Global beef industry watches US ban on Brazilian beef

Beef Central, 26/06/2017

INTERNATIONAL beef markets have been surprisingly calm since Friday’s announcement by the US Government that Brazilian chilled and frozen beef imports have been banned until further notice.

Further details behind the suspension made public since Beef Central’s original Friday story (click here to view) suggest the violations the USDA detected in Brazilian beef included abscesses, unidentified foreign material and ‘ingesta,’ a term which can include any feed, liquid or medicine that cattle consumed prior to slaughter.

Since March, the USDA has rejected 11 percent of Brazilian fresh beef products, compared to the rejection rate of 1 percent for shipments from the rest of the world.

The rejected shipments, totalling about 1000 tonnes, raised concerns about public health, animal health and sanitation, the USDA said on Friday.

Reaction in the US market

Following the announcement on Friday, the US imported market was described as ‘quiet’.

A source said sellers put their prices up US2-3c/lb, but buyers were happy to take a ‘wait and see’ approach as the situation remained very uncertain.

“There is no doubt spot imported meat in the US, whether it is from NZ, Australia or Brazil is very tight at present, and any disruption like this, even though small, might see a short-term increase in prices as sellers look to cover commitments should the ban continue over an extended period,” an Australian analyst said. “Most importers I spoke to felt the biggest concerns in the market were more related to those being short-bought on Brazilian grinding meat rather than cuts.”

The head of the Brazilian Meat Exporters Association ABIEC estimated about 120 containers representing about 3000 tonnes of Brazilian meat were in the ‘pipeline’ to the US at the time of the announcement.

Brazil Ag Minister flies to the US

Brazil’s agriculture minister Blairo Maggi announced on Friday (Saturday Australian time) that he will travel to the US to fight the ban on Brazilian beef imports.

Deputy Agriculture Minister Eumar Novacki said the problems laid out by the USDA posed no risk to public health. He told reporters at a news conference that some cattle had adverse reactions to certain vaccines.

He recognised, however, that there were flaws in Brazil’s inspection system, but suggested there could be “commercial motivations” for the US ban. He said US and European authorities had stepped up inspections of Brazilian beef in recent months.

The head of Brazil’s Meat Exporters Association said the US suspension had done more damage to Brazil’s image, than it did in terms of volume beef sales.

He said USDA approval for Brazil’s fresh beef, which was only granted last year, was expected to open the door to bigger fresh beef importers such as Japan and South Korea.

“We worked a long time to open the US market because it is a passport to other markets,” he told media.

Similar concerns raised in EU

Similar problems as those encountered in the US have been occurring in Brazil’s exports to the EU.

Europe has ramped up control checks, leading to the rejection of 108 consignments of Brazilian meat. Of those, 77 were due to presence of salmonella in poultry; four due to the presence of Shiga toxin producing E. coli in beef; two for drug residues in horsemeat; and 25 for other reasons including incorrect certification and cold chain problems.

Stricter checks for all Brazilian meat entering Europe will now remain in force. Authorities had raised concerns about the quality of Brazil’s meat inspection systems four months before Brazil’s recent Weak Meat bribery scandal.

Between May 2 and 12, the EU conducted an audit in Brazilian slaughterhouses and meatpacking companies, reporting a range of critical deficiencies in most sectors, a number of which of a serious nature.

Reacting to the news of the US beef suspension from Brazil, Irish Farmers Association national livestock chair Angus Woods said EU authorities had to take note of the US ban, and remove Brazilian beef from any Mercosur deal.

“Irish and European farmers will be rightly questioning how EU negotiators can continue to engage with the Mercosur countries given this decision by the USDA,” Mr Woods said.

At the beginning of this month, the EU’s Health and Food Security Committee gave Brazil a warning. In a letter to Brazil’s Agriculture Minister, the EU said that Brazil had not tried to regain the trust of its European partners.

Brazil has made some amendments following EU criticisms over the last six years, but this has proved to be insufficient. Currently the EU has symbolically suspended horse meat bans, but broader bans could follow, analysts suggested this week.

Canada’s reaction

Canada has also rejected six shipments of Brazilian beef out of 191 meat shipments since April 10, according to the Canadian Food Inspection Agency.

The Canadian agency said it recently blocked imports from one Brazilian plant that did not meet food safety requirements, but is accepting meat from plants that meet its standards.

Contacts with connections with Chinese importers thought China and Hong Kong would monitor the situation in the US and focus on a plant-by-plant evaluation as opposed to a country-wide Brazil ban.

“The decision by other countries so far not to follow the US and take and a ‘wait and see’ approach is understandable,” an Australian analyst told Beef Central today.

“If they did follow the US, and should the approval process of allowing Brazil back into the US take an extended period, then for many countries they might feel bound to follow,” he said. “This in turn could cause major disruptions to supply, for extended periods.”

By adopting a plant-by-plant ban approach, it would enable other countries to maintain flexibility and not be bound by the US’s own decision-making on importing Brazilian beef.

In countries like the EU, the added complexity of negotiating a free trade agreement has undoubtedly given farmer and other lobby groups some ammunition to try to disrupt the negotiations – and in turn has placed the EU negotiators in an awkward position. Hence the desire to also maintain a plant-by-plant monitoring approach potentially takes complication out of the FTA discussions for EU negotiators, the analyst said.

How long will ban last?

“The length of time likely for the US ban remains very unclear, as I am sure the USDA is still trying to determine if this is a systematic failure or isolated cases,” he said.

“If it’s the former, then it could be assumed that the ban might last longer than expected, but if the latter, then the issues might be resolved in a short period of time. It is the unknown timeline of the ban by the USDA that has led to more cautious approach by other countries to head down a similar path to the US,” the analyst said.

“There is no doubt in my mind that should the ban go for an extended period of time there will be an impact on imported spot meat in the US, with potential this will move to an extended premium for imported over domestic grinding meat – at least until the unfilled Brazilian beef commitments  are filled.”

“The overall US market is likely to be short lean meat, as a result of last week’s announcement, but not necessarily imported lean meat – therefore domestic lean beef might be used,” Beef Central’s contact said.

“Given how tight imported meat is in the US spot market is at present, then this option lets the importer off the hook because he could be squeezed on trying to source NZ or Australian beef.”



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