By Allan Barber
The most significant news over the weekend is the announcement that the US government will allow the importation of beef from Brazil.
This is a big change in US policy that will see Brazilian beef for the first time compete head on with Australian and NZ beef in the US market.
Brazil does not have a quota into the USA like Australia, NZ, Uruguay and Argentina.
Therefore to avoid the out of quota tariff (26.5%) they will have to import it under the “other Quota” currently utilised by Central America, which is 66,000 tonnes.
Brazil's ability to fill this quickly, but also to build credibility in the US market could see this access increase over the next 5-10 years.
The other key component to this is that other countries like Japan and Korea may take the lead from the US and also accept Brazilian fresh beef.
Once again this will have a major impact on Australia and New Zealand's competiveness in these markets.
The ability of Brazil to ramp up supply cannot be underestimated.
USDA Proposes to Allow Importation of Beef from Specific Brazilian States
The U.S. Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) is proposing to amend its regulations to allow, under certain conditions, the importation of fresh beef from specific Brazilian states.
Earlier in the week, the U.S. Department of Agriculture (USDA) and Brazil's Ministry of Agriculture, Livestock, and Food Supply (MAPA) issued a joint statement affirming their mutual commitment to science-based rulemaking and announcing both countries agreed to a path forward to address rules that currently limit bilateral beef trade.
The proposed regulation changes would allow the importation of chilled or frozen beef while continuing to protect the United States from an introduction of foot-and-mouth disease (FMD).
Based on a risk assessment and series of site visits, APHIS concluded that Brazil has the veterinary infrastructure in place to detect and effectively eradicate an FMD outbreak if necessary.
Also imported beef would be subject to regulations that would mitigate the risk of FMD introduction, including movement restrictions, inspections, removal of potentially affected parts and a maturation process.
Before actual importation of beef from these Brazilian states, USDA’s Food Safety and Inspection Service must also determine Brazil as eligible to export fresh/frozen beef products after a final regulation by APHIS has been published.
“The Brazilian health service does an exemplary job, ensuring that the requirements of inspection for food produced in the country are fulfilled to the letter.
This has guaranteed security for our customers, who know that they are getting quality products. There is no wonder we are among the main beef exporters in the world,” he said.
The article below from Global Meat News.com highlights Brazil’s current volume of beef exports.
-------------------------------------------------------------------------------------------------------------------------------------------
Farms For Sale: the most up-to-date and comprehensive listing of working farms in New Zealand, here »
-------------------------------------------------------------------------------------------------------------------------------------------
Brazil beef exports hit new record in November (Global Meat News.com)
According to the Brazil’s Ministry of Agriculture, Livestock and Supply (MAPA), beef export values are now expected to exceed $6.5bn in 2013, which would be a 15% year-on-year increase from the $5.7bn recorded last year.
It added that Brazil had exported over 1.35m tonnes of beef to 130 countries so far this year. Agriculture Minister Antonio Andrade said the result demonstrated that Brazil’s trading partners had confidence in the quality and safety of Brazilian beef.
Andrade also stressed the importance of negotiations with Russia, which recently agreed to lift a ban on Brazilian beef imposed in 2009.
President of the Brazilian Association of Meat Exporters (ABIEC), Camardelli Antonio, said that expansion of emerging markets, such as Hong Kong, had also driven significant growth.
“We also had a significant increase in the negotiations carried out with Venezuela and Middle Eastern countries, including Iran and Israel,” he said.
According to data from the US Department of Agriculture (USDA), Brazil is the world’s biggest beef exporter this year, ahead of India and Australia.
In a bid to boost exports, Brazil has intensified its inspection programme which is managed by the Federal Inspection Service (SIF) over recent years.
According to the latest data from MAPA, SIF operates in 278 slaughterhouses across Brazil and compliance with animal health standards is around 90.51%.
---------------------------------------------------------------------------------------
Here are some links for updated prices for
- lamb
- beef
- deer
- wool
M2 Bull
Select chart tabs
---------------------------------------------------------------------------------------
Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country where he runs a boutique B&B with his wife. You can contact him by email at allan@barberstrategic.co.nz or read his blog here ».
13 Comments
I have been pointing out for some time, that most primary produce exporters have been helpless price takers on international markets most of the time for the last 70 years; the terms of trade have moved against primary products by a factor of 4; and nations like NZ that remain reliant on exports of primary products have slidden down the OECD wealth rankings as a result.
There is no reason to think that a short term trend to higher dairy export incomes is a reversal in the long term trend. Besides Brazil, there is the famous African "bread basket of the British Empire" that could enter the fray too if it ever sorted its political and cultural act out.
