South America Calling
Alastair Stewart South America Correspondent

Tuesday 01/08/13

Brazil's Beef Industry Rides Out BSE Storm

With a month gone since Brazil tardily announced a case of atypical bovine spongiform encephalopathy (BSE) disease, the world's No. 1 beef exporter seems to be successfully riding out the storm.

Fresh beef shipments actually rose in December, despite the furor, as Brazil's principal clients continued to import and shares in the country's main meatpackers rose to above pre-announcement levels on the Sao Paulo Stock Exchange.

On Dec. 6, the Agriculture Ministry created a stir by confirming the protein that causes BSE had been identified in an animal that died in the southern state of Parana in 2010. The animal showed no BSE symptoms prior to death and was not fed meat and bone meal. As such the World Animal Health Organization reaffirmed that this atypical case did not change Brazil's mad cow risk rating, which it classes as 'irrelevant.'

However, many were troubled by the fact that the case had taken two years to come to light.

In response, seven countries have banned imports of all Brazilian beef - Japan, China, South Korea, Peru, South Africa, Saudi Arabia and Taiwan -- while two others -- Jordan and Lebanon -- banned imports from Parana.

However, out of this group, only Saudi Arabia and Lebanon are in the top 10 of Brazil beef export destinations and the banning countries only account for about 5% of total exports, which totaled well over one million metric tons in 2012.

It appears that Brazil's offensive to explain that the atypical BSE case represents no threat has borne fruit with its major clients keeping doors open -- Russia and Chile were the two major concerns -- although things may have been different if supply from the U.S. and the European Union weren't so tight.

As a result, it has been largely business as usual for exporters.

December fresh beef shipments were actually 33% higher than last year at 83,700 metric tons, while stocks in JBS, Marfrig and Minerva, the principal exporters, have bounced back from initial losses to register gains of 8.7%, 7.0% and 3.4%, respectively, over the last 30 days

According to Agriculture Minister Mendes Ribeiro, it is just a question of time before restrictions on beef imports are lifted altogether with Brazilian officials visiting with counterparts in these countries to explain sanitary controls and convince them of the negligible BSE risk.

Basically, the countries that have imposed bans are primarily looking to defend local markets and renegotiate price, he said.

"It's a game," he declared.


Posted at 11:05AM CST 01/08/13 by Alastair Stewart
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