorities for alleged infringement of these laws. These proceedings may result in penalties, fines, sanctions or other forms of liability and could have a material adverse effect on our business, reputation, brand, selling prices, results of operations and financial condition, including as a result of the closure of international markets. Furthermore, there can be no assurance that the introduction of new competition laws in the jurisdictions in which we operate, the interpretation of existing antitrust or competition laws, the enforcement of existing antitrust or competition laws by authorities or civil antitrust litigation by private parties, or any agreements with antitrust or competition authorities, against us or our subsidiaries will not have a material adverse impact on our business, results of operations or financial condition.

A failure to comply with export control or economic sanctions laws and regulations could have a material adverse impact on our results of operations, financial condition and reputation.

We operate on a global basis and face risks related to compliance with export control and economic sanctions laws and regulations, including those administered by the United Nations, the European Union and the United States, including the U.S. Treasury Department’s Office of Foreign Assets Control. Economic sanctions programs restrict our dealings with certain sanctioned countries, individuals and entities. However, we have conducted, and may in the future seek to conduct, business in certain countries that are subject to sanctions under the laws of the United States or other countries. Although we have pursued these transactions, and intend to pursue any future transactions, in full compliance with applicable laws and regulations, we may not be successful in ensuring compliance with limitations or restrictions on business with companies in any such countries. If we are found to be in violation of applicable sanctions laws or regulations, we may face criminal or civil fines or other penalties, we may suffer reputational harm and our results of operations and financial condition may be adversely affected. Additionally, there can be no assurance that our employees, directors, officers, partners or any third-parties that we do business with, including, among others, any distributors or suppliers, will not violate sanctions laws and regulations. We may ultimately be held responsible for any such violation of sanctions laws and regulations by these persons, which could result in criminal or civil fines or other penalties, have a material adverse impact on our results of operations and financial condition and damage our reputation.

Failure to maintain adequate internal controls could adversely affect our reputation and business.

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting that provide reasonable assurance of the reliability of the preparation and reporting of our financial statements for external use. Inadequate internal controls may result in our failure to meet public reporting requirements accurately and on a timely basis and harm our reputation. The internal controls over financial reporting may not prevent or detect all misstatements or fraud, regardless of the adequacy of those controls, and, therefore, we cannot assure that material weaknesses will not be identified in the future.

Our failure to continuously innovate and successfully launch new products that address our clients’ needs and requirements, as well as maintain our brand image, could adversely impact our operating results.

Our financial success depends on our ability to anticipate changes in consumer preferences and dietary habits and our ability to successfully develop and launch new products and product variations that are desirable to consumers. The resources that we devote to new product development and product extensions may be insufficient and we may not be successful in developing innovative new products or our new products may not be commercially successful. For example, trends towards prioritizing health and wellness present a challenge for developing and marketing successful new lines of products to address these consumer preferences. Furthermore, a reduction in our investment in product development may negatively affect not only our ability to generate innovative solutions, but also the in-market success of any such products. Additionally, BRF employees working on innovation and research and development may move to one of our competitors, which would compromise our ability to deliver new and innovative products and may also result in our competitors gaining information we view as proprietary. To the extent that we are not able to effectively gauge the direction of our key markets and successfully identify, develop, manufacture and market new or improved products in these changing markets in a timely or cost-effective manner, our products, brands, financial results and competitive position may suffer, which may have a material adverse effect on our business, results of operations, financial condition and prospects.

We also seek to maintain and extend the image of our brands through marketing, including advertising and consumer promotions. Due to inherent risks in the marketplace associated with advertising, promotions and new product introductions, including uncertainties about trade and consumer acceptance, our marketing investments may not prove successful in maintaining or increasing our market share. A continued global focus on health and wellness, including weight management, increasing media attention on the role of food marketing and negative press coverage about our quality controls and products, including in connection with theCarne FracaOperation andTrapaça Operation, may adversely affect our brand image or lead to stricter regulations and greater scrutiny of food marketing practices.

Our success in maintaining, extending and expanding our brand image also depends on our ability to adapt to a rapidly changing media environment, including increasing reliance on social media and online dissemination of advertising campaigns. The growing use of social and digital media increases the speed and extent that information or misinformation and opinions can be shared. Negative posts or comments about us, our brands or our products on social or digital media could seriously damage our reputation and brand image. If we do not maintain or improve our brand image, then our sales, financial condition and results of operations could be materially and adversely affected.

We may divest or acquire businesses or enter into joint ventures, which may divert management resources or prove to be disruptive to our company.

We regularly review and pursue opportunities to rationalize our business through divestitures or expand by means of acquisitions, joint ventures and other initiatives. We have completed several divestitures and acquisitions in recent years.  For additional details on certain of these transactions, see “Item 4. Information on the Company—A. History and Development of the Company.” Divestments, acquisitions, new businesses and joint ventures, particularly those involving sizeable businesses, may present financial, managerial, operational and compliance risks and uncertainties, including:

·challenges in realizing the anticipated benefits of the transaction;

·difficulties with managing various macroeconomic variables and their impact on the business;

·difficulties with managing commercial relationships in various countries;

·diversion of management attention from existing businesses;

·difficulties with integrating/carving-out personnel, especially to different managerial practices;

·disruptions when integrating or carving out financial, technological and other systems;

·difficulties identifying suitable candidate businesses or consummating a transaction on terms that are favorable to us;

·challenges in retaining an acquired company’s customers and key employees;

·challenges related to the loss of key employees in connection with a divestment;

·increased compensation expenses for newly-hired employees;

·exposure to unforeseen liabilities or problems of the acquired companies or joint ventures;

·warranty claims and claims for damages which may be limited in content, timeframe and amount;

·legal challenges, including claims for indemnification;

·challenges arising from a lack of familiarity with new markets with differing commercial and social norms and customs, which may adversely impact our strategic goals or require us to adapt our marketing and sales model for specific countries;

·compliance with foreign legal and regulatory systems;

·difficulties in transferring capital to new jurisdictions; and

·challenges receiving the necessary approvals from governments and international antitrust authorities.

We may be unable to realize the strategic benefits from our divestitures or acquisitions in the timeframe we anticipate, or at all. In addition, we may be unable to identify, negotiate or finance future divestitures, acquisitions or other strategic initiatives successfully or on favorable terms. Any future joint ventures or acquisitions of businesses, technologies, services or products might require us to obtain additional equity or debt financing, which may not be available on favorable terms, or at all. Future divestitures, acquisitions and joint ventures may also result in unforeseen operating difficulties and expenditures, as well as strain our organizational culture.

