Brazil proposes beef export quota swap with Uruguay

The additional volume is equivalent to nearly one month of Brazilian shipments and would generate more than $500 million in revenue at current beef prices.

Under the proposal, Brazil would transfer to Uruguay its share of the Mercosur quota for tariff-reduced exports of chilled beef to the European Union in 2027. According to one source, that allocation would total about 7,000 tonnes. In exchange, Uruguay would give up 100,000 tonnes of its 331,000-tonne quota for exports to China next year.

Export volumes recorded in the first five months of 2026 underscore the gap between Brazil and Uruguay in production capacity and penetration of China’s beef market. Brazil exported 45,601 TEUs of beef to China over the period, while Uruguay shipped just 4,879 TEUs. The chart below provides an overview of Brazil’s beef exports to China in recent years:

Beef Exports to China | Jan 2023 – May 2026 | TEUs

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Uruguay reportedly agreed to the swap, which would take effect in 2027. However, Brazilian meatpackers opposed the arrangement, preventing the two governments from finalizing the deal, sources said.

Uruguay’s Ministry of Livestock, Agriculture, and Fisheries did not respond to a request for comment. Brazil’s Ministry of Agriculture also did not respond. The Brazilian Beef Exporters Association (Abiec) declined to comment.

According to sources, the proposal stalled because of pressure from major meatpacking companies unwilling to sacrifice market share in the European Union. The same companies have also urged the government to avoid banning antimicrobial use in cattle production to comply with European sanitary requirements.

Smaller and mid-sized processors, however, support the quota swap. Many rely heavily on the Chinese market and have already furloughed workers or granted collective leave after China’s import quota was exhausted. The halt in exports is expected to weigh on their cash flow. An agreement with Uruguay would provide at least one additional month of sales to China and help ease the financial impact on those slaughterhouses.

Unlike Brazil, Uruguayan meat exporters face no restrictions on shipments to the European Union because the country has already demonstrated compliance with the bloc’s requirements regarding the absence of antimicrobial use in exported beef. As a result, sources said the quota exchange would be commercially attractive for both countries.

Europe pays higher prices for Brazilian beef. According to Abiec, premium fresh beef cuts exported to the European market have averaged $9,100 per tonne this year. China pays about $6,200 per tonne, but primarily imports lower-value cuts.

Another source familiar with the discussions said the quota exchange would not face opposition from the Chinese government and could be implemented through an arrangement between the countries.

Mercosur has a quota of 99,000 tonnes in carcass weight equivalent—55% chilled beef and 45% frozen beef—for exports to the European Union at a reduced tariff of 7.5%. That full allocation, however, will only be reached in the sixth year of the Mercosur-EU trade agreement, in 2031. Until then, the quota will increase gradually each year.

Of the 18,100 tonnes of chilled beef, about 7,600 tonnes would be allocated to Brazil and included in the proposed arrangement with Uruguay. The official distribution among Mercosur members has not yet been finalized. It is this volume that the Brazilian government offered Uruguay in exchange for 100,000 tonnes of China’s import quota, which is subject to a 12.5% tariff.

Uruguay has a quota of 324,000 tonnes for exports to China in 2026 but had used less than 25% of it through May, according to official Chinese government data. Brazil’s situation is markedly different. Officially, 65% of its 1.1 million-tonne quota has already been filled this year, but because additional cargoes are still in transit, Brazilian meatpackers have already suspended production of cuts destined specifically for China and halted new shipments in July.

Industry observers have questioned why Brazil’s meatpacking sector rejected the proposed agreement with Uruguay.

“Brazil is likely to be without access to the European Union quota for at least two years, yet it refused to exchange it for a much larger quota to China,” one source said.

Within the livestock sector, some believe the move is intended to put downward pressure on domestic cattle prices.

In theory, Brazil would retain its Hilton quota for the European Union, which totals nearly 8,900 tonnes and became duty-free after the Mercosur-EU agreement entered into force. Outside that quota, exports face a tariff of 12.8% of the shipment value plus €3.04 per kilogram. Exports to Europe, however, could be suspended as early as September because of antimicrobial-use issues.

Data from Uruguay’s National Meat Institute (Inac) show the country exported 23,000 tonnes of beef to the European Union in the first half of this year, down 36% from 36,200 tonnes in the same period of last year and broadly in line with the 23,900 tonnes shipped in the first six months of 2024.