BRF : Announcement to the Market - Reply to CVM/BMandFBovespa Inquiry - 01/06/2017

São Paulo, January 6, 2017.

To
Brazilian Securities and Exchange Commission (CVM)
Rua Sete de Setembro, 111, 33th floor
Centro, Rio de Janeiro - RJ

For the Attention of: Manager of Corporate Oversight 2
Guilherme Rocha Lopes

Ref.: Official Inquiry Letter Nº 12/2017/CVM/SEP/GEA-2

Dear Sirs,

We hereby present our position on the news item published on the Reuters Brasil portal under the headline 'EXCLUSIVE - BRF seeks IPO of halal food unit by early April, sources say', published on January 5, 2017, as requested in your Official Inquiry Letter Nº 12/2017/CVM/SEP/GEA-2, transcribed below.

First of all, it should be pointed out that, in reply to the Official Inquiry Letter sent by the CVM, disclosed on July 25, 2016 through an Announcement to the Market, the Company informed the market that it was studying strategic alternatives for its project to speed up the expansion and growth of Sadia Halal (currently called OneFoods). The market was informed on June 30, 2016 that approval had been given for its founding. In this same Announcement, the Company stated that these alternatives included the possibility of investments being undertaken by third parties, which could occur through a private placement, such as an Initial Public Offering (IPO), but that no decision had yet been taken internally on the subject that would justify any disclosure.

On November 8, 2016, the Company continued its policy of disclosing information and published a new Announcement to the Market in which it stated that it had formalized the process of hiring investment banks to advise the Company over potential investments to be made by third parties in OneFoods.

This means that since July 25, 2016, it has been widely known on the market that an initial public offering of OneFoods shares could be made, amongst other alternatives.

Finally, on January 4, 2017, the Company issued an Announcement to the Market informing it of the start of operations by OneFoods and reiterating that it would continue to examine strategic alternatives for the halal business that would allow its potential expansion, whether in markets where it currently operates or in new markets not yet served by the Company.

Having made these important explanations, the Company reiterates that an undertaking of an IPO for OneFoods is under consideration, and that it may occur in London Stock Exchange. The Company, however, considers other alternatives, such as a private placement. Nevertheless, at the present time, no Board of Directors' approval has been made. Please note that, within the terms of the Company Bylaws, it is the responsibility of the Board of Directors to approve the issue of securities by any of its subsidiaries, as is the case with OneFoods.

Therefore, at this moment, no important decision has been taken that has not been disclosed to the market. The Company will keep the market informed of any relevant developments related to this matter, within the terms required by the applicable regulations.

Yours sincerely,

José Alexandre Carneiro Borges
Chief Financial Officer and Investor Relations Director