Brazil is ready to cover meat deficit in the US

At the time when the United States has a warning about a possible deficiency of animal protein due to the closure of more than 20 meat and poultry processing plants because of the COVID-19 pandemic, some Brazilian companies have taken advantage of the situation to say they are ready to cover that demand.

(Royalty Free illustration | Rawpixel.com)
(Royalty Free illustration | Rawpixel.com)

At the time when the United States has a warning about a possible deficiency of animal protein due to the closure of more than 20 meat and poultry processing plants because of the COVID-19 pandemic, some Brazilian companies have taken advantage of the situation to say they are ready to cover that demand.

According to Bloomberg, diversified meat and poultry producer JBS is one of the companies that are ready to increase exports from its plants in Australia or Brazil. Another way that Brazil would benefit from the situation would be to increase the shipments of meat to China due to the lower exportable supply of pork from the U.S.

“Our geographic diversification has been a natural hedge for trade barriers and sanitary issues. Now, this flexibility has worked as a supply hedge for the current crisis,” said JBS Chief Financial Officer Guilherme Cavalcanti, at a webinar sponsored by Genial Investimentos.

Based in Brazil, JBS is the largest producer of beef and poultry meat in the world. With a presence in 15 countries, it also produces pork. In the U.S., JBS closed two beef facilities and a pork plant due to the pandemic.

“At least 22 meat plants have closed within the past two months, reducing pork-processing capacity by 25% and beef by 10%, a food-worker union says,” Bloomberg reported. 

Minerva SA, the largest beef exporter in South America, is also ready to send more animal protein to the United States through its eight plants in Brazil, Argentina and Uruguay, according to the CFO Edison Ticle. 

In addition, representatives of Marfrig Global Foods SA indicated that the company has already experienced a rise in demand for beef from the United States in recent weeks.

Beef shipments from Brazil to the U.S. were reauthorized in February this year, after being suspended in 2017 for sanitary issues.

According to Ticle, Brazil can export around 60,000 metric tons of this meat to the United States annually in a tariff-free import quota shared with other countries, excluding Argentina and Uruguay, which have their quota. “Shipments exceeding the quota should pay a 26% tariff, which may still be profitable considering the current price differentials,” reported Bloomberg.

Meanwhile, a lower pork production in the U.S. would also benefit Brazil, if exports to China were to be reduced.

“We can keep a position of the U.S. in China and (in other markets in) Asia. There would be room for us to increase pork exports because they (U.S. companies) lower their exports in this scenario,” said Francisco Turra, president of the Brazilian Association of Animal Protein (ABPA), as quoted by El Observador.

On April 28, U.S. President Donald Trump signed an executive order delegating authority under the Defense Production Act (DPA) of 1950 to keep meat and poultry plants operating amid the COVID-19 pandemic.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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