July 7, 2005

Brazil's beef export market will not gain much from US mad cow case

Brazil's beef exporters stood to benefit from the discovery of mad-cow disease in the US last year but the latest case in the US will have much less impact as there is little sign it will gain access to the lucrative Japan and South Korea markets .

Japan, South Korea and Taiwan, which account for about 40 percent of the international beef market, have banned Brazilian beef because of the continued presence of foot-and-mouth disease.

However, the mad cow case discovered in June will likely cause Japanese authorities to delay a lifting of the ban on US beef imports implemented in January 2004, despite a recent declaration from Japan's prime minister to the contrary.

The maintenance of the ban means Australia, which offers some of the world's highest prices for prime cuts will naturally continue to divert beef to Japan, leaving other markets for Brazil to exploit.

Brazil has shown itself apt at spreading into new markets in recent years. Last year, it exported 1.94 million tonnes to 143 different countries. The growth continued this year and in the first five months of 2005, exports rose 31.7 percent to 915,900 tonnes.

Shipments will probably slow down in the second half of the year, but growth will still be about 20 percent. The main targets for Brazil's exporters will continue to be the Middle East and Europe, in particular Russia.

However, the BSE outbreak is a setback for Brazil's pretensions to export fresh beef to the US. In March, US Agriculture Secretary Mike Johanns said that the US could lift a ban on fresh beef exports, imposed due to foot-and-mouth. But with Asian countries likely to delay their decision to lift restrictions on US exports, the local producers will likely look to preserve the market for themselves, said Antonio Camardelli, director of the Brazilian Beef Exporters Association, or Abiec.