Political and economic risks in regions and countries where we have exposure could limit the profitability of our operations and our ability to execute our strategy in these regions.

Since we have business operations around the world, we are subject to a variety of risks that may adversely affect our financial results. In the regions where we have production and distribution activities, we are subject, among others, to the following risks:

·governmental instability;

·geopolitical risk and conflicts (including war, terrorism and civil unrest);

·imposition of exchange or price controls;

·imposition of restrictions on exports of our products or imports of raw materials necessary for our production processes (including embargoes from countries where we have production and/or distribution activities);

·fluctuation of local currencies against thereal;

·nationalization of our property;

·political influence by local governments in communities where we operate requiring investments or other expenditures;

·increases in export tax and income tax rates for our products; and

·unilateral (governmental) institutional and contractual changes, including controls on investments and limitations on new projects.

As a result of these factors, our results of operations and financial condition in the regions where we have production and distribution activities may be adversely affected, and we may experience significant variability in our revenue from those operations. For instance, it is unclear to us if the ongoing diplomatic crisis between Qatar and other Arab countries may lead to measures, such as trade embargoes, that could ultimately impact our current operations in Qatar and in the Middle East. In addition, the Brazilian government opened a business representation office in Jerusalem in December 2019, which announcement earlier in 2019 had led to protests and unrest throughout the Middle East, and apprehension among Brazilian exporters who fear possible retaliation or embargoes from Arab countries on Brazilian exports. The impact of these changes on our ability to deliver on our planned projects and execute our strategy cannot be ascertained with any degree of certainty, and these changes may, therefore, have an adverse effect on our operations and financial results.

Deterioration of general economic and political conditions could negatively impact our business.

Our business may be adversely affected by changes in Brazilian and global economic and political conditions, which may result in increased volatility in our markets and contribute to net losses.

Global economic downturns and related instability in the international financial system have had, and may continue to have, a negative effect on economic growth in Brazil. Global economic downturns reduce the availability of liquidity and credit to fund the continuation and expansion of our business operations worldwide. While Brazil exports a diversified bundle of products to a variety of countries, a significant decline in the economic growth or demand for imports of any of Brazil’s major trading partners, such as the European Union, China or the United States, could have a material adverse impact on Brazil’s exports and balance of trade and adversely affect Brazil’s economic growth.

Furthermore, because international investors’ reactions to the events occurring in one emerging market country sometimes produce a “contagion” effect, in which an entire region or class of investment is disfavored by international investors, Brazil could be adversely affected by negative economic or financial developments in other countries. Such developments may affect the Brazilian economy in the future and, consequently, our results of operations.

Uncertainty as to whether the Brazilian government will implement significant changes in public policy in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and the securities issued by Brazilian companies. As a result, there may be high volatility in the domestic financial markets in the short term, and economic recovery in the long term may be hindered. Accordingly, improvements in the labor market and income growth may be limited, which could have an adverse effect on our operations and financial results.

Furthermore, on June 23, 2016, the United Kingdom held an in-or-out referendum on the United Kingdom’s membership within the European Union, the result of which favored the exit of the United Kingdom

from the European Union, or “Brexit.” The United Kingdom was initially expected to depart the European Union on March 29, 2019, but on March 21, 2019, the European Union and the United Kingdom agreed to extend the deadline for Brexit. The European Union and the United Kingdom agreed to a further extension on April 10, 2019. On January 2020, the United Kingdom announced it had officially exited the European Union and entered a transition period. Brexit has caused and may continue to cause political and economic uncertainty, including significant volatility in global stock markets and currency exchange rate fluctuations. The effects of Brexit will depend on many factors, including any trade deals that the United Kingdom makes to retain access to European Union markets. Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Union laws to replace or replicate. If no trade deal is reached, there could be increased costs from re-imposition of tariffs on trade between the United Kingdom and the European Union, shipping delays because of the need for customs inspections and procedures, and temporary shortages of certain goods.  In addition, trade and investment between the United Kingdom, the European Union, Brazil and other countries will be impacted by the fact that the United Kingdom currently operates under the European Union’s tax treaties. The United Kingdom will need to negotiate its own tax and trade treaties with countries all over the world, which could take years to complete. The potential impact of Brexit on our market share, sales, profitability and results of operations is unclear. Depending on the terms of Brexit, economic conditions in the United Kingdom, the European Union and global markets may be adversely affected by reduced growth and volatility. The uncertainty before, during and after the period of negotiation could also have a negative economic impact and increase volatility in the markets, particularly in the Eurozone.

Pandemics or human disease outbreaks, such as the novel coronavirus (COVID-19 virus), may disrupt consumption and trade patterns, supply chains and production processes, which could materially affect our operations and results of operations.

Pandemics or human disease outbreaks, such as the novel coronavirus (COVID-19 virus) originating in China in late 2019 and declared a global pandemic by the World Health Organization on March 11, 2020, may adversely affect our business and operations.

While the extent and impact of the COVID-19 pandemic currently remains uncertain, it has already disrupted consumption and trade patterns, supply chains and production processes at a global scale and specifically relating to our business, including to the extent that anticipated product shipments may be substantially delayed either as a result of further spread of the virus or as a result of precautionary measures implemented by governments or commercial enterprises to limit the spread of the virus.

We continue to operate our plants, distribution centers, logistics, supply chain and administrative offices, although currently we have implemented a partial remote work program in some of our corporate offices. Our management has developed and implemented contingency plans to maintain the operations and monitors the effects of the pandemic through a permanent multidisciplinary monitoring committee, formed by executives, specialists in the public health area and consultants.

Customers from certain regions and channels in which we operate are being affected by COVID-19, mainly by the measures of social distancing imposed by authorities. We believe that there will be an increase in general customer default rates during the second quarter of 2020 and a consequent increase in expected credit losses. The further deterioration in the credit cycle of our customers may adversely affect our results and cash flows in the future, which we discuss in Note 36.2 to our consolidated financial statements.

Our operations include global production and distribution facilities, and if there is an outbreak of COVID-19 in our facilities or the communities where we operate and distribute our products, our production, operations, employees, suppliers, customers and distribution channels could be severely impacted. Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work, and means of transporting products within regions or countries may be limited for the same reason, along with the potential for transport restrictions related to quarantines or travel bans.

Such a pandemic could also have an adverse impact on consumer demand, as quarantines may inhibit consumption, and restrictions on public gatherings or interactions may limit the opportunity for our customers and

consumers to purchase our products. The consequences of such a pandemic could also result in a widespread health crisis that destabilizes commodity prices and the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and have a material adverse effect on our results of operations.

