Will Brazilians Likeness To U.S. Beef Mean More Imports of It

Since the United States opened its market for both Brazilian and Argentinian beef in 2016, the same opportunity for trade was delivered to U.S. beef exporters. That is, fresh and frozen beef can be exported from the U.S. to Brazil or Argentina, which trade freely under the Mercosur trade agreement.

Another interesting aspect that can help to boost those exports is that the typical American barbecue became trendy in South America and consumers demand more U.S. beef cuts, though there is a strong tradition and pride of buying the local beef in the region.

Top tourist destinations in Buenos Aires (Argentina), such as La Cabrera steakhouse, started to offer traditional T-Bones and ribeyes. In the last months, the restaurant Los Prados, also in Buenos Aires, saw its demand for ribeyes jump from 20 per week to over 500 units per week.

Both cuts are not very different compared to the local cuts, but essentially most experts say that people are attracted to something that is new in place. The cuts are essentially made in opposite sides.

In Sao Paulo, Brazil, the same phenomenon started to gain traction about four years ago. Orlando Carvalho, owner of Texas Fumaçaria, a steakhouse opened two years ago in Porto Alegre, saw that trend growing and began to experiment with a few things in the state of Rio Grande do Sul, the most traditional steak state in Brazil.

He first started cooking with the pit smoker barbecue informally with groups of friends who were surfers and skaters. First, Carvalho cooked hamburgers, but later he started to add the steaks and people enjoyed. Then, after the success among friends, came the idea of opening a steakhouse.

"The first thing that I thought is that Texas had the most similar culinary to the state of Rio Grande do Sul and had to apply the Texas barbecue in my state," Carvalho told Agriculture.com.

"But I did not know if people would not feel angry with outside barbecue coming to our land," Carvalho says.

Texas Fumaçaria opened in 2017 and after one year bbq ribs both from hogs or bovine attracted thousands of customers in the open air place. In the current days, people frequently ask for ribeye and other cuts. Carvalho usually uses the beef from packing plants in Rio Grande that use Angus and Hereford genetics, typically grown both in Texas and Rio Grande do Sul.

"Here we use the local beef with typical U.S. beef," he said, but admitted he could use American beef in the future.

The changes in consumption and the growing population of Brazil was one of the argument that USDA Secretary Sonny Perdue used to highlight the importance of opening the Brazilian market. Combined, the Mercosur countries (Argentina, Uruguay, Paraguay and Brazil), which are one market, have over 250 million inhabitants. On the other hand, they are large producers and exporters of beef. For that reason, Alcides Torres, beef market analyst at Scot consultancy, is skeptical that imports of U.S. beef could grow substantially in Brazil.

"The consumption of imported beef is marginal. Roughly, the imports range from 30,000 tons to 50,000 tons: It will not be a bigger jump. Our production is very solid," stated Torres to Agriculture.com.

For the U.S. Meat Export Federation, the challenge in the Brazilian and Argentine market is not tax barriers, but the label and registration process.

"The onerous registration process in Brazil, the zero tolerance for salmonella and variation in testing frequency and document inspection protocols between Brazilian ports continue to be obstacles. The U.S. hasn't made any commercial shipments to Argentina and only has a few exporters eligible for Brazil, so it's difficult to test the market and get the industry used to import practices and procedures," the USMEF staff said.

From 2012 to 2018, the total exports to Brazil jumped from 12 tons to 1,379 tons. To Argentina, it jumped from zero to 18 tons. The USMEF projection is that the imports from Brazil with 6,000 metric tons until 2023.

Nevertheless, the Federation is optimistic about future prospects in Brazil and Argentina. "USMEF does feel that there are opportunities for U.S. beef, and we have seen some promising demand in Brazil for picanhas, livers and some middle meats. In Argentina we expect to eventually see middle meats achieve some success in the higher-end foodservice sector," they concluded.

In the view of Brett Stuart, a market analyst at Global Agritrends, based in Dever, Co., exports to Brazil and Argentina would take off if there is no "games". "The new access may lead to larger shipments. U.S. beef and pork exports will flow to any market where we have 0% duties and no "games". Games include the lack of government issued import permits, non scientific residue standards, etc…," explained Stuart.

Stuart considers markets with no games Chile and Colombia, countries that the U.S. have full trade agreements with, right now. According to USMEF, the Chilean demand for U.S. beef has grown from 1,490 tons in 2010 to 9,396 in 2018. The Colombian demand has grown from 233 tons in 2010 to 3,266 tons in 2018. Currently, the total beef and beef variety imports in South America is 28,333 tons (2018), but the USMEF estimate is 45,000 tons by 2020.

"One cut that is very competitive has grown in demand in Brazil is "picanha" (US sirloin cap or coulotte)," said Stuart, citing the most common cut in Brazil overall.

Mad cow disease

Brazilian authorities announced they are investigating a case of mad cow disease detected in the state of Mato Grosso. The exact location of the case was not announced due to prevention reasons.

As one of prevention measures of the country's Ministry of Agriculture, Livestock, and Supply there was a suspension of sanitary certificates emissions, which result in a suspension of exports to China. In the view of Alcides Torres, Brazilian packing companies, like JBS, would direct the supply to other countries they produce beef for, probably not the U.S. because of the trade war.

Brazil, Argentina to supply the European Union

Brazil's Minister of Economy, Paulo Guedes, announced in an official trip of Jair Bolsonaro to Argentina, that the Mercosur reached a deal to have a free trade agreement with the European Union and the details of the agreement would be announced in the next four weeks. Beef exports from Brazil, Argentina, Uruguay, and Paraguay were of the key points of the negotiations. France was the key voice against the entrance of South American beef in Europe.