As the latest round of EU-Mercosur negotiations conclude in Uruguay today, there appears to be little threat of an immediate trade deal – with a blame game in progress. Ahead of this round of negotiations, Brazil has accused the EU of dragging its feet on access for agricultural produce (beef), while the European Agriculture Commissioner shot back that Mercosur had not responded to requests the EU had made in January on a range of goods and recognition of PGIs.

Farmer fears for an influx of South American beef have been well documented and continue to occupy the minds of the EU farming organisations. However, failure to gain further quota for the EU on top of the current Hilton and Quality beef quota hasn’t prevented the South American countries from developing their export businesses for beef.

European Trade Commissioner Cecelia Malmstrom (right) with European Agriculture Commissioner Phil Hogan (left) at the WTO Ministerial Conference in Buenos Aires.

Brazil

China is a major destination for Brazil, Argentina and Uruguay. In the eight months to the end of August, Brazil shipped 191,000t of frozen beef to mainland China; while a further 175,000t was shipped to Hong Kong, along with 63,000t of offal. Exports of frozen beef to mainland China have jumped 48% compared with the same period last year and beef sales to Hong Kong are up 19% on 2017 figures. This is over half of all Brazil’s beef exports in 2018, with the Middle East and North Africa are the next important markets.

Uruguay

Uruguay too has grown its imports in 2018 up until week 36, though its chilled beef exports are down 2,000t. This year it has exported 193,000t compared with 183,000t for the same period in 2017. Again, China is the major customer – taking an even higher percentage of Uruguayan exports at 118,000t compared with 106,000t during the same period in 2017. The next most important export customer for Uruguayan frozen beef is the USA, which has taken 24,000t this year to date – down from 26,000t for the same period last year.

Argentina

Of all South American countries, Argentina is the one with the most potential. Between 2005 and 2015, it was government policy to frustrate beef exports in order to keep suppliers within the country and depress prices – making it more affordable for consumers. To that end, the Argentinian government imposed a 15% export levy and at one point banned exports of beef completely for six months.

The election of a new free market President in 2018 meant that exports were encouraged and in early 2017 an export refund of between 2.5% and 4% for exporters was introduced. Argentina was the third largest exporter of beef in the world in 2005, shipping approximately 500,000t. By 2015 this figure dropped to 140,000t, but has been recovering every year since. This year, Argentinian exports of beef are at 184,000t, 65% ahead of the first seven months of 2017. China again is a major customer, taking over half the volume.

Trade with EU

With quota restrictions, the South American focus in trade with the EU is on high-quality cuts that get maximum value. Sales to the EU are a mix of fresh and frozen. In the first six months of 2018, Brazil, Argentina and Uruguay accounted for 77% of all the EU imports of beef. Brazil had the largest share on 68,000t, while Argentina was on 31,000t and Uruguay on 27,000t.