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Exclusive interview: Brazil beef bans impact on U.S. beef exports
Story Date: 1/8/2013
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Source: Rita Jane Gabbett, MEATINGPLACE, 1/7/13
Brazilian officials are working feverishly to reverse full or partial bans against its beef products imposed by 10 nations after a “non-classic” case of bovine spongiform encephalopathy from 2010 was reported on Dec. 7.
U.S. officials were faced with a similar task last spring when a dairy cow infected with “non-classic” BSE was discovered in California. Most of those bans were short-lived.
Meatingplace asked U.S. Meat Export Federation Communications Director Joe Schuele to shed some light on the implications going forward for Brazil and for U.S. beef exporters in the aftermath of this latest BSE scare.
Meatingplace: Does USMEF see these temporary bans on Brazilian beef as shifting any beef export business to the United States in the interim?
SCHUELE: The biggest loss for Brazil has been Saudi Arabia, which also closed to U.S. beef after the April 24, 2012 BSE case and hasn’t reopened. This is Brazil’s seventh largest market by volume and 10th largest by value, but at least for the time being the United States will not be able to capitalize on the absence of Brazilian beef.
The situation is similar in China, where Brazil’s exports had recently been on the rise but the U.S. currently lacks access.
In Peru, Brazil and the United States rank first and second in terms of market share (Brazil is No. 1 in volume, the U.S. No. 1 by value). So this is the most likely market in which U.S. exports might increase due to the new restrictions on Brazil. Canada and Paraguay also recently reentered this market and could stand to benefit as well.
Other markets that have closed (Japan, South Korea and South Africa) were very small markets for Brazilian beef for reasons unrelated to BSE – or in the case of Korea, already closed completely.
Meatingplace: What types of beef would be in demand during these bans?
SCHUELE: That will depend on the market in question. Peru, for example, imports a large volume of variety meat while Saudi Arabia is mostly a muscle cut market.
Meatingplace: When the United States lost markets to BSE in 2003, Australian exporters got a fair bit of that business. How would Australia compare to the United States in terms of temporarily pick up these markets from Brazil?
SCHUELE: Again, this depends on the specific market in question, and which competitors have access. Australia, and perhaps Uruguay, are probably best-positioned to fill whatever void may have been created in China, where beef imports are still relatively small but have been growing at a substantial rate over the past year.
In the case of Peru, Australia is not a supplier there and that market has been essentially split between the U.S. and Brazil. So this bodes well for the United States, but we do still face out-of-quota duties in Peru beyond a certain volume. While those duty rates are not terribly high, this could create an opportunity for Canada or South American suppliers such as Argentina and Uruguay. Paraguay also recently reentered this market after an FMD-related absence.
In Saudi Arabia, imports from Canada have increased sharply as a result of the U.S. suspension that dates back to early May of last year. So on the high end of the market, Canada might see the most benefit. For lower-end product, India has a growing presence in the Saudi Arabian market.
Meatingplace: How temporary does USMEF see this situation for Brazil?
SCHUELE: It’s important to note that Brazil’s “big three” markets of Russia, Hong Kong and Egypt have not suspended imports of Brazilian beef and the only top 10 market to close has been Saudi Arabia. Those top three markets make up nearly half of Brazil’s export volume and more than 40 percent its value.
So from a market access standpoint, the impact on Brazil will not even approach what the United States went through after the 2003 BSE case. And while that may understandably create some frustration in the U.S. beef industry, it’s really better for the United States in the long run. The more limited impact on Brazil is really a reflection of how far the world has come in its understanding of BSE, and shows that a more science-based approach is being taken when a new BSE case is detected. This is really positive news for any beef-exporting country, including the United States.
For more stories, go to http://www.meatingplace.com/.
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