JBS Sees Short-Lived US Ban Of Processed Beef From Brazil

Agriculture Online

6:17 PM, August 4, 2008

SAO PAULO (Dow Jones)--The suspension on Brazilian processed beef exports to

the U.S. is expected to be short-term, and it may even benefit meatpackers, the

investor relations director of JBS said Monday.

"This isn't particularly serious and may be a blessing in disguise," said

Gerry O'Callaghan.

According to O'Callaghan, JBS sees the suspension in Brazil as a good

opportunity to further hike processed beef output through its plants in

Argentina. "This allows us to move towards full capacity in Argentina," he

said.

The temporary suspension increases a trend that was already happening,

according to the JBS executive.

"Since mid-June we have seen increasing volumes in Argentina in mainly canned

beef products," he said.

Rival Brazilian beef company Marfrig (MRFG3.BR) also said Monday that the

company would increase its production of processed beef in neighboring Latin

American countries to beat the export suspension on Brazilian exports to the

U.S.

Marfrig will expand its production and exports of cooked meats and beef jerky

from its plants in Uruguay and Argentina, the company said.

Brazil's Ministry of Agriculture was forced to suspend processed beef exports

on Friday, when U.S. inspectors complained of inconsistencies between

regulations in Brazil and in the U.S.

The suspension should last for only one or two months, while the Brazilians

resolve audit issues, said O'Callaghan.

Brazil has 22 meatpackers and additional inspections should be carried out in

the next two weeks by Brazilian auditors, then U.S. teams will be invited back

to Brazil, he said.

According to O'Callaghan, audits are conducted in different ways between the

two countries, with local officials carrying out inspections in Brazil, while

federal officials need to inspect the beef in the U.S.

Alcides Torres, chief beef market analyst at Scot Consultoria in Sao Paulo,

agreed that Brazilian and U.S. inspectors have different ways of doing things,

and the rules need to be adjusted.

"It is mainly an issue due to red tape, and not a protectionist issue like

with the European Union," he said. The E.U. suspended Brazilian imports of

fresh beef at the start of 2008, claiming that Brazil's health conditions

weren't sufficient.

"The suspension (of U.S. exports) should be lifted within 30 days," Torres

said.

The Brazilian Beef Exporters Association, or Abiec, said 62,500 metric tons

of processed beef was exported by Brazil to the U.S. in 2007.

Brazil is the world's largest beef exporter.

-By Tony Danby, Dow Jones Newswires

agriculture.com