Aug 08, 2014

Russia's Ban on U.S. Meat Exports opens Door for Brazilian Exports

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The recent announcement by Russian president Vladimir Putin instituting a one year ban on imported food items from countries that have imposed sanctions on Russia will open the door for Brazil to increase their agricultural exports to Russia.

Poultry, beef, and pork are included in the banned products and Russia is the second largest importer of U.S. broiler meat accounting for 8% of the total U.S. exports. Brazil is also a major meat exporter to Russia and those exports are now expected to increase significantly.

At the same time that Russia was announcing bans on certain food items, the Russian agency in charge of food sanitation announced that 40 more meat processing facilities in Brazil would be authorized to export meat products to Russia – 20 beef processing facilities and 20 poultry processing facilities. In total, there are now 90 meat processing facilities authorized to export meat products to Russia.

Russia is already a principal destination for beef, pork, and poultry exports from Brazil. Total agricultural exports to Russia last year were valued at US$ 2.72 billion and with the new accords signed between Russia and Brazil, commercial trade between the two countries is expected to reach US$ 10 billion per year. In addition to meat products, Brazil is expecting to increase their exports of corn and soybeans to Russia as well.

The president of the Brazilian Animal Protein Association (ABPA) Francisco Turra, has indicated that the Brazilian meat sector could easily fill the gap left by the ban on American meat products. He indicated that the industry could export an additional 150,000 tons of poultry products to Russia per year, which would more than make up for the banned U.S. products.

In 2011Russia suddenly decided to prohibit meat products from many Brazilian processing facilities citing sanitary concerns, but Brazilian officials never truly accepted the Russian explanation. They felt the ban was the result of domestic Russian concerns and not due to sanitary issues. Especially since at the same time that Russia prohibited some Brazilian meat exports the USDA was announcing that Brazil had met the U.S. sanitary standards and Brazil could start exporting meat products to the U.S.

Restarting meat exports to Russia has not been an easy proposition. Since 2011 there have been more than 150 visits between Brazilian and Russian officials including at least a dozen official bilateral meetings. The current accord was finally reached during meetings between Vladimir Putin and President Dilma Rousseff.