Major threat looms as Brazil pushed to be recognised as FMD free

Brazil is one of the world’s biggest beef producers and a move to be recognised formally as FMD free casts a big shadow over Australian red meat.

Photo: Nelson ALMEIDA / AFP

The first hints of how Brazil could influence Australian beef exports are being seen as the South American country continues its push to be sell itself as Foot and Mouth Disease-free.

Late last month, a delegation from Brazil’s Ministry of Agriculture and Livestock met with counterparts in Japan where they “highlighted that Brazil currently holds the status of a country free of FMD without vaccination, an essential condition for exporting to the Japanese market”.

“The only remaining step is to obtain recognition from the World Organization for Animal Health,” an official said in a media briefing after the meetings.

Global Agri Trends livestock analyst Simon Quilty said the move for Brazil to be acknowledged as FMD-free was a “a monumental stride ..., and the implications for Australia, the United States, and other global suppliers of FMD-free meat are profound”.

“Brazil’s potential to supply a significant volume of meat could lead to substantial market shifts and potential price fluctuations in the future,” Mr Quilty said.

He said Brazil’s two most important markets for beef access, Japan and South Korea, were dominated by the US and Australia.

“In 2023, South Korea was the number one destination for US beef, Japan was number two, and Australia’s beef destinations ranked second and fourth,” he said.

The price gap between Brazil and its export competitors was “enormous”, Mr Quilty said, because Brazil did not have access to the key markets of Japan and South Korea.

“With access to these markets, I expect Brazil’s prices would lift, and both Australian and US prices would likely fall, given the enormity of supply and the desire for Brazil to ‘buy its way’ into the market,” he said.

While Brazil had always been seen as a threat to Australian exports when it became free of FMD, the goal posts had shifted as logistics of shipping chilled product changed, Mr Quilty said.

“One of Brazil’s challenges in exporting to Asia has been the long voyage times of 35 to 40 days,” he said.

“The development of the new mega-port in Chancay, Peru is expected to shorten this voyage time by 15 days or more, enabling (chilled) beef exports to reach Japan and Korea within 21 days.

“This is a significant step forward, and South American countries could become important players in chilled beef to Asia.”

Meanwhile, the latest monthly export figures for Australian red meat show how Brazil has already affected the market.

Meat and Livestock Australia global market analyst Tim Jackson said while exports to other countries were booming, China was the only major market to see a decline in volumes.

“Exports fell 22 per cent year-on-year to 15,359 tonnes (in May),” Mr Jackson said.

“Brazil is the major exporter to China, and with Brazilian production currently running at near-record highs, this is impacting the Australian market share.”