June 3, 2011

 

Brazilian beef industry surprised by Russia's import ban

 

 

Brazil's beef industry and its regulators were taken by surprise when Russia announced a temporary ban on imports of animal produce from three Brazilian states.

 

Officials at Brazilian industry trade groups said they did not know why Russia had slapped the embargo on the states of Mato Grosso, Parana, and Rio Grande do Sul. This was reportedly based on Russian safety concerns.

 

Brazil's Agriculture Ministry confirmed the ban but gave no details on the reasons behind it.

 

Russia's agricultural inspection agency said it had uncovered lax enforcement of Russian sanitary requirements during an inspection in April.

 

In the past, Russia has periodically blocked entry of beef from Brazil, the world's largest exporter, citing health, or safety concerns. The EU has also banned imports of Brazilian beef in recent years.

 

Brazilian meatpacker JBS SA said the ban hit three of its slaughterhouses, but added that it will continue to supply Russia from other plants in Brazil and abroad.

 

"JBS will maintain its exports to Russia from another eight factories operating in Brazil in regions that weren't affected by the embargo, as well as from the production platform located outside the country," the company said.

 

An agribusiness analyst at a major foreign bank said JBS rivals Brasil Foods and Marfrig Alimentos SA also have facilities in the affected states. Like JBS, the latter two companies should also be able to shift their production to meat-packing plants in other states.

 

"This is not the first time the Russians have done this, or the last time," the analyst said, noting that Russia accounts for about 10% of the three companies' total exports, on average.

 

The ban may have been motivated by domestic issues such as an oversupply of beef in the Russian market, said the analyst. "They tend to use sanitary reasons as an excuse," he said. "At the end of the day, there's no issue."

 

Also on Thursday (Jun 2), the European Commission demanded that Russia explain a "disproportionate" decision to ban imports of fresh vegetables from EU countries in response to a deadly outbreak of the bacteria E. coli.

 

The director of Russia's consumer protection agency said that the ban had taken effect on Thursday (Jun 2) morning and that all vegetables already shipped in from the EU would be seized across Russia.