Our results of operations are subject to cyclicality and volatility affecting the prices of commodities, poultry and pork, which could adversely affect our entire business.

Our business is largely dependent on the cost and supply of corn, soy meal, soybeans, hogs and other raw materials, as well as the selling prices of our poultry and pork. These prices are determined by supply and demand, which may fluctuate significantly, and other factors over which we have little or no control. These other factors include, among others, fluctuations in local and global poultry and hog production levels, environmental and conservation regulations, economic conditions, weather, animal and crop diseases, cost of international freight and exchange rate and interest rate fluctuations. In addition, prices for our raw materials, including corn, soy meal and soybeans, have been affected, and may continue to be affected, by the ongoing trade dispute between the U.S. and China. It is unclear whether this trade dispute will be resolved and what effects it may have on global political and economic conditions in the long term. Any changes in the price of raw materials required to produce our products as a result of the foregoing or other factors could have a material impact on our business.

Our industry, both in Brazil and abroad, is generally characterized by cyclical periods of higher prices and higher profitability, followed by overproduction, leading to periods of lower prices and lower profitability or losses. There can be no assurance that we will be able to adequately adapt to any such cyclicality or volatility, which may have an adverse effect on our operations and financial results.

Natural disasters or extreme weather, including floods, excessive cold or heat, hurricanes or other storms, as well as any interruption at our plants that may require the temporary re-allocation of plant functions to other facilities could, among other things, impair the health or growth of livestock or interfere with our operations due to power outages, damage to our production and processing facilities or disruption in transportation channels or information systems.

Our external market sales are subject to a broad range of risks associated with cross-border operations.

External market sales account for a significant portion of our global net sales, and represented 44.5% of our net sales in 2019, 43.3% of our net sales in 2018 and 43.3% of our net sales in 2017. Our external market is reported within our International business segment, which comprises Islamic markets (including Turkey, North of Africa, Gulf Cooperation Council (GCC) and Malaysia), Asia, Europe, Eurasia, Africa and Americas, where we are subject to many of the same risks described below in relation to Brazil. Furthermore, we may seek to expand sales of our products to additional international markets. Our future financial performance depends, to a significant extent, on the economic, political and social conditions in those regions as well as on our supply conditions.

Our future ability to conduct business operations in external markets could be adversely affected by factors beyond our control, such as:

·exchange rate and interest rate fluctuations and the impact of hyperinflation;

·commodities price volatility;

·deterioration in global economic conditions;

·political risks, such as turmoil and instability, foreign exchange controls and uncertainty regarding government policies;

·decreases in demand, particularly from large markets such as China and Saudi Arabia;

·imposition of increased tariffs, anti-dumping duties or other non-tariff trade barriers;

·restrictions on international trade and financial flows imposed due to balance of payments deficits;

·strikes or other events affecting ports and other transport facilities;

·unpredictable international border closings that restrict products, materials and people;

·compliance with differing foreign legal and regulatory regimes;

·strikes, not only of our employees, but also of port employees, truck drivers, customs agents, sanitary inspection agents and other government agents at the Brazilian ports from which we export several of our products;

·access to adequate infrastructure, which could be affected by flooding or similar events;

·sabotage affecting our products; and

·negative media exposure related to the Brazilian agriculture and/or meat processing industry, including in connection with theCarne Fraca Operation,Trapaça Operation and/or other investigations.

We face significant competition from Brazilian and foreign producers, which could adversely affect our financial performance.

We face strong competition from other Brazilian producers in ourboth the domestic market and from Brazilian andexternal markets. In addition, we compete with foreign producers in our internationalexternal markets. The Brazilian market for whole poultry, and poultry and pork cuts is highly fragmented.  Small producers, can also be important competitors, some of which operate in the informaleconomy, and are able to offer lower prices by meeting lower quality standards. Competition from small producers is a primary reason why we sell most of our frozen (in natura) meat products in the export markets and is a barrier to expanding our sales of those products in the domestic market.  With respect to exports, we compete with other large, vertically integrated Brazilian producers that have the ability to produce quality products at similarly low cost, as well as with foreign producers.costs.

In addition, the size and growth potential growth of the Brazilian market for processed food, poultry, pork and beef andcombined with Brazil’s low production costs are attractive to international competitors. Although the main barrier to these companies entering the Brazilian market has been the need to build a comprehensive distribution network, andincluding a network of outgrowers international(outsourced farmers), foreign competitors with significant resources could undertake to build these networks and/or acquire and expand existing networks.such capabilities.

The Brazilian poultry and pork cuts markets, in particular, are highly price-competitive and sensitive to product substitution. Even if we remain a low-cost producer, customerswith strong brands, consumers may seekchoose to diversify their sources of supply by purchasing a portion of thepurchase other products they need from producers in other countries, as some of our customers in key export markets have begun to do.or brands. We expect that we willto continue to face strong competition in all of our markets and anticipate that existing or new competitors may broaden their product lines and extend their geographic scope. Any delay or failure by us to respondin responding to product, pricing and other movesstrategies by competitors may negatively affect our financial performance.

Increased regulation of food safety and animal welfare could increase our costs and adversely affect our results of operations.

Our manufacturing facilities and products are subject to regular Brazilian federal, state and local, as well as foreign, governmental inspections and extensive regulation in the food safety area, including governmental food processing controls.controls in all countries in which we operate. We currently comply with all food safety requirements and animal welfare laws in the markets where we conduct our business. We already incur significant costs in connection with such complianceour efforts to comply with applicable food safety and changesprocessing rules. Changes in government regulations relating to food safety or animal welfare could require us to make additional investments or incur additional costs to meet the necessary specifications for our products. Our products are often inspected outside of Brazil by foreign food safety officials, and any failure to pass those inspections cancould result in ourus being required to return all or part of a shipment to Brazil, destroyrecall certain products, dispose of all or part of a shipment or incur costs because of delays in delivering products to our customers. Although Brazil currently has limited regulations regarding animal welfare, we have adopted various international animal welfare standards to address our customers’ expectations. Any tightening of food safety or animal welfare regulations could result in

increased costs and could have ana material adverse effect on our business, and results of operations.operations, financial condition and prospects.

Our performance depends on favorable labor relations with our employees, and our compliance with labor laws.laws and the safety of our facilities. Any deterioration of those relations, or increaseincreases in labor costs or injuries at our facilities could adversely affect our business.

