The suspension of bovine meat exports from Brazil to China should last until April, and losses to the sector are expected by industry experts to be limited.
The president of the Brazilian Export Association, José Augusto de Castro, told CNN that the sector will face a loss of about USD 500 million, after a case of mad cow disease found in a farm lead to a halt in exports.
“This value is very far from the billionaire loss of the suspension period in 2021 (…) shipments will be postponed, producers will not lose everything because of the suspension. Part can be directed to the domestic market and other countries”, the president of AEB added.
Brazil beef exports to China halted after case of mad cow disease
Brazil adopts an auto-embargo to comply with a sanitary protocol signed with China in 2015. The last time this happened was in 2021, when the country was more than 100 days without exporting meat to that Asian market.
Castro believes that commercial flow will be resumed without problems because the world does not have enough beef and China itself will maintain its demand.
Fernando Iglesias, director of consulting firm Safras & Mercado, underlined that while in 2021 China had its beef stock full, this time, in the last quarter of 2022, the country´s purchases have been low and it “cannot afford maintaining such a long embargo”.
In addition, the expert points out that Brazil is seen as a more attractive option than its peers in the international market, because it has greater ability to meet Chinese demand.
“The situation in Brazil is favorable, because the other countries are experiencing a shrinkage of the herd, the opposite of what happens here. The exception of competitors is Australia, which has also increased production, but still has much lower numbers than Brazil”, Iglesias said.
Experts emphasize that the mad cow case was isolated, in a single herd animal and with characteristics that indicate there is no risk of contamination.
Agrifatto estimates that each month exports are paralyzed, there is an impact on Brazil of about USD 500 million, as around 520 animals are currently negotiated with China in the period. “Automatic suspension of exports is a flaw of our trade agreement with China, because the market is very volatile even in a controlled situation,” argued Lygia Pimentel, CEO of Agrifatto.
“In 2021, we sent all reports and evidence and we waited a position that was not coming. It was 103 days waiting for a statement from the Chinese government, knowing that each passing day without negotiations we were harmed”, Pimentel addd.
Andre Braz, economist at the Getulio Vargas Foundation (FGV), said that in order to minimize losses farmers can offer meat in the local market in the meantime,or keep cattle in the pasture longer, considering that the winter has not yet arrived.
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