Where's the beef? In Brazil, it's at center stage

Thu Jun 19, 2008 4:47pm EDT
By Stephanie Beasley
SAO PAULO (Reuters) - The cattle are the stars at Brazil's 14th annual Feicorte International Beef Fair but these celebrities are actually admired for being pieces of meat.
Hundreds of cows, bulls and calves crowded the floor at Sao Paulo's Centro de Exposicoes Imigrantes, the city's largest convention center, on Wednesday night.
Most were indifferent to the thousands of people filing past as they dozed and ruminated, showing interest only when handlers led them through the evaluation and auction stages, a reminder of why they and the fair's attendees were there.
"The great return from this is to select a better breed each time," said Andre Mendoca, a buyer attending the auction for the Brahman breed.
Mendoca was one of many potential bidders at the auction eyeing the livestock while sipping cold beer and munching snacks.
With the pulsating music, flashing lights and confetti, the event had the feeling of a party. Indeed, many Brazilians feel there is reason to celebrate.
"Brazil is seen as the country with the cheapest beef in the world, and it will continue to be," said Roberto Barcellos, special projects director for the Marfrig beef company.
Brazil has the world's largest cattle herd and is the largest beef exporter, and looks likely to stay that way.
In March, Brazilian meat company JBS acquired U.S. companies Smithfield Beef Group and National Beef Packing Co for nearly $1.3 billion. The deals pushed its U.S.-based JBS-Swift unit past Tyson Foods Inc to make it the largest U.S. beef producer.
NOT COWED BY EU RESTRICTIONS
Brazilian cattle is highly regarded because it is mainly grass-fed and so free of the mad cow disease that has tainted beef exports from other nations like the United States. But its image as the beef king has suffered some damage recently.
In January, the European Union suspended beef imports from Brazil, citing food safety concerns about the meat's lack of traceability. The EU eased restrictions in February but is still only allowing beef shipments from 106 Brazilian farms.
Brazilian beef experts have said that at least 1,000 farms would need to be authorized for export to normalize trade.
"Brazil has practically never had a market outside of Europe," said Juan Lebron, director of operations for Assocon, the national cattle growers association.
"We don't have a better client."
Experts estimate that the level of beef exports from Brazil will fall 20 percent from the volume produced in 2007 as a result of the EU's new restrictions. However, profit is still expected to increase by 10 percent to $5 billion as a result of higher beef prices.
Lebron said changes should be made to the current production system and that beef producers should begin catering to the different global markets.
"The inclination is to separate the producers according to markets. There would be groups for Europe, Japan and the United States, which are more restrictive, and others for Russia, Chile and the other countries," Lebron said.
Jose Amauri Dimarzio, president of the Brahman breeders association, is optimistic that the EU will eventually allow more beef exports from Brazil. But he believes it is only a matter of time before others follow the European example.
"In five years the principal buyers, Russia included, will also want to have this," he said. "It's an irreversible trend in the world -- something that the consumer will insist upon."
The issue of global marketability did not appear to weigh heavily among the cattle being auctioned at Feicorte on Wednesday night as they paraded across the stage while "We Are the Champions" blared in the background.
(Reporting by Stephanie Beasley; Editing by Angus MacSwan and Eric Walsh)