Major Brazilian beef exporters concerned over limited state focus

Brazil is currently engaged in negotiations to open its beef market to Japan, focusing primarily on three smaller states, a move that has stirred unease among larger Brazilian beef exporters. Talks have gained traction following a state visit by Brazil's President Luiz Inacio Lula da Silva to Japan in March, marking a significant step in a two-decade effort to penetrate the Japanese market.

Background

Brazil, the world's leading beef exporter, has been striving to enter the Japanese market, which is primarily served by the United States and Australia. A successful agreement with Japan would provide the country with an alternative beef supplier amid shifting global trade dynamics influenced by U.S. tariffs. The discussions are currently centered on the states of Rio Grande do Sul, Parana, and Santa Catarina, which together account for less than 4% of Brazil's beef exports by volume.

Market Implications

The focus on these smaller states is causing concern among larger beef-producing regions such as Sao Paulo, Mato Grosso, Mato Grosso do Sul, and Para, which collectively make up nearly 60% of Brazil's beef exports. The decision to concentrate on the smaller states is attributed to their earlier declaration as free from foot-and-mouth disease, a contagious viral illness affecting cattle. Although Brazil has recently been recognised as free of the disease without vaccination, the larger states are still awaiting inclusion in the negotiations.

Industry Reaction

Representatives from Brazil's beef sector have expressed their hope that more states will eventually be included in the talks. Paulo Mustefaga, head of the beef lobbying group Abrafrigo, noted the surprise within the industry at the current focus on only three states, emphasising the need for broader inclusion to benefit the entire sector.

Japan's Ministry of Agriculture, Forestry and Fisheries is conducting a risk assessment in line with its procedures before issuing any export permits to Brazilian meatpackers. The outcome of these negotiations could significantly impact Brazil's beef trade, potentially opening new avenues for export and altering the competitive landscape in Japan.

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