Daily News Update, Feb. 1, 2008

EU threatens ban on Brazilian beef

The European Union (EU) has placed a temporary ban on imports of all Brazilian beef due to a failure of Brazilian farms to meet EU import requirements.

Brazilian farms can be approved to export to the EU when European health safety inspectors are certain that appropriate standards have been met. In some cases, EU officials have to inspect and certify each operation individually.

"This will be a lengthy process," said EU Health Commissioner Markos Kyprianou.

"This extraordinary development in world beef trade has been coming for some time," NCBA Chief Economist Gregg Doud said. "Although some say it is unlikely, it has potentially huge implications if it persists. In tonnage, this is one of the largest beef trading relationships in the world, behind Brazil’s 415,000 metric tons (mt) plus export program to Russia, and it is very comparable in tonnage to Australia's annual beef exports to the United States."

With more than 300,000 mt worth at least $1.3 billion, Brazilian beef exports to the EU-27 (the 27 countries that make up the EU) amount to about 15 percent of Brazil's total beef export program and 32 percent of its total value.

Brazil is the world's largest exporter of beef, with estimated foreign sales of $4.2 billion in 2007.

"This issue will be watched closely for its implications in third-country markets," Doud explained. "At first glance, it would appear some of this beef will end up in the Middle East and China, meaning that the impact on U.S. exports should be limited."

"But the answer largely depends upon how long it takes for these two trading partners to sort this out. Unfortunately, this won't lead to an opportunity for U.S. beef into the EU because of our miniscule 11,500 mt quota and the long-standing non-hormone requirement. Although we long-ago won the hormone case against the EU, we still haven't been able to resolve one of the longest standing trade disputes in all of agriculture," Doud said.

The EU is currently the seventh largest export market for U.S. beef exports worth about $50 million, a market that has grown by 58 percent over the past year.