As of December 31, 2015,2019, we had a total of 96,279approximately 93,000 employees worldwide. All of ourOur production employees in Brazil and in countries where organized labor is prevalent are generally represented by labor unions. Upon the expiration of existing collective bargaining agreements or other collective labor agreements, we may notbe unable to reach new agreements without union actionwith the labor unions and any such agreements may not be on terms satisfactory to us, which could result in us paying higher payments of wages or benefits to union workers. IfAdditionally, if we are unable to negotiate acceptable union agreements, we may become subject to work stoppages or strikes.

Labor costs are among our most significant expenditures. In 2015, theySuch costs represented 15.4%approximately 14.3% of our cost of sales representing an increasein 2019. In the event of 1.5 percentage points compared to 2014.a review of our employee contract structure, additional operational expenses could be incurred. Additionally, in the ordinary course of business, we outsource some of our labor force, in the ordinary course of business, therefore being subjectwhich subjects us to the contingenciesclaims that may arise from this relationship. These contingencies may involvethese relationships, including claims directly against us as if we were the direct employer of thosethe outsourced workers or claims seeking our subsidiary liability.workers. In the event that a significant amount of these contingencies haveclaims result in an unfavorable outcome against us, we may be held liable for amounts higher than ourprovisions, which may have a material adverse effect on our business, financial and operational condition and results of operations. In addition, if the outsourced activities are considereddeemed by the authorities to be our core activities, outsourcing may be considered illegal and the outsourced workers may be considered our employess,employees, which would result in a significant increase in our costs and could subject us to administrative and judicial procedures by the relevant authorities and fines.We are also subject to increases in our labor costs due to Brazilian inflation and increases in health insurance.insurance costs. Material increases in our labor costs could have a material adverse effect on our business, and results of operations.operations and financial condition and prospects.

Environmental laws and regulations require increasingincreased expenditures for compliance.

We, like other Brazilian food producers, are subject to extensive Brazilian federal, state and local environmental laws, regulations, authorizations and licenses concerning, among other things, the interference with protected areas, (conservationsuch as conservation units, archeological areas and permanent preservation areas),areas, handling and disposal of waste, discharges of pollutants into the air, water and soil, atmospheric emissions, noise and clean-up of contamination, all of which affect our business. Water management is especially crucial and poses many challenges to our operations. In Brazil, water use regulations impact farming operations, industrial production and hydroelectric power. Any failure to comply with any of these laws andor regulations or any lack of authorizations or licenses could result in administrative and criminal penalties, such as fines, cancellation of authorizations or revocation of licenses, in addition to negative publicity and civil liability for remediation or compensation for environmental damage without any caps. We cannot operate a plant if the required environmental permit is not valid or updated. Civil penalties may include summons, fines, temporary or permanent bans, the suspension of subsidies by public bodies and the temporary or permanent shutdown of commercial activities. Criminal penalties include fines, temporary interdictionloss of rights and prison (for individual offenders) and liquidation, temporary interdictionloss of rights, fines and community servicesservice (for legal entities).

Furthermore, Additionally, pursuant to Brazilian environmental legislation,laws, the corporate entityveil will be pierced (such that the stockholders of a company will be disregarded (such that the owners of the company will beheld liable for its debts) if necessary to guarantee the payment of costs related to the recovery of environmental damages,damage whenever the legal entitycorporate veil is deemed by a court to be an obstacle to reimbursement of damages caused to the quality of the environment.obtaining compensation for environmental damage.

We have incurred, and will continue to incur, operating expenses and capital and operating expendituresexpenditure requirements to comply with these laws and regulations. Because of the possibility of unanticipated regulatory measures or other developments, particularly as environmental laws become more stringent in Brazil, the amount and timing of future expenditures required to maintain compliance couldmay increase from current levels and couldmay adversely affect the

availability of funds for capital expenditures and other purposes.priorities. Compliance with existing or new environmental laws and regulations, as well as obligations in agreements with public entities, couldmay result in increased costs and expenses.

Our plants are subject to environmental and operational licensing based on their pollution potential and usageuse of natural resources. If for example, one of our plants is built or expanded without an environmental license, or if our environmental licenses expire, are not timely renewed or have their request offor renewal dismissedrejected by the competent environmental authority, we may incur fines and other administrative penalties, such as suspension of operations or closing of the facilities in question. Those same penalties may also be applicable in the case of a failure to fulfill the conditions of validity foreseen in the environmental licenses already held by us. Furthermore, we cannot operate a plant if the required environmental permit is not valid or updated. Currently, some of our environmental licenses are in the renewal process, and we cannot guarantee that environmental agencies will approve our renewal requests within the required legal period.requests. Brazilian Complementary Law No. 140/2011CONAMA (“Conselho Nacional do Meio Ambiente”) Resolution 237 establishes that renewal of environmental licenses must be requested at least 120 days in advance of itstheir expiration, so that the licenselicenses may be automatically extended until a final decision from the environmental authority is reached. In addition, the interim, we are permitted to continue operations under the respective license, duringenvironmental agency may condition the renewal process.on expensive facility upgrades if there have been regulatory changes in the environmental standards that the plant is required to meet, which may result in delays, disruptions or in the denial of the license.

Unfavorable outcomes in administrative and legal proceedings may reduce our liquidity and negatively affect us.

We are defendants in civil and other proceedings (including administrative, regulatory and environmental), labor and tax proceedings and are also subject to consent agreements (Termo de Ajustamento de Conduta, or “TAC”). Under IFRS, we classify the risk of adverse results in legal proceedings as “remote,” “possible” or “probable.” We disclose the aggregate amounts of these proceedings that we have judged possible or probable, to the extent the amounts are known or reasonably estimable, and we record provisions only for losses that we consider probable. See “Item 8. Financial Information—Legal Proceedings” and Note 27 of our consolidated financial statements.

We are not required to disclose or record provisions for proceedings in which our management judges the risk of loss to be remote. However, the amounts involved in certain of the proceedings in which we believe our risk of loss is remote are substantial, and the losses to us could be significantly higher than the amounts for which we have previously recorded provisions.  Even for the amounts recorded as provisions for probable losses, a judgment against us would have an effect on our cash flow if we were required to pay those amounts. Unfavorable decisions in our legal proceedings may therefore, reduce our liquidity and adversely affecthave a material adverse impact on our business, results of operations, financial condition and results of operations.prospects.

With regard to tax contingencies, we are currently defendants in a number of cases, which include, for example, disputes regarding the offset of tax casescredits and the use of tax incentives in several states that involve tax credit offsets. These cases have not yet reached a final ruling byin the Brazilian courts.We In addition, we may face risks arising from potential impairment of input state VAT that we accumulate on exports.

