Brazil Fears Mad Cow Case Will Force Cut in Beef Prices

Brazil is worried that fears over a single case of mad cow disease from more than two years ago could force it to slash its beef prices, after China, Japan and South Africa this week suspended imports.

Agricultural officials here insist there is "no risk whatsoever to public health or to animal hygiene" from the lone case of bovine spongiform encephalopathy (BSE) that was detected in an animal that died in 2010 in the southern state of Parana.

Nevertheless, China, South Africa and Japan suspended their imports of Brazilian beef this week, amid fears that other countries could follow suit.

Analysts here suspect that the decision to shun Brazil's beef may be calculated to compel the government to renegotiate its meat prices.

"Undoubtedly, it is a negative situation which generated a lot of speculation and some importers are already trying to use this to renegotiate prices," said Hyberville Neto, an agribusiness expert with Sao Paulo-based Scot Consultoria.

Others said however that a depression of meat prices likely would be a temporary event.

"This crisis can be used to push prices down but so far this is just speculation. And if it occurs, it won't last," said Fernando Sampaio, executive director of the Brazilian Association of Meat Exporting Industries (ABIEC).

Meanwhile, President Dilma Rousseff launched an information campaign to avert a domino effect which could hurt the country's meat sales, although as of Friday, authorities said they have not heard of new suspensions.

"The main buyers listened to our explanations and everything seems under control," Sampaio said.

An agriculture ministry official who asked not to be named said the government is working behind the scenes "to prevent other countries from suspending their imports."

After Japan decided to suspend its imports, British bank Barclays said other key importers such as Russia, Egypt and Iran were unlikely to follow suit. But Barclays added that those countries could block shipments and "create an opportunity to negotiate better prices."

Authorities said the World Organization for Animal Health (OIE) was notified of the case of mad cow but was "maintaining Brazil's status as a country with an insignificant risk of BSE, the best existing risk classification."

Brazil argued that several countries, including the United States, Canada, Japan, Portugal and Britain, also have recorded atypical cases of BSE.

With nearly 200 million head of cattle, Brazil is a leading beef exporter counting some 180 countries as customers this year.

Between January and October, it exported one million tons of beef, mainly to Russia, the ministry said.

Other major customers of Brazilian beef are China and Hong Kong. Brazil is a member of the BRICS bloc of emerging powers, which includes China, India, Russia and South Africa.

The beef crisis surfaced just as exporters prepared to celebrate upbeat 2012 results, after recovering from the impact of the real's appreciation against the dollar and a drought in agricultural states.

The episode also has cast a shadow over what has otherwise been a banner year for exports, which have soared 12.25 percent, while sales have been up 6.5 percent, according to industry groups.