US Seen Losing Out to Brazil as World Beef Demand Grows

29 March 2019

World demand for meat will continue to grow alongside higher per capita incomes, but the US beef industry won’t be the prime beneficiary. Over the next 10 years, international beef sales are expected to continue to tilt toward Brazil, while the US will gradually lose market share, according to the Interagency Agricultural Projections Committee of the USDA. The US currently is the fourth-largest beef exporter, behind Brazil, India, and Australia.

On the other hand, the US is expected to increase world market share in pork, owing to greater advances in US pork production efficiency, the committee said in its report.

The US and Brazil have been at loggerheads over beef for the past two years, with the US blocking Brazilian imports since June 2017. That may be about to change, as Brazil’s Ministry of Agriculture, Livestock, and Food Supply announced this week that Brazil has reached an agreement with the US that may lift those restrictions. The agreement calls for USDA inspectors to determine whether Brazilian facilities have remedied the problems of two years prior which caused millions of pounds of fresh beef to be denied entry into the US. In the months leading up to the 2017 restrictions, the proportion of fresh beef rejected by USDA’s Food Safety and Inspection Service was 10 times higher for shipments from Brazil than it was for shipments originating elsewhere. USDA cited public and animal health concerns as the reason for the rejections.

Brazil’s ascendency to the world’s eighth-largest economy has brought the US increased competition in agricultural markets. A resolution of the beef trade dispute between the US and Brazil could help ease supply undulations within each country. It also highlights the difficulty for the US in denying access to the world’s largest beef exporter. Prior to this week’s agreement, US Agriculture Secretary Sonny Perdue visited Brazil to lay the groundwork for improved relations between the two regional powers, which traded $100 billion in goods with each other during 2017, according to the Office of the US Trade Representative.

Historically, the US has had its own, more serious, beef quality concerns. In December 2003, a dairy cow in Washington state was identified to have contracted bovine spongiform encephalopathy (BSE), also known as mad cow disease. Although the cow was ultimately determined to have originated in Canada, international buyers dropped the US in dramatic fashion, causing an 82-percent reduction in beef exports. Only in 2016 did Brazil end restrictions it put in place on US beef, followed a year later when China ended most of its restrictions. In the intervening years, Brazil benefited from a shift in buyers’ focus, as the US BSE infection came in the middle of rapid expansion of Brazil’s beef exports, which rose nearly tenfold, to 2.19 million tonnes, between 1997 and 2007.

The right chart below shows that Brazil holds top place in world beef exports, with the US as No. 4. The chart at left shows the rapid growth of Brazil’s beef exports. US exports took a big hit after the 2003 discovery of a BSE-infected cow in Washington state.
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