Brazil government likely to avoid intervening in beef export quota to China

Brazil’s federal government is not expected to step in to manage the beef export quota to China this year. Despite a request from exporters, the issue was not included on the agenda of Thursday’s meeting of the executive management committee, or Gecex, of Brazil’s foreign trade chamber and there is no guarantee it will be discussed at upcoming meetings. Without regulation, meatpackers are seeking credit under the Brasil Soberano Plan to help offset projected revenue losses.

The Brazilian Confederation of Agriculture and Livestock (CNA) told the government it opposes state regulation of shipments, Valor reported. In a letter sent to the Ministry of Development, Industry, Trade and Services, the group warned that official control could hurt prices received by cattle ranchers and create “market reserves” for large meatpackers, with regional pressure on cattle prices.

The government took that argument into account in halting progress on the proposal from Abiec, the Brazilian Beef Exporters Association, according to Valor. There was also a complaint from a small meatpacker, which signaled it could appeal to Brazil’s antitrust authority, Cade, if the government moved ahead with the measure. The ministry did not respond to a request for comment.

CNA told the government that regulation would leave cattle producers “at the mercy” of the meat industry. The group also raised concerns about a possible lack of transparency in information on quota compliance. Ranchers feared meatpackers could claim they had already filled their allotted volume and then try to negotiate lower prices for so-called “China cattle” without properly proving whether that meat would in fact be shipped to the Asian country.

Cattle producers also believe China will not stop buying after the quota is filled. There has been a move to bring imports forward in order to secure cheaper prices without the extra 55% tariff, but expectations are that demand in China will remain firm. CNA did not respond when contacted by the report.

The industry’s position is the opposite of that of ranchers. Economic and legal studies were delivered to the government to support the creation of an official system to divide volumes among meatpackers and monitor shipments.

According to exporters, allocating volumes and ensuring regular supply could support overseas prices and bring stability to the domestic market. Without that, they argue, there could be disarray, with declining and devalued export sales and a resulting cash-flow imbalance for meatpackers.

Roberto Perosa, president of Abiec, said “the end of the Chinese quota will coincide with the period of greatest supply of feedlot cattle. If we had rules in place, that would be more balanced,” suggesting a possible drop in cattle prices in the second half of the year.

The current situation contrasts with the joint position issued by CNA and Abiec on Dec. 31, 2025, when China announced the safeguard measures. At the time, the entities said the quota imposed “a reorganization of production and export flows” and that they would work to reduce the damage to cattle producers and exporters.

Meatpackers now assess that the government’s position will cause medium-term damage to Brazil’s cattle chain. The sector is concerned about what happens after the quota is exhausted, which Abiec estimated last week could occur in the first half of the year. Chinese import data showed that more than 372,000 tonnes of Brazilian beef entered the country in January and February, equivalent to 33.6% of the 1.1 million-tonne quota for 2026.

Meatpackers told the government that regulation could help organize supply and shift the income capture from the quota toward Brazilian exporters rather than Chinese importers. The industry’s view is that the greatest damage will be the “deterioration of prices received” in an environment of “disorderly competition,” according to documents seen by Valor.

In Brasilia, the view is that the issue could return to the government’s table later if there are effects on domestic prices. A source following the matter said that any pressure could lead the government to consider quota controls for 2027 and 2028.

Without a quota-control system in place, the current assessment is that smaller meatpackers will be hurt, while large multinationals may quickly take up the remaining quota.

With the government rejecting the measure and a sector-wide agreement on quota distribution deemed unworkable because it could be seen as cartel behavior, meatpackers’ strategy will be to seek other steps to mitigate possible losses from a smaller Chinese market and potentially lower sales revenue due to price pressure.

One request is for financing lines under the Brasil Soberano Plan, which was increased today by 15 billion reais for companies affected by the war in Iran, to be extended to meatpackers that may be hit by exports to China.

Source: Globo Rural

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