BRAZILIAN beef shipments to Australia’s prized market, the United States, have so far not been meaningful but the South American competition is shaping up to be a major challenge in the medium to long term.
The US last year granted access for fresh and frozen Brazilian beef - something Brazil had sought for many years but was blocked due to foot and mouth disease and bovine spongiform encephalopathy (BSE) concerns.
Brazil has since had five plants accredited to export fresh beef to the US but Brazilian-based beef analysts say additional facilities are going through the accreditation process.
Brazil is still awaiting US approval to start shipping grinding beef, the market which has traditionally accounted for Australia’s largest beef export volumes and is considered to be strongly aligned with cattle prices here.
Meat and Livestock Australia’s North America international business manager Rob Williams said the trade was also restricted at the moment as Brazil was sharing the Other Country Quota with a number of competitors such as Ireland and Nicaragua.
Rabobank’s senior analyst in Brazil Adolfo Fontes said it would be challenging for Brazilian exporters to send large volumes to the US.
“However, the US access acts as a powerful support for access to other markets that often use the US as a reference for import standards,” he said.
These included Canada, South Korea and Japan, markets where Brazilian fresh beef is not yet present, he said.
With a cattle sitting around 220 million head and increasing at a rate of at least 1 per cent each year, Brazilian beef businesses are, by all accounts, focusing more on the export market than ever.
Mr Fontes said exports had accounted for around 20pc of total beef production in Brazil over the past decade but that was expected to expand to 25pc over the coming decade.
Rabobank analysis shows Brazilian beef exports in 2016 were flat, compared to the year before, however they were still around 25pc above volume levels of five years prior.
Hong Kong was the main destination, with an 8pc growth but a massive 69pc increase in Brazilian shipments to China occurred last year.
On the other hand, Egypt and Russia reduced their beef imports from Brazil by 10 and 22pc respectively.
Mr Fontes said through January this year, Brazilian beef exports increased by 10pc in volume against January 2016.
“China has increased its beef imports from Brazil by 105pc in the same period, buying 18,200 tons in January,” he said.
The Brazilian mid-west had been the main region where investments in beef production growth had occurred, particularly in the state of Mato Grosso, Mr Fontes said.
“Here, feedstuff prices are below average due to a big availability of grains,” he said.
“Crossbreeding Nelore cattle with Angus for feedlots has been one of the main strategies in order to improve quality, which is likely to continue over the coming decade.”