As of December 31, 2019, we had R$1,794,369 thousand in provisions for contingencies, of which R$307,177 thousand was for civil and other contingencies (including administrative, regulatory and environmental), R$583,464 thousand was for tax contingencies, R$603,074 thousand was for labor contingencies and R$300,654 thousand was for contingent liabilities andarising from business combinations.

We are also currently being investigated in the monetization of tax credits, which can negatively impact our results.The Supreme Court of Brazil has ruled that the use of total ICMS tax credits in operations related to food products classified as staple foods in Brazil (cesta básicaCarne Fraca), Operation andTrapaça Operation, which benefitmay result in penalties, fines and sanctions from a reduced tax basis ingovernmental authorities or other forms of liability. For more information about the calculation of the ICMS tax, is improper. The case is currently on appeal“Carne Fraca Operation” and if the decision is upheld and determined to apply to some or all of BRF’s operations, it could have “Trapaça significant impact on our operations, liquidity and financial results. See Operation” see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Tax Proceedings.Carne Fraca Operation” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Trapaça Operation.” Any investigation from governmental authorities currently unknown to us with respect to any potentially unlawful business practice may also result in penalties, fines and sanctions or other forms of liability.

AsOn March 12, 2018, a shareholder class action lawsuit was filed against us, some of our former managers and a current officer of ours in the U.S. Federal District Court in the Southern District of New York. On July 2, 2018, the Court appointed the City of Birmingham Retirement and Relief System lead plaintiff in the action (the “Lead Plaintiff”). On December 31, 2015,5, 2018, the Lead Plaintiff filed an amended complaint that sought to represent all persons and entities who purchased or otherwise acquired BRF ADRs during the period from April 4, 2013, through and including March 2, 2018. The class action alleges, among other things, that BRF and certain of its officers and/or directors engaged in securities fraud or other unlawful business practices related to the regulatory issues in connection with theCarne Fraca Operation andTrapaça Operation. On December 13, 2019, we hadand the other defendants filed a motion to dismiss. On January 21, 2020, the Lead Plaintiff filed an opposition motion and, on

On December 19, 2018, we entered into a Share Sale and Purchase Agreement whereby we agreed to sell all of the issued and outstanding shares of our Argentinian subsidiary, Avex S.A., to Granja Tres Arroyos S.A. and Fribel S.A.. Avex S.A. operates three facilities located in Llavalol, Villa Mercedes and Rio Cuarto, in Argentina, for the total considerationproduction of US$146.2 million. QNIE acted as BRF’s distributor in the State of Qatar for over 40 years.poultry and margarine. This transaction was completedclosed on January 6, 2016 byFederal Foods Qatar LLC, a subsidiary of BRFFebruary 4, 2019, for an amount equivalent to R$169,726 thousand (US$44,824 thousand).

Molino’s Trademarks – ArgentinaSale of Assets in Europe and Thailand

On February 7, 2019, we agreed to sell to Tyson International Holding Co. most of our subsidiaries in Europe, including our Wrexham (UK) and Oosterwolde (Netherlands) processing plants, and our food processing and poultry slaughtering operation in Thailand.  This transaction closed on June 3, 2019, for an amount equivalent to R$1,488,033 thousand (US$382,106 thousand).

Other Transactions in 2018 and 2019

On October 1, 2015, BRF, throughDecember 6, 2018, the Company was notified by VDG Holding S.A. that it was exercising its controlled entities Quickfoodright to terminate Minerva S.A. and Avex’s shareholders’ agreement entered into by the parties, as shareholders of Minerva S.A., both headquartered in Argentina, executed, with Molinos Río de la Plata S.A. and one of its controlled entities, the documents required for the acquisitionon November 1, 2013, as a result of the following sausage, hamburger and margarine trademarks, all present inCompany holding less than 6% of the Argentinean retail market: Vieníssima, GoodMark, Manty, Delícia, Hamond, Tres Cruces and Wilson. The total consideration for the transaction was US$43.5 million, paid in in Argentinean currency. This transaction was completed on October 16, 2015.

Campo Austral – Argentina

On December 1, 2015, BRFsigned a binding offer with Pampa Agribusiness Fund L.P. and Pampa Agribusiness Follow-on Fund L.P. related to the acquisition of all theoutstanding shares issued by Eclipse Holding CooperatiefUA, a Dutch company that controls Campo Austral, a group of companies with fully integrated business operations in the hog segment in Argentina, including the cold cuts market. Campo Austral is valued at US$85.0 million. As of the date hereof, this transaction has not yet been completed.

Golden Food Siam - Thailand

On December 1, 2015, BRF,through its controlled entity BRF GmbH, entered into a share purchase agreement for the acquisition of all the common shares issued by Golden Foods Siam, including its assets in Thailand and Europe, for the total consideration of US$348.7 million. This transaction was completed on January 26, 2016. Golden Foods Siam is one of the leading poultry producers in Thailand with fully integrated operations and presence in more than 15 global markets.

Universal Meats (UK) Ltd – United Kingdom

Minerva S.A.

On December 1, 2015, BRF, through18, 2018, the Company created a Brazilian receivables investment fund (“FIDC”) to acquire trade receivables of commercial transactions entered into by the Company and its controlled entity BRF Invicta Limited, signed a binding memorandumcustomers in Brazil. The fund has three distinct classes of understandingquotas and may reach an aggregate total volume of R$875 million.

On January 10, 2019, the Company executed an Asset Sale and Purchase Agreement with BOGS S.A. for the shareholderssale of Universal Meats (UK) Ltd, a food distributorits facility located in the UK, focusedcity of Florencio Varela, Argentina, and all assets and liabilities related to it, including the brands “Bocatti” and “Calchaquí,”. The transaction closed on food service,February 28, 2019, for an amount equivalent to R$95,036 thousand (US$26,753 thousand).

On January 10, 2019, the Company executed a Share Sale and Purchase Agreement with La Piamontesa de Averaldo Giacosa y Compañía S.A. for the total considerationsale of GBP31.8 million. Thisall of the capital stock of the Company’s Argentine subsidiary, Campo Austral S.A., including its facilities in San Andrés de Giles and Pilar and the brand “Campo Austral.” The transaction closed on March 11, 2019 for an amount equivalent to R$29,359 thousand (US$7,619 thousand).

On August 20, 2019, the Company’s wholly-owned subsidiary Badi Limited executed a Share Purchase Agreement with Al Takamul International Company for Commercial Investment Limited for the purchase of the remaining 25% of the capital stock that it did not own in Al Wafi Al Takamul International Company for Food Products Limited (“Wafi”), a company incorporated in the Kingdom of Saudi Arabia responsible for distributing BRF products in that country. The transaction closed on April 21, 2020 for an amount equivalent to R$100,390 thousand (US$19,000 thousand, translated toreais at the exchange rate of R$5.2837 as of April 20, 2020), at which point Wafi became a wholly-owned subsidiary of Badi Limited.

