Brazil seeks to add to meat lead in ‘05

Cattle Market & Farm Reports, Editorials
Jan 3, 2005
by WLJ
Brazil’s meat industry is looking to consolidate on a spectacular year of growth in 2004, cementing its position as the world’s largest meat exporter.
Beef, chicken and pork exporters saw orders grow despite a recent import ban by Russia, its largest client, and continuing restrictions on Brazilian meat in the Far East.
Meat shipments are expected to total $5.8 billion in 2004, some 42 percent higher than 2003, with physical sales expected to reach 4.2 million metric tons, 23 percent higher than the year before.
The challenge for Brazil’s industry is to take advantage of the continuing sanitary problems in competing countries and the inability of others to respond to the opening of new markets.
"It is extremely likely that Brazil will remain in the lead during 2005 as long as there are no major disasters,” said Jose Vicente Ferraz of the Sao Paulo-based FNP consultancy.
The confirmation of a possible outbreak of hoof-and-mouth disease (HMD) in the beef state of Mato Grosso do Sul would represent just such a disaster.
State officials are denying the outbreak, saying that tests only came back positive because the cattle had been recently vaccinated. But Brazil's major export rival, Australia, has already announced a ban on beef imports in what local officials see as an attempt to increase international concern over the possible outbreak here.
Meanwhile, Russians continue to ban imports of Brazilian meat, except from the state of Santa Catarina, following a HMD outbreak in the isolated Amazon region in September.
Brazil should remain the world's main beef exporter next season because of limited cattle stocks in Australia and the U.S., its two main competitors, said Ferraz. In Australia, producers are just recovering from three years of drought. Meanwhile, the U.S. lost major market share after the discovery of BSE there in 2003.
One negative factor, however, is the continued strength of the Brazilian real, which is biting into the country’s competitiveness.
The beef industry’s main challenge will be to open new markets next year, said Marcus Vinicius Pratini de Moraes, president of the Brazilian Beef Exporters Association (ABIEC).
“We export to 143 countries but we don't sell to the top paying countries,” he said, referring to the U.S., Japan and South Korea, which account for around 50 percent of world exports.
Exporters must work hard to convince these states to lift the sanitary barriers to its produce, he added.
Brazil exported $2.2 billion in beef in the first eleven months of 2004, up 66 percent on the year before.
Exports should continue to grow next year, but not at the same rate as this year, said Pratini. Avoiding losing markets due to sanitary barriers will also be key for chicken exporters next year.
“The great challenge over the next year will be to hold on to what fell into our lap,” said Julio Cardoso, president of the Brazilian Chicken Exporters Association (ABEF).
The Avian influenza epidemic that spread across Asia cut the capacity of China and Thailand to sell to Japan, one of Brazil's key markets.
To maintain markets, Brazil must invest much more in sanitary checks and balances as well as improving ties with importing countries.
Exports are expected to rise 10 percent on top of the 2.4 million tons forecast for this year.
Brazil's pork exporters are slightly more conservative about the future, forecasting that international sales will hold steady in 2005.
In 2004, exports are expected to total 500,000 tons, bringing in $737,000 in revenues.
“But we desperately need to diversify our client base,” said Pedro Camargo Neto, president of the Brazilian Pork Exporters Association.
Specifically, Brazil must reduce its dependence on Russia, which has been regularly imposing restrictions on local exports for the past few years. Despite the problems, Russia imported 263,500 tons of the 459,000 tons exported from Brazil in the first eleven months of 2004, said Camargo.
The industry's targets will be Asian and eastern Europe, he added.