Beef prices likely to soar as FMD ban hits Brazil
Brazil’s huge beef exports are 2.243 billion tons per year - nearly as much as all of its competitors combined - leaving a huge shortfall in world market supply when there is an export ban.
Sources in Brazil have warned that their loss of output could drive international beef prices so high that the foot and mouth ban will be short-lived.
For the moment, there is no country which can fill the gap if a large part of Brazil’s exports are blocked, said Jose Vicente Ferraz, the technical director of FNP Consultoria, a private Brazilian consulting firm that examines world agricultural data.
Australia had suffered a 10-year drought that led to a sharp reduction in its herd. Their herd rebuilding programe has cut into their slaughter throughput, and will limit Australian beef production for several years.
Argentina is still recovering from a severe economic crisis, and their beef exports are already at their upper limit.
The EU has gone from exporter to net importer, and the US is suffering the repercussions of two cases of mad cow disease.
FNP experts predicted that the ban on Brazilian beef may last only a few weeks, if the government takes the necessary measures to curb the outbreak of FMD, and carefully explains to importing countries the steps it has taken.
But Irish cattle farmers are determined to make the most of any world beef scarcity, and the EU’s ban on Brazilian beef from three states, estimated to rule out more than half of the beef which comes to Europe from Brazil.
IFA National Livestock Committee Chairman John Bryan said farmers with beef cattle to sell are very determined to secure an immediate and significant price increase from factories here.
He said there’s already a severe scarcity in Ireland of the cattle under 30 months which are needed for prime export markets.
“Some factories have been forced to cancel kills because they cannot get enough stock,” said Mr Bryan.
Sell hard and get the full value of your livestock, he advised farmers.
According to IFA’s figures, the Brazilian ban will remove more than 200,000 tonnes of beef from the EU market, equivalent to half of Ireland’s annual exports. This would leave beef supplies extremely scarce, and should immediately drive strong demand for finished cattle.
Robin Smith, chairman of the Irish Cattle and Sheepfarmers Association’s beef committee, advised farmers to hold back cattle, with a view to getting 2.80/kg or £1/lb for R grade animals.
Sao Paulo alone, one of three states which cannot now send beef to the EU, is said to supply 70% of Brazil’s beef exports, said Mr Smith. Russia, which took more than 300,000 tons of beef from Brazil to date this year, will also have to look elsewhere. “Ireland, which has the lowest beef price in the EU, is the obvious country to benefit most”, he said.
Outbreak revealed animal health carelessness in Brazil.