On September 5, 2019, the Company executed a Share Sale and Purchase Agreement with Sats Food Services Pte Ltd, providing for the terms and conditions for the sale of our interest in Singaporean food company Sats BRF Food Pte Ltd., equivalent to 49% of its capital stock. The transaction was completedconcluded on February 1, 2016.September 5, 2019 for the amount equivalent to R$51 million (SGD17 million) and also encompassed the execution of a new contract for the distribution and licensing of brands owned by BRF.

Carne Fraca Operation

We are currently being investigated in connection with theCarne Fraca Operation. For more information, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Carne Fraca Operation.”

Trapaça Operation

We are currently being investigated in connection with theTrapaça Operation. For more information, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings— Trapaça Operation.”

Capital Expenditures

The table below sets forth our capital expenditures with respect to operations for the periods indicated:

*The total amount spentamounts disclosed above do not include leases.

In 2019, as in 2015 isthe previous year, investments were made a priority to meet the regulation and adaptation of our asset base to safety and quality principles in line with investments in previous years, with higher investments for increases in capacity, yield improvements, cost reductions, processes automation, improvement of service levels and for better working conditions for our employees. Additionally, we have strengthened our commitment to a more efficient use of the employed capital aiming at generating value to shareholders and sticking to our strategic plan.organizational culture.

In 2014,2018, we had a reductionfocused our investments on our quality and security standards rather than acquisitions, reflecting the policies of our new board of directors.

In 2017, BRF focused on executing the nearly R$115.0 million of investments aimed at increasing capacity. On the other hand, there was an increasemade in the amount invested for improvement of efficiency, cost reduction, process automation and service level, as well as working conditions for employees, improving the focus on compliance with regulatory standards. Additionally, there was a reinforcement on the focus on capital efficiency used to generate shareholder value and aligned with the strategic plan.

The main capital expenditures in 2015, 2014 and 2013 are described below:

Tatui (SP-Brazil):In 2014 and 2013, BRF invested a total of R$65.9 million in developing a production line for sliced cold cut products to be sold in an exclusive single package. This new line was installed in the Tatui Industrial Complex, located in the state of São Paulo (Brazil). This new product aims at strengthening the presenceof the Sadia brand in the cold cuts category, offering a differentiated pre-sliced product, with clear identification of the brand and food security assurance.

BRF is a leader in the cold cuts category and wants to expand the portfolio of products that reach the consumer needs, such as single fresh slices. The new sliced cold cuts lineSoltissimo offers thin and single slices that do not stick together, with “easy-open” and storage packaging and fresh products.

Logistics Management:BRF has been working on a Logistics Growth Acceleration Project, which consists of the implementation of two logistics management systems: Transportation Management System (“TMS”) and Warehouse Management System (“WMS”). With that, we expect to improve the company’s service levels and On Time In Full (“OTIF”) index, representing the percentage of orders that are fully satisfied with the items and quantities requested and within the time specified by the customer, and align it with market benchmarks.

Automation:In 2015, 2014 and 2013, BRF invested R$482.3 million2016 for the automation of company processes. The goal has beenof these investments was to improve efficiency by increasing productivity and reducing production costs. In 2015,We also invested R$136.5 million in international projects, more specifically our Toledo, Campos Novos and Rio Verde factories to increase pork production for the focus of automation investments was on deboning processes and poultry packaging.

Internationalization Project: BRF is working onChinese market. Additionally, in 2017, we invested R$20.1 million in a broad long-term internationalization project. In 2014,new production line for example, the company opened a processed products facility in the UAE, with production capacity of 70 thousand tons/year. This represented a total investment of around US$160.0 million.

Operational footprint: In 2015, the company had a strong focus on improving its operational complex, investing on growth and optimization of production between plants in order to minimize the cost to produce and deliver each product. The optimization takes into account aspects of production cost, logistics, tax, quality and production specialization. At this point, the review also takes this opportunity to improve the mix of the Company's products, maximizing investments in higher value-added products, in line with the strategy of BRF. The revaluation of footprint also provides greater flexibility and agility in the production process.

animal ingredients.

In 2016,2020, in addition to existing projects, we planexpect to focus on pursuing our commitment to maximizing the developmentuse of our assets by making investments to help eliminate production constraints and increase overall efficiency. In addition, we will increase investments to expand in the markets we serve and take advantage of new products and technologies as well as on manufacturing efficiency and logistics improvements. In accordance with BRF’s commitment to a more efficient use of its employed capital, we will also analyze divestiture opportunities (such as inactive real estate assets) should they allow the company to increase its focus on the core business and generate higher returns for shareholders.

commercial opportunities.

B.                 Business Overview

BRF S.A. is one of the largest producers of fresh and frozen protein foods in the world,world. We are committed to operating our business and delivering products to our global customer base in line with our core values: quality, safety and integrity. We have a portfolio of over four thousandapproximately 3,000 stock keeping units (“SKUs”). Our processed products include marinated and frozen whole and cutchicken,Chester® rooster and turkey meats, specialty meats, frozen processed meats, frozen prepared entrees, portioned products and sliced products. We also sell margarine, sweet specialties, sandwiches mayonnaise, and animal feed. We are the holder of brands such asSadia, Perdigão, Qualy, Chester, Perdix,Confidence andPatyHilal. In 2019, BRF is responsibleaccounted for 14.5%11.6% of the worldworld’s poultry trade, in poultry.according to Trademap.

Our portfolio strategy is focused on creating new, convenient, practical and healthy products for our consumers based on their needs.preferences. We seek to achieve that goal through strong innovation to provide us with increasing value-added items that will differentiate us from our competitors and strengthen our brands.

With 35 plants34 industrial facilities in all regions of Brazil, BRF haswe have among itsour main assets a widespread distribution network that enables itsour products to reach Brazilian consumers through 623,000more than 555,000 monthly deliveries and 4045 distribution centers 20as of December 31, 2019, 21 of which are in the domestic market and 2024 of which are in our export markets.

In the international market, BRF has a leading brand,Sadia, in various categories in Middle Eastern countries. We maintain 22 sales21 offices outside of Brazil serving customers ofin more than 120130 countries on five continents. We have sixone industrial units in Argentina, two in Europe (BRF UK and BRF Holland) and onefacility in Abu Dhabi, United Arab Emirates, that was inauguratedone in Malaysia and three in Turkey.

