Brazil's beef exports are tipped to rise as it carves open the US market, despite an economic depression that has seen inflation and unemployment skyrocket.
Brazil’s beef exporting business, unlike the country’s crumbling economy, is in a good place: it has secured market access to the world’s largest beef importer – China – and looks set to gain access to the second-biggest beef importer – the US.
Ink not dry
This is according to Rabobank’s Global Beef Quarterly Q1 report, which states Brazil, the largest beef producer in Latin America, will see beef exports climb 11% this year as local consumption falls.
Negotiations between Brazilian and US authorities are close to completion, but the ink is certainly not yet dry; there are certain regulatory processes that need to be completed for Brazil to gain access to one of the world’s top five beef importers. But if it can gain access to the US, it would improve Brazil’s position in the international market, according to Rabobank.
“The key thing to note is that Brazil is looking to export beef because local consumption is slowing down,” said Justin Sherrard, Rabobank’s global animal protein strategist, the person who oversaw the Global Beef Quarterly report.
“Secondly, the US market is so attractive to so many beef exporters for two reasons: one reason is because, over the last few years, the US has imported significant volumes of beef, so you [beef exporters] always want to go where the action is. The second reason is because many counties use US safety standards as their own de facto trading standards, so if one country sees the US accepting Brazilian beef, it’s likely other countries will fall in behind the US in accepting beef.”
China growth
Socially, politically and economically, Brazil is in what Rabobank has described as a “complex situation”. High inflation and rising unemployment have produced serious economic hardship and Goldman Sachs has said the situation has deteriorated from a recession to “an outright economic depression”.
And with a devaluation in the Brazilian real, beef exports from Brazil have become competitive on the international market, especially against the US dollar.
But Brazil has been able to remain competitive against other major beef exporters too, and Rabobank expects the country to double its volume of beef exports to China in 2016. This would see China import around 200,000 tonnes of Brazilian beef, making the Latin American country the leading beef exporter to China this year.