Higher prices from beef scandal
New Zealand stands to benefit from the beef scandal engulfing Brazil, chiefly through receiving higher prices.
Authorities in Brazil have suspended over 30 government officials in response to allegations that some of the country’s biggest meat processors have been ‘‘selling rotten beef and poultry for years’’, according to reports from the BBC. In response China and the European Union placed a temporary ban on Brazilian meat imports, although China has since lifted it.
New Zealand Meat Industry Association chief executive Tim Ritchie said Brazil exported between 1 to 1.2 million tonnes of beef a year, chiefly to Hong Kong, Egypt, China, Russia, Iran, Chile and Italy. New Zealand’s exports amount to 400,000 tonnes.
Analysts have been predicting a significant increase in exports this year from South America, and particularly Brazil. The United States recently agreed to a hike in imports of Brazilian beef, from the 10,000 tonnes it takes now, to 60,000 tonnes. New Zealand’s biggest beef markets are the US, earning $1.2 billion last year, and China was a $450 million market.
Ritchie said some of the Brazilian beef was still in transit, and while it may be stopped from entering ‘‘mature’’ markets, it would find a home somewhere.
‘‘What gets stopped somewhere tends to pop up somewhere else but they are not markets we are servicing.’’
The Government’s agricultural trade envoy Mike Petersen said the scandal was a ‘‘big issue’’ and reinforced the need for food safety integrity.
‘‘The benefit to us is that prices will head upwards.’’
ASB rural economist Nathan Penny said he expected the US to place a temporary halt to imports from Brazil until they understood the situation. ’’It’s at times like these that the payback from good food safety practices comes in,’’ Penny said.
Ritchie said New Zealand would not be able to supply countries experiencing a shortage of beef because it sold everything it could produce. ’’So it doesn’t open up any opportunities for us to supply, but it will be positive for us in better prices.’’
He said it could take a long time for the Brazilians to recover now their reputation had been tarnished. It depended on how quickly the authorities could convince destination countries that they had taken the measures necessary to guarantee the safety of the beef.
Brazil tends to operate at the lower end of the market, and fetches prices about $2 per kilogram less than what New Zealand beef does.