Trade

Brazil rains on Australia’s beef parade in Russia

Jon Condon, 24/08/2012

 

Australia’s beef exports to Russia are under considerable pressure from competing, sharply-priced product from Brazil, as Russia starts to free-up its access limitations for supply from South America.   

Recent DAFF trade date for the 2011-12 fiscal year just completed showed Australia’s export to Russia back 35 percent year-on year, although to be fair, that fall was from historically high levels in 2010-11. Exports last financial year to Russia fell to 46,700t.

For the month of July, our exports to Russia reached only 2035t, down 50pc on a year earlier. This was Australia’s smallest July beef export performance to Russia since 2006, and an indication of the tough conditions being faced in the market.

Manufacturing beef exports recorded the largest fall in volumes, back almost 10-fold for the month to just 136 tonnes.

In contrast, South American suppliers, particularly Brazil, have again picked up pace as a supply source, at Australia’s expense. To make matters worse, Brazil enjoys a preferential tariff over Australia into Russia.

Brazil’s exports to Russia increased 27.3pc year-on-year for July, to 22,952t. Underpinning the increase was a 2.7pc month-on-month reduction in Brazilian beef export price, which averaged US$4.54/kg.

A fortnight ago, Russian veterinary inspectors completed another set of meat plant inspections in Brazil amid hopes that more Brazilian exporters could soon regain full access to one of their most important export markets.

However despite optimistic noises coming out of the Brazilian Ministry of Agriculture, fresh differences are emerging over the use of the controversial feed additive Ractopamine, which has been the cause of earlier export limitations out of Brazil.

After the latest inspections which involved 20 meat plants across six Brazilian states, Brazilian authorities said they believed the two countries were close to resolving the issues which have hampered trade for the preceding 12 months.

Despite the recent Codex decision allowing Ractopamine at certain Maximum Residue Limits (MRLs), reports suggest Russia is ready to take a hard line stance on the issue.

Veterinary authority Rosselkhoznadzor was quoted as saying that it would recommend the suspension of imports of all animal products from Brazilian farms that use Ractopamine. The EU has taken a similar position.

The Brazilian ministry of agriculture said it was drawing-up a plan to present to both the EU and Russia that it was confident would allay fears, using a new ‘split system’ that would provide guarantees that Brazilian beef for the Russian markets was free of the additive.

Ractopamine is not registered for use in beef production in Australia, providing unfettered freedom in export into the Russian and EU markets.

 

 

 

 

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