We have been a public company since 1980. Our shares have been listed on November 26, 2014.

We are able to reach substantially alltheNovo Mercado of the Brazilian population through a nationwide networkSão Paulo Stock Exchange as BRFS3 since 2006, and ADRs representing our common shares are traded on the New York Stock Exchange, or “NYSE.”

A breakdown of 20 distribution centers. our products is as follows, which are sold both in Brazil and to our international customers:

·Meat Products, consisting ofin natura meat, which we define as frozen whole and cut chicken, and frozen pork;

·Processed Food Products including the following:

omarinated, frozen, whole and cut chicken, roosters (sold under theChester^® brand) and turkey;

ospecialty meats, such as sausages, ham products, bologna, frankfurters, salami, bacon and other smoked products; and

ofrozen processed meats, such as hamburgers, steaks, breaded meat products, kibbeh and meatballs;

·Other Processed Products including the following:

omargarine; and

ofrozen prepared entrees, such as lasagna and pizzas, as well as other frozen foods; and

·Other, consisting of soy meal, refined soy flour and animal feed.

Prior to the divestitures made in connection with our financial and operational restructuring plan, other processed products included mayonnaise, mustard and ketchup.

In the Brazilian market,Brazil, we operate 3534 meat processing plants, three margarine processing plants, three pasta processing plants, one dessert processing plant and three soybean crushing plants, all of themwhich are located near our raw material suppliers or the main consumer centers. We have an advanced logisticlogistics system in our domestic market, with 2021 distribution centers, being ninesix of which are owned by BRFus and 1115 of which are leased byfrom third parties, all of which serve the domestic marketsupermarkets, retail stores, wholesale stores, restaurants and export markets.other clients.

In the internationalour International market, we operate sixfive industrial facilities for meat processing plants, one margarineprocessing. Additionally, after giving effect to the divestitures made in connection with our financial and oil processing plant, one sauce and mayonnaise processing plant and one frozen vegetables processing plant. We have 20operational restructuring plan, we continue to operate 24 distribution centers located overseas,in Asia, the Southern Cone and the Middle East as well as commercial offices on four continents.

We are also focused on addressing the impacts of climate change on the environment and our business. Among the initiatives that we have taken to reduce our exposure to climate change and to maintain our

competitiveness in terms of costs is the monitoring of grain stocks and purchases and the constant monitoring of the weather in agricultural regions to guide our purchasing decisions, as well as anticipating price movements in the United Kingdom, France, Spain, Italy, Austria, Hungary, Netherlands, Russia, Singapore, South Korea,commodity markets. Other initiatives include technological innovations in our animal-raising facilities to improve efficiency and safeguard animal welfare. In addition, we recognize that consumers, investors and other stakeholders are more conscious of social and environmental aspects of the production chain. We have taken steps to address these concerns, for example by entering into a partnership with the World Wide Fund for Nature (WWF) and joined the Collaboration for Forests and Agriculture (CFA) in 2019, with the aim of developing a more sustainable grain supply chain.

Our Industry

We manage our business to target both the Brazilian market and international markets.

Brazilian Market

As a Brazilian company, with a significant portion of our operations in Brazil, we are acutely affected by local economic conditions. Because of our significant operations in Brazil, fluctuations in Brazilian demand for our products affects our production levels and revenues.

Real GDP in Brazil increased at an average annual rate of 2.3% from 2004 through 2019.  For two consecutive years, in 2015 and in 2016, Brazil’s GDP decreased by 3.5%, after increasing 0.5% in 2014. Reacting to this weak economic scenario, the Central Bank lowered the Special System for Settlement and Custody (Sistema Especial de Liquidação e de Custódia, or “SELIC”) interest rate, which is the short-term benchmark interest rate. Overall, the long-term trend remains downward, from 17.8% as of December 31, 2004 to 4.5% as of December 31, 2019.  For the year ended December 31, 2019, the IPCA increased by 4.31%.

The unemployment rate and consumer confidence levels also have an impact on consumption levels in Brazil. The average unemployment rate for 2019 was 11.8%, an increase of 0.2 percentage points when compared to the 11.6% of 2018. The Consumer Confidence Index for December 2019 was 91.6%, 1.4 percentage points below that in December 2018 of 93.0%.

According to the Brazilian Association of Supermarkets (Associação Brasileira de Supermercados, or “ABRAS”) in December 2019, supermarket sales in real terms (deflated by the IPCA), increased 2.3% compared to December 2018. For the full year, supermarket sales in real terms rose 3.6% in 2019 as compared to 2018.

Export Markets

The information set forth in this “Export Markets” subsection relates to Brazilian exports as a whole and not only to exports of our company.

Brazilian chicken exports increased by 2.8% in the year ended December 31, 2019, compared to the year ended December 31, 2018, in terms of volume. Pork exports registered an increase of 16.2% in volume sold in the year ended December 31, 2019, compared to the year ended December 31, 2018. Beef exports recorded an increase of 12.9% in volume in the year ended December 31, 2019, compared to the year ended December 31, 2018.

Brazilian chicken exports in the year ended December 31, 2019 totaled 4.2 million tons on sales of R$28.17 billion. China Japan,is the main destination for these exports (13.9%), followed by Saudi Arabia (11.1%), Japan (10.1%) and the United Arab Emirates Qatar, Oman, Kuwait, South Africa, Argentina, Uruguay(8.1%).

Pork export volume in the year ended December 31, 2019 totaled 750.3 thousand tons, totaling around R$6.45 billion. The leading importers, China, Hong Kong and Chile.Chile represented 33.2%, 21.7% and 5.9%, respectively, of total exports from Brazil.

Beef shipments in the year ended December 31, 2019 totaled 1.81 million tons with sales of around R$29.77 billion. This increase in volume was driven by higher exports sent to China and Hong Kong, which import 27.2% and 18.2% of Brazilian beef exports, respectively.

BRF has beenFor a public company since 1980. Our shares have been listeddiscussion on the BM&FBovespa as BRFS3 since 2006,global economic conditions and we are also tradedfurther information on the New York Stock Exchange (NYSE - ADR level III). Since 2005, BRF has been part of BM&FBovespa’s Corporate Sustainability Index (ISE) portfolio in acknowledgement of its strong commitment to sustainable development. This commitment has been reinforced and internationally recognized since 2012, upon our entrance into the portfolio of Emerging Markets of Dow Jones Sustainability Index.

