September 27, 2012

Brazil faces entry barriers for pork exports to Argentina

Less than four months after the two countries had agreed to restore the flow of trade, Brazil is starting to experience entry barriers again for its pork exports to Argentina in the last month.

Brazilian exporters are hearing from across the border that the latest complication could be disguised retaliation by the government over Brazil's refusal to import Argentine crawfish.

Argentina has been requiring all import purchases to be authorised by the government on a case-by-case basis since February, making importers complete affidavit paperwork detailing where the goods come from and why they can't be bought domestically.

For the past three weeks, new affidavits for Brazilian pork imports have not been approved, according to Brazil's pork processors and exporters association, Abipecs. Any Brazilian pork still going into Argentina is fulfilling past order affidavits already approved.

Through the first few months of 2012, Brazilian pork exports to Argentina had fallen from around 4,000 tonnes per month to as little as 94 tonnes in May. An agreement between the governments had been reached in July to green light a variety of goods for free trade, allowing 3,500 tonnes of Brazilian pork to be shipped in August.

Argentina's pork industry has always been dependent on imports. The country produces about 300,000 tonnes per year, with domestic consumption hovering around 360,000 tonnes. About 85% of that extra demand has been met by Brazil in past years.

With the slow but steady rebound of Brazilian pork exports to Russia, the importance of battling with the Argentine government and its trade policies has become less important for Brazil's pork sector. Brazilian exports rose more than 19% by volume and 10% by revenue in August compared to the same month a year ago, with Russia being the main buyer at 14,240 tonnes for US$38.1 million, up 387% by volume and 327% by revenue compared to August 2011.

Some Brazilian pork processors say they are being told by their Argentine trade partners that this latest trade detour is the government's  way of sending a message about Brazil's unwillingness to import the Argentine crustacean lagostim, or crawfish.

Brazil has been closed to Argentine crawfish since 1999. Sales of Argentine shellfish abroad between January and August of this year have dropped 24%, compared to the same period in 2011, reports Valor Economico newspaper.