Brazil’s Lula calls China’s Xi over stranded beef consignments

Almost 70,000 tonnes of Brazilian beef are stranded at Chinese ports awaiting a resolution to a stalemate initiated after the identification of an atypical case of Bovine Spongiform Encephalopathy (BSE), known as “mad cow disease” in Brazil.

In the meantime, the meat cuts produced months ago are still waiting to enter the Asian country. The situation even instigated a phone call from President Luiz Inácio Lula da Silva to his Chinese counterpart, Xi Jinping, to resolve the issue, as stated by the Brazilian leader himself during an event in Bahia on June 6.

Brazil suspended beef production for China after the BSE case was reported on February 23, but the products that had already been cleared for export to the Asian country continued to be shipped at the risk of being denied access to Chinese territory, which eventually happened.

A month later, on March 23, China agreed to resume beef exports from Brazil. The Asian economic powerhouse accounts for over 60% of the total exported by Brazilians in 2022.

Shipments resumed after the embargo was lifted. However, this did not resolve the situation for the cargo loads that were shipped during the embargo period. The cargo that left Brazilian ports after March 23 encountered no issues.

According to Lula, the Minister of Agriculture, Carlos Fávaro, informed him that “70,000 tonnes of meat are stuck inside containers at Chinese ports.”

During an agricultural fair in Bahia, the president revealed that Fávaro told him the products were shipped “at the wrong time” and that there is little to be done about it.

“Right or wrong, we have the Atlantic Ocean full of containers loaded with Brazilia meat. I had to pick up the phone and call President Xi Jinping,” said Lula.

The volume mentioned by the president, reportedly in the containers awaiting clearance to enter China, is significant considering Brazil’s monthly exports.

See below Brazil’s monthly beef exports from Jan 2019 to Apr 2023. The data is from Datamar’s DataLiner market intelligence service.

Beef exports to China | Jan 2019 – Apr 2023 | WTMT

Source: DataLiner (click here to request a demo)

In May, Brazil exported approximately 170,000 tonnes of fresh beef to various countries, marking a 16,000-ton increase in total exports compared to the same month in 2022.

According to an anonymous source within the sector, the agreement with China stipulates that exports should be halted in the event of BSE, and this condition has been met. However, the deal does not apply to shipments cleared before the embargo start date.

“That’s exactly what happened. On the announcement date, February 23, production for China ceased. From that point onward, the Ministry of Agriculture stopped clearing goods for export. However, a certain quantity was produced before February 23 but shipped afterward,” the source explained.

“The Chinese believe that Brazil violated the agreement by continuing to ship, but the agreement pertains to production, not shipment,” the source clarified.

A similar deadlock occurred in 2021 when two atypical cases of BSE were reported in Brazil, resulting in a temporary export embargo to China. Eventually, Chinese customs authorities accepted the shipments following measures the Brazilian government took.

At that time, around 100,000 tonnes of goods were halted.

According to the industry source, who refrained from discussing current volumes held at Chinese ports, exporters eagerly await a decision from China.

“The Ministry of Agriculture and the government, in general, are actively engaged to demonstrate from a technical point of view that there is no justification for barring this meat,” the source commented.

Lygia Pimentel, director of Agrifatto consultancy, confirmed that the volume stranded at Chinese ports ranges between 40,000 and 70,000 tons.

“It is difficult to ascertain the precise amount still awaiting clearance and what has already been returned or redirected,” Pimentel noted, considering that some of the cargo may have been redirected to other countries.

She further affirmed that the affected shipments remain stagnant, while the Chinese authorities insist they will not accept these batches. They must either be returned or redirected to alternative destinations.

Source: https://www.moneytimes.com.br/lula-fala-com-xi-jinping-para-liberar-cerca-de-70-mil-toneladas-de-carne-parada-em-porto-da-china-apos-vaca-louca/

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