Competitive Strengths

We believe our strongest competitive points are:

·Leadership in the Brazilian Food Market with Strong Brands and a Global Presence in the Market.We are one of the biggest food companies in Brazil, the biggest company in Brazilian agrobusiness (according to Globo Rural magazine), with a size and scale that allows us to compete in Brazil as well as in international markets. We believe our leading position allows us to take advantage of market opportunities by expanding our business, increasing our offer of added-value products and improving our business in international markets.  In 2015, we slaughtered around 1,724.4 million chickens and other poultry, 9.5 million hogs and cattle. In this same year, we sold around 4.5 million tons of poultry, pork and processed products. Our own and licensed brands have a high recognition specially in Brazil, Argentina and Golf countries and we are expanding our presence internationally. Our sustainable practices have also brought BRF great recognition over the years. We are the only representative of the food sectorconditions on a list of 10 leading Brazilian companies in terms of transparency published by the Carbon Disclosure Project (CDP). We are the only company in the food sector to be part on BM&FBovespa’s Corporate Sustainability Index (ISE) of the São Paulo stock exchange for the last 11 years. The company also became part of the Emerging Markets portfolio of the Dow Jones Sustainability Index four years ago. BRF is also among the companies listed on the Global Compact 100 Index, a list of the United Nations Global Pact.

·Extensive Distribution Network in Brazil and the Export Markets.  We are one of the few companies with an established distribution network that can deliver frozen and chilled products in practically any region in Brazil. Moreover, we export products to around 120 countries and are developing our own distribution network in Europe, where we sell directly to food processing companies and local distributors. We operate in the Middle East through stakes we have acquired in distribution companies like Al Khan Foodstuff LLC, the leader in the distribution of frozen and chilled food in the Sultanate of Oman, the retail frozen foods distribution business of  Alyasra Food Company W.L.L., the leader in the distribution of frozen, chilled and dried food in Kuwait, and Federal Foods Limited, the leader inthe distribution of food in the United Arab Emirates (UAE). Besides this, we also operate through Al Wafi in Saudi Arabia. In Argentina, we are working to optimize the number and increase the loyalty of our distributors. Our established distribution capacities and logistical experience allow us to expand our national and international business, leading to higher sales volume and a greater coverage of our line of products.

·Low Cost Producers in a Growing Global Market.  We believe we have a competitive advantage over producers in some of our export markets due to our lower labor costs and gains of efficiency in animal production in Brazil. We have also achieved a scale of production and quality that allows us to compete effectively with the main producers in Brazil and other countries. We set up a series of programs aimed at maintaining and improving our cost effectiveness, including programs to optimize our supply chain by integrating demand, production, inventory management and client attendance. Our Shared Service Center (CSC - Centro de Serviços Compartilhados) centralizes our administrative and corporate activities, and our BRF Value Generation system (GV BRF - Geração de Valor BRF”) provides our managers with a more efficient use of fixed and working capital while our Zero-Base Budget (OBZ - Orçamento Base Zero) is directed at enhancing the efficiency of cost management.

·Strategic and Diversified Geographic Allocation.  Our slaughterhouses are strategically located in different regions of Brazil (South, Southeast and Midwest). This allows us to offset the risks from any restrictions on exports that may occur in particular regions of the country due to sanitary concerns. The geographical diversity of our plants in 10 Brazilian states also allows us to reduce the cost of transport due to their proximity to the grain-producing regions and the country´s main export ports. In order to have a greater focus on our core business, we made an strategical partnership with Minerva, through which we transferred our beef operations to them, in exchange for an equity stake in this company. This transaction was approved by Brazil’s anti-trust agency (CADE) in 2014. In 2015, we also sold our dairy division to Lactalis do Brasil – Comércio, Importação e Exportação de Laticínios Ltda, a company controlled by Parmalat S.p.A., a listed Italian company that belongs to the Groupe Lactalis. We also opened our first processed food plant in the Middle East in Abu Dhabi in the United Arab Emirates in 2014, the largest processed food plant in the region. This is a great step forward as part of our Company’s international expansionBrazilian market, see “Item 5. Operating and aims to provide the best options to clients through local operations, which allow rapidFinancial Review and efficient access to strategic markets and increase the flexibility of the adaptation of products to local wishes. This approach is always carried out according to the specific requirements of each country and follows rigorous controls in all the productive processes.

·Emphasis on Quality, Safety and Diversified Portfolio of the Product.  We concentrate on food safety and quality in all our operations to meet the specifications of the clients, prevent contamination and reduce the risks of epidemics of animal illnesses. We monitor the treatment of the poultry and the hogs we create in all the stages of their lives and during the whole production process. We launched a campaign in Brazil to publicize the Sadia Total Guarantee Program (Programa de Garantia Total Sadia) that ensures our chickens have no hormones or preservatives and are inspected individually. Moreover, we were the first Brazilian company approved by the European Food Safety and Inspection System which qualified us to sell processed poultry products to European consumers. This means we attend the most demanding clients in the world and meet their quality controls and external audits. We have a diversified variety of products that give us the flexibility to direct our production according to the market demand and the seasonality of our products. To support this continuous innovation of our product portfolio, we have been continuously investing in our Technology Center in Jundiaí, in upstate São Paulo.

·Committed Management Team.  Our management endeavors to accentuate the best practices in our operations and corporate governance standards, as shown in the listing of our common shares on theNovo Mercadosegment ofthe São Paulo stock exchange. Those companies listed on this stock market must pledge to adopt the highest standards of corporate governance. Pedro Faria assumed the position of Global CEO in January 2015. He is leading a long-term cycle focused on excellence and high performance, consolidating the management model that has been implemented to date, based on people, quality, efficiency and meritocracy. He is also continuing with our international expansionplans, focusing on gaining new markets in a sustainable way so that BRF moves increasingly closer to the consumers, attending their wishes and demands.

Business Strategy

We intend to become the most inspiring and relevant global food company. In order to achieve this, we reviewed our long-term plan in our yearly strategic planning process. We set three main targets for our company in the next years:

·become a global, brand-focused, consumer-oriented food company;

·be dominant in our relevant playing fields; and

·implement a market-driven, global and agile supply footprint.

BRF is focused on three main strategic pillars:

·Build Sadia as a truly global brand. Sadia has different brand stages across our markets. In Brazil and Golf countries, for example, it has impressive penetration and preference levels. We are working to achieve our goal for Sadia to be strong in all our relevant markets, building a unified and global brand.

·Focus in four key global categories.Strengthen our portfolio and its quality must be a global effort. Therefore, we elected our most important categories, considering strategic and value importance, to be our global focus: value added poultry and pork cuts, cold cuts, breaded and ready to eat meals. Some exceptions apply locally, e.g., paty in Argentina.