May 22, 2009

Beef markets will recover within 12 months, as the easing credit crunch will boost beef demand in growing markets such as China and Russia, according to a Paraguay farming leader.

 

Paraguayan beef farmer and Rural Association executive Massimo Coda said beef farmers need to be conservative and ride out the global economic crisis.

 

Coda said the global recession has hit Paraguay - beef farmers there received a record US$1.70 per kg for their product but exports nosedived 10 months ago and prices now hover around US$0.95 per kg.

 

While Australia and New Zealand have maintained their market share worldwide, South American countries were affected because of Australia and New Zealand's access to valuable markets such as Japan, South Korea, the US and the EU, he said.

 

Paraguay produces 400,000 tonnes of beef annually, of which 180,000 tonnes are sold locally. The remaining 220,000 tonnes are mostly sold to Russia, which accounted for 40 percent of total exports, with the balance going to Chile, Israel, Egypt and Angola.

 

But the sharp fall in oil prices damaged beef sales in Russia, a major oil producer.

 

Coda said the downturn in the Paraguayan beef industry has seen some farmers exit, but efficient farmers still made profits and those who preserve will be rewarded.

 

Coda said the beef trade will stabilise and recover in one year, and farmers won't have to be aggressive in investment but be conservative.

 

Coda said China's average per capita beef consumption has increased from one kg per year in the 1990s to six kg per year. Meat and Livestock Australia had also predicted China to import six million tonnes of beef annually to meet local demand, he said.

 

China's beef demand will require increased production and Paraguay could capitalise on this opportunity, Coda said.

 

The EU is currently producing less beef, US cattle numbers are 95 million and that is the lowest in 20 years, and Australia has 27 million cattle but their maximum capacity is 30 million, he said.

 

Coda said Paraguay keeps a close watch on the Australian beef industry because of similar tropical climates. Paraguay is currently not competing for the valuable markets but they will in the near future, he said.

 

The lack of free trade agreements also hampers Paraguayan beef exports, Coda said.