São Paulo – Brazilian beef sales to Middle East countries are on their way up as availability of buffalo meat from India goes down. So said investment firm Radar Investimentos managing partner Leandro Bovo during a webinar hosted on Tuesday (14) by consulting firm Datagro and livestock industry association Grupo Pecuária Brasil (GPB). India is struggling with livestock production as a result of the Covid-19 pandemic.
“India used to be a relevant supplier of cheap protein to the Middle East. When it stopped slaughtering buffaloes, the Middle East looked to Brazil almost immediately. They are going back to buying much more product from us,” said Bovo. The webinar also featured Minerva Foods Institutional Relations director João Sampaio and GPB/Datagro executive Leonardo Bacco, with moderation by Brazilian Zebu Breeders Association (ABCZ) director Bento Mineiro.
According to Bovo, China is also displaying a great appetite for Brazilian beef. Coronavirus knocked down currencies around the world, and Brazil’s real was one of those that slid the most relative to the US dollar. Although this isn’t a good thing for many aspects of the economy, a strong dollar is beneficial to exports since it makes Brazilian products more competitive at an international level. “This made our beef really affordable,” he said.
During the webinar it was said that an arroba (roughly 32 pounds) of Brazilian cattle was going for USD 37.5 last Tuesday (14), as against USD 58 for Australian and USD 58.5 for cattle from the United States. Even though Argentina had the cheapest cattle at USD 37, it does have a limited production capacity. “No other country in the world can rival our quality, our volume or our structure, which enables us to get beef to anywhere in the world at prices that are unmatched,” said Bovo.
The webinar speakers said foreign markets are becoming more important in today’s scenario. Sampaio said this external demand is not circumstantial or due to the exchange rate. “This is solid demand,” he said. “South America in general, and Brazil in particular, is ideally suited to supply the beef that the world needs,” said João Sampaio.
Sampaio said China stepped up its imports last year as a result of swine flu, as well as due to rising income and a populational shift towards urban areas, which drove up beef consumption. “And other major countries like Indonesia – which has a population of 300 million, a fast-growing economy, and which used to import meats basically from Australia – are embracing Western habits, like eating more beef. Demand is consistent across the entire Middle East and North Africa,” the Minerva Foods Institutional Relations director said.
The specialists agree that beef is one of the least impacted industries in Brazil by the pandemic. They believe this is so because the problem hit at a time when availability wasn’t high. Brazil’s beef industry is in a relatively good situation, in great part due to demand from abroad, the speakers in the webinar said. Logistics is also relatively good, with ports mechanization, and the administration is working to keep it going. However, they noted, the scenario is an immensely uncertain one.
“There are many other risks facing us that are hard to gauge. Take, for instance, the United States, which just shut down plants after workers came down with the coronavirus,” said Bovo. He believes Brazil is doing better than the United States, because although it has big meat packing plants, most units will slaughter some 500 head of cattle a day. “This means the risk gets spread out. If one unit shuts down, you can shift production elsewhere,” said Bovo.
There is uncertainty surrounding the availability of Brazilian beef in the second half of the year. According to Bovo, companies are keeping less cattle in confinement, due to unfavorable replacement costs and misgivings regarding future prices, among other factors. “So far, confinement hasn’t been encouraged in any shape or form,” said Leandro Bovo. He believes that in case the economy bounces back in the second half and drives up consumption, there might be a problem with beef supplies.
Translated by Gabriel Pomerancblum
