São Paulo – Egypt, which preferred to buy buffalo meat from India – at the time more competitive than Brazilian beef – is returning to imports of the Brazilian product. The expectation of the Brazilian Beef Industry and Exporters Association (Abiec) is that the Egyptians should triple purchases of Brazilian beef in 2009.
"Egypt, which has already been among the main markets, registered an enormous reduction in 2008. With the crisis, the demand for 100% prior payment has made the Egyptians return to buying Brazilian beef. We are now starting a period of recovery that should grow much over the year," stated Abiec executive director Otávio Hermont Cançado. Last year, Egypt imported 78,000 tonnes of beef, 58% less than the 184,000 tonnes imported in 2007. In terms of revenues, the reduction in exports reached 32%. The US$ 348 million exported in 2007 dropped to US$ 236 million in 2008.
The beef sector ended the first month of 2009 with a negative balance. Exports of beef dropped 45% over the same period last year. In total, in the first month of the year, trade on the foreign market totalled US$ 255,690, as against US$ 465,380 in the same period last year. In terms of volume, there was a 34% reduction, with 81,810 tonnes sold, as against 124,700 tonnes exported in January 2008. The figures were disclosed yesterday (12) by the Abiec.
Exports of raw beef dropped 38%, to 56,600 tonnes exported in January, against 91,900 tonnes in the same period in 2008. In terms of value, exports of raw beef dropped 54%, with revenues of US$ 168,460 against the US$ 364,740 in January last year.
Industrialized beef totalled 13,460 tonnes exported. In January 2008, the volume of the product exported reached 19,160 tonnes, representing a reduction of 18%. In terms of values, the reduction was 45%, with sales of US$ 54,740 in January, whereas in the same period last year it was US$ 69,500.
According to Cançado, part of this reduction in exports is due to the effects of the international financial crisis, which reduced the offer of credit for importers and exporters. Apart from that, according to Cançado, in January 2008 both the volume and the export revenues were atypical. "At that time there was an expectation of a European Union embargo and many Brazilian companies anticipated their sales," he said.
Effects of the crisis
Amidst the credit crisis that has been affecting the sector, exporters of beef should increase shipments in coming months with the objective of calming a reduction in international prices. "The country should export more to generate the same revenues. But this should not be the tendency for the whole world," stated Cançado.
According to the director, the figures for January were negatively impacted by the reduction of stocks by importers, who purchased less due to lack of credit. "Apart from that, the base for comparison with the same month last year is strong, as it was an atypical month. In that period the market anticipated restrictions imposed by the European union in 2008 and shipped large volumes," he said.
Seeing signs of recovery in sales in January over December 2008, Cançado concludes that the crisis is not of demand, but of financing for foreign trade operations. For this reason, he believes in a stronger rebound by Brazilian slaughterhouses, even due to the fact that the lack of credit should not be as great as last year.
He mentioned as examples of the return to greater shipments the volumes sold to Russia (up 50% in the December/January comparison), Hong Kong (6%), Italy (38%), Lebanon (20%) and the Netherlands (66%).
The main exports to the destinations, however, were at lower prices than in December. The Russians, the main importers of the product from Brazil, paid an average price of US$ 2,181 per tonne last year, against US$ 2,610 in December, a sign that the contracts are being closed for lower values.
Abiec forecasts for this year are for annual export revenues equal to or slightly lower than in 2008, when the sector exported US$ 5.3 billion.
When asked whether exporters were not facing difficulties to expand the volumes sold amidst the crisis, geared at reaching similar exports to those of 2008, Cançado stated that some time prices will rise, reducing the need for greater foreign sales. "I think that by the end of the third quarter we will have an idea of the average price," stated the director, estimating greater growth in shipments in the second quarter.
Hilton Quota
Last Wednesday (11), the Abiec filed at the Brazilian Foreign Office, in Brasília, a request for compensation in the European Union Hilton quota. The organisation wants 8,000 tonnes of beef to be added to the current 5,000 tonnes. "Compensation is for the entry of Romania and Bulgaria into the list of importers of beef in the region," he said.
The Hilton Quota forecasts exports of a certain volume of Brazilian noble beef to the European Union at lower import fees. Despite the possibility of not reaching the quota due to the crisis and the lack of conclusion of negotiations with the European Union, the Abiec wants to reach 2011 with approved compensation.
The director also declared that the Abiec is monitoring possible protectionist measures in the beef export market. "The moment is one of market opening to move the economy and not one of prospecting. If this takes place, as we already know of measures in other sectors, we are going to ask for immediate government intervention," said Cançado.
*Translated by Mark Ament
