A monthly column written exclusively for Beef Central by Steve Kay, publisher of US Cattle Buyers Weekly

FREE access to global markets is crucial for the prosperity of the Australian and US beef industries.

One can argue that these markets are more important to Australia, as it exports 60 percent of its annual production (although it will likely be less this year). The US exports only 12pc of its production of cuts and by-products. But these exports are crucial in maximising the value of products such as short plates and livers.

That’s why USDA worded its August 1 announcement about two market openings the way it did. It led its press release with the news that it has reached agreement with Brazil’s Ministry of Agriculture, Livestock and Food Supply to allow access for US beef and beef products to the Brazilian market for the first time since 2003. Almost as an afterthought, it also announced that the US would reopen its market to Brazilian fresh and frozen beef.

The development was reported on Beef Central last Saturday (click here to view).

Given the turmoil in the Brazilian economy, it’s hard to imagine thousands of tonnes of high quality US beef suddenly being shipped to Brazil. But the US industry is taking a long-term view and reckons there will be a high-end market to be satisfied, especially as Brazil produces little grainfed beef.

More important is that the US has persuaded yet another country to lift BSE-related restrictions on US beef. That’s why USDA highlighted this point. Brazil’s action reflects the US’s negligible risk classification for BSE by the World Organization for Animal Health (OIE) and aligns Brazil’s regulations to the OIE’s scientific international animal health guidelines, it says.

The US is pleased that Brazil, a major agricultural producing and trading country, has aligned with science-based international standards, says Agriculture Secretary Tom Vilsack. It encourages other nations to do the same.

Since last year alone, USDA has eliminated BSE-related restrictions in 16 countries, regaining market access for US beef and pumping hundreds-of-millions of dollars into the American economy, he says.

Moreover, the Brazilian market offers excellent long-term potential for US beef exporters, says Vilsack. The US looks forward to providing Brazil’s 200-million-plus consumers, and growing middle class, with high-quality American beef and beef products, he says. US exporters no doubt wished the re-opening had come in time for them to send beef to Rio de Janeiro to take advantage of the expected half a million visitors going to the Olympic Games.

Some US analysts described the opening of the US market to Brazilian beef as the big news. I hesitate to disagree but the amount of beef Brazil will send to the US will be a drop in the bucket in relation to US production and overall imports. As Beef Central reported, Brazil will have to share the “Other Countries” tariff-free quota of 64,805 metric tones per year with at least Nicaragua, Honduras, Costa Rica and Ireland. This quota will eventually change and Brazil will send more beef, but the amount will remain small.

Looking at USDA forecasts for US beef production and imports puts the entry of Brazilian fresh beef into perspective. The 64,805t quota is 0.6pc of projected 2016 production of 11.315 million tonnes and 0.5pc of projected 2017 production of 11.696 million tonnes.

The Brazilian beef will be mostly lean manufacturing beef and won’t anywhere near fill a hole in such imports because of declining shipments from Australia. USDA put 2015 beef imports at 1.5 mt, and projects 2016 imports at 1.295 mt and 2017 imports at 1.157 mt. These projections likely do not include Brazil’s imports. But even if Brazil captured the entire 64,805t quota, which is extremely unlikely, its shipments will be only 5pc of total US imports in 2016 and 5.5pc in 2017.

Australian exporters thus have little to be concerned about. Depending on the relationship of the Brazilian real to the Australian dollar, Brazilian beef might be more competitively-priced than Australian beef. But Australia has many years of experience in shipping high-quality lean manufacturing beef to the US. Its exporters have long-term relationships with further processors and end users that are just as important as the price of the raw material.

Brazilian exporters though already know the US market extremely well. JBS, Marfrig and Minerva will likely dominate shipments to the US.

JBS is obviously the best-positioned of the three as it has operated in the US in various capacities for nine years. It could receive Brazilian lean beef at one of its grinding operations and blend it with other imported product. But the other two companies likely already have customers lined up, as they’ve had several years to do so.

Brazilian shipments to the US will not start for some time. It appears that USDA’s Food Safety and Inspection Service has not yet approved any specific Brazilian plants. It has only determined that Brazil’s food safety system governing meat products remains equivalent to that of the US.

Once individual plants are approved, it might take several months for FSIS to approve plants’ protocols for testing beef for the presence of various E. coli strains and other pathogens or residues.

When shipments begin, Brazilian imports will have no impact on the price of lean manufacturing beef because of the projected decline in total imports. Australian exports to the US last year totaled 412,203t on a product weight basis. For the first seven months of this year, its shipments were down 40pc to only 165,000t, as Beef Central noted on Tuesday.

End-users will thus welcome imports of Brazilian beef but this beef will still be a drop in what will be a smaller bucket than last year.