THE US has banned all fresh and frozen beef imports from Brazil following the detection of of unacceptable material including blood clots and bone as well as bacteria in several shipments.
The latest ban follows on from a corruption scandal which rocked the Brazilian industry in March where a two year investigation revealed up to 40 meat companies had paid off inspectors and politicians the processing and sale and export of rotten meat.
According to Meat and Livestock Australia the latest blanket ban came swiftly after the Brazilian government had self-imposed the suspension of five processing facilities that were exporting to the US. Unsatisfied this would address ongoing food safety and quality concerns, the USDA subsequently halted all imports of Brazilian beef.
The majority of the Brazilian beef exported to the US is ground product used in hamburger patties and smallgoods.
According to Commonwealth Bank economist Tobin Gorey the immediate impact of Friday’s ban will be that US processors will switch demand elsewhere, including within the US domestic market and Australia.
US cattle futures prices rocketed on Monday on the strength of the ban.
“The ban might well have a lasting impact,” Mr Gorey said. “Brazil has spent many arduous years getting back into the US market. We do not know right now how long these bans will remain in place.”
According to USA Today, the US Department of Agriculture’s Food Safety and Inspection Service said it had rejected 11pc of Brazilian beef shipments since March over "public health concerns, sanitary conditions and animal health issues".
Despite the scandal Australian cattle prices were a shade weaker earlier in the week on the back of forecast dry weather across much of the pastoral areas of Queensland and NSW.
According to MLA Brazilian beef exports were just over 90,000 tonnes in May – a 29 per cent increase month-on-month. However, exports in April were the lowest monthly volume since 2012, a direct result of numerous trading partners issuing temporary import restrictions.
MLA said while removal of the US market reflects lost opportunity, it still only accounted for 5pc of Brazilian exports in May. Furthermore, Brazil continues to expand into China, where it remains the market leader.
Brazilian cattle prices have moved lower through the first half of 2017, with prices in Brazilian Real terms back 15pc since January, underpinned by economic instability and the aforementioned industry setbacks.
However, in US dollar terms, Brazilian cattle prices have been further compounded as a result of a weaker currency – trading close to the historical lows, MLA said. (R$1 (Brazialian real) is worth about US30c or A40c).
Mr Gorey said Brazil’s reputation would again be tarnished.
“The recent investigation into Brazil’s meat inspectors was one incident and here is another, all too soon afterwards,” Mr Gorey said.
“We suspect supermarket procurement agents might be reluctant to risk buying Brazilian beef, for at least a while, no matter how good the deal that is offered.”