Brazilian beef exports hit by scandal

April exports drop to five year low

Following a widely publicised meat scandal, Brazilian beef exports through April were just over 70,000 tonnes swt – a 28% decline on March and the lowest monthly volume since April 2012. Markets responded swiftly to the scandal, with numerous trading partners issuing import restrictions or increased product inspection. China, Chile, Hong Kong, Egypt and Saudi Arabia were amongst some of Brazil’s largest export destinations to impose a suspension on imports.

The April export decline is not expected to have a significant long term impact, with most of the aforementioned countries now open for business. However, the scandal does reignite concerns with regards to food safety and traceability standards which has plagued the Brazilian meat industry for decades.  

Australia’s ability to capitalise on the trade disruptions was hindered by several short weeks during April and subsequent reduced slaughter. While overall Australian exports were back as a result, there was some increased share towards markets where Brazil has a presence – namely China and Saudi Arabia. 

Exports to key trading partners

China suspended imports of all meat products from Brazil as a precautionary measure and was one of the first nations to do so. April beef exports to China suffered as a consequence, declining 39% month-on-month to almost 12,000 tonnes swt.

Beef exports to Hong Kong declined 8% from the previous month, albeit off a high base in March, to nearly 15,000 tonnes swt. The Hong Kong to China grey channel may have moderated the drop in exports to Hong Kong, as a means of ensuring product continued to flow through to the China market.

Shipments to Russia were almost 10,000 tonnes swt in April, a 41% drop month-on-month but much more in line with historical averages following noticeable spike in March.   

A decline in shipments was also apparent to the Middle East. Exports to Saudi Arabia moved 35% lower, to 4,000 tonnes swt, following seven consecutive monthly increases. Exports to the UAE also slipped, while Egypt was the only major export destination to see a lift in exports through April, reaching a little over 6,000 tonnes swt. 

Chile also moved swiftly to ban imports from Brazil, the result was the lowest monthly export volume since April 2015, totalling just over 3,000 tonnes swt, back 23% month-on-month – albeit off historically small export volumes.