Every country in the world wants to have food security, and the amounts traded internationally are low compared to local production for local consumption. There is scarcely much room for many "primary produce surplus" economies in the global economy.
I miss the late Prof. Sir Paul Callaghan very much, he was a fount of wisdom on stuff like this and absolutely showed up the economics specialists who never got his insights.
One of the best 45-minutes odd you can spend:
IF you don’t have time to watch it, which would be a pity, at least read this:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10559030
Maybe so, didn't David Lange also describe farming as a sunset industry, and Ronald Reagen may have suggested something similiar, both informed by neo liberal ideology to improve economic efficiency through promoting the 'free market', corporatisation and the trickle down effect. How's that working out? Where is agriculture at in the USA?
As agriculture is on the bottom rung of the price taking ladder, wouldn't they be better off if they worked together in cooperative structures to preserve long term wealth?
An excerpt from Phils link above.
But we do need to resist our occasional little-mindedness, our parochialism, our tendency to divide amongst ourselves, our tendency to be suspicious of each other.
We have business suspicious of government, engineering suspicious of science, Wellington resenting Auckland, the University of Auckland pretending the other universities don't exist, CRIs jealously protecting research grants from universities, the Ministry of Research, Science and Technology disjointed from the Ministry of Education, the Foundation for Research, Science and Technology disconnected from the Tertiary Education Commission. We just can't afford it.
We live in a wonderful but small country. Our population is no bigger than Manchester or Philadelphia, but no smaller than Finland - where people seem a whole lot better at co-operation. My plea is that we believe in ourselves and work hard to discover the business models that work for us.
There was certainly a clamour for financial investors to get Fonterra to free up it's capital structure so they could get their mits on a bit of agriculture wealth, so there must be some value there?
Henry Tulls post in the top 10 points out the value foreign corporates see in investing in NZ agriculture, and technological alternative to agricultural wealth generation for NZ.
The way I see it is that farming is not a sunset industry but that as a country we are not putting in place the systems needed to allow new industries to develope. Especially urban based ones. This is well discussed in the comment section over in Reserve Bank analysis recent migrant inflow could increase house prices 7% and produce 150 extra building permits a month next year
It's sunset in that little extra ocst-additions can be effective made to it. ie little chance of new breakthroughs, little chance to put a bunch of jobs in place in "quality control" as it's a mature commodity industry competing on profit with established players.
Thus not something they want to depend or invest in for future growth. it is sunset, not new day.
Brendon is right. Farming does not need to be a sunset industry - everyone's got to eat - but "value added" is where all the wealth creation in the world is.
And "feeding yourself" is easy - there is hardly an economy in the world that can't do it.
But even in an enlightened, free-trade world, it is not going to be NZ getting rich from exporting food to countries that can't do it as efficiently as NZ; it is the countries exporting the stuff with the greatest "value added" - even if they had to import the raw materials and the food. The price of raw materials and food on international markets are not a lot higher than the cost of production or extraction by the most efficient producers and extractors. Aussie is losing its edge at efficiency of extraction of valuable rocks right now.
What traded items DO embody "wealth creation" for the exporting economy, are the ones with the greatest value added. How much value to the buyer is there in a 500 gram cut of meat versus a 500 gram computer hardware item or better still, a program sold over the internet?
feeding yourself is not easy Phil. It's very expensive and takes skills and raw materials that take time to develop.
As for value, good meat is nutrious. Easy to live without computer hardware which will cost more money later anyway or a program which will seldom give you it's value back.
Good gracious; is there not a hierarchy of human needs and a matching hierarchy of economic development?
We humans solved the "food production" thing long ago. There is no longer "systemic new wealth creation" in it.
There are much harder things to do, all of which create far more value than "getting fed" under modern economic conditions. Of course if we collapse back to subsistence conditions due to war or bad politics or natural cataclysm, food will be "worth a lot" relative to our now greatly reduced real incomes.
But that is a completely different thing to "the sources of wealth" being grown as economies develop.
IT creates massive value for its users, I don't know why you are so skeptical about it. The IT that people can buy now, does ten times as much stuff as could have been done at a hundred times the cost a few decades ago. This is what wealth creation is all about. People getting more and more value for less and less money.
It is very hard to do the same when your specialty is selling legs of lamb. You would have to discover some miracle substance you could extract from the leg of lamb that would enable people to teleport themselves, or something, to match what US, Japanese and Korean electronics makers have been doing for the last few decades.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.