The meteoric rise of Brazil as one of the world’s foremost exporters of bee...

The meteoric rise of Brazil as one of the world’s foremost exporters of beef and pork has led many to see the South American giant as a juggernaut which will crowd out competition from other great exporting countries such as the United States. The U.S. Meat Export Federation (USMEF), however, is convinced that opportunities exist for U.S. pork exports to Brazil.

USMEF Director for Central & South America Ricardo Vernazza-Paganini provides USMEF members with current, quality information tailored to help them sell beef and pork products, build partnerships with Latin American buyers and increase exports. Vernazza-Paganini, a native of Uruguay, and Brazil-based USMEF Representative Sonia Regina Amadeo recently investigated the Brazilian pork market and gained insights on business and market opportunities for U.S. companies.

U.S. companies, particularly traders and brokers, can profit in Brazil with a thorough understanding of the market and up-to-date intelligence about what will and won’t sell. U.S. cuts and product specifications differ and successful companies will design their products for the market. A strong seasonality in supply determines an irregular demand and fluctuating prices for imports throughout the year. Pork consumption is low (10 kg per capita) not only because of public perception of its safety, but also because of strong price competition from poultry. One major distributor told Vernazza-Paganini that it is difficult to sell its products to restaurants because they constantly work to reduce their costs.

A ban on Italian salami, for instance, and a 30 percent price advantage over the European Union thanks to the fall in the dollar have created an opportunity for U.S. salami exports to Brazil. High-quality U.S. prosciutto ham, too, will find a market in Brazil as long as it can be sold at 30 percent less than other competitors’ imports. Successful salami or prosciutto products, Vernazza-Paganini found, are likely to be those marketed with an Italian or Spanish style labeling. These products are very popular: Brazil imports an estimated 20-30 metric tons per month every month.

Since the pork processing industry is highly concentrated the demand for raw materials is largely controlled by a few large companies, and Vernazza-Paganini found interest in buying and distributing imported raw pork materials such as natural casings, ears, feet, trimmings, picnic shoulders and back fat.

The Brazilian pork industry’s phenomenal recent success in exports has been driven by a low cost leadership strategy and a customer-driven approach to fabrication and packaging. Since labor costs are very low, the Brazilian industry employs a very large work force to prepare and fabricate orders in a one-on-one customer approach. Genetic improvement and vertical integration have also been key factors in the expansion of the industry. Nevertheless, in 2004, U.S. pork exports to Brazil soared to $10.2 million (10,280 metric tons) up from $4.2 million (2,012 metric tons) in 2003. Brazil is still a small market, but it has proven potential. Much of that potential hinges on pricing.

The U.S. Meat Export Federation is the trade association responsible for developing international markets for the U.S. red meat industry and is funded by USDA, exporting companies, and the beef, pork, corn, sorghum and soybean checkoff programs.

– USMEF –