July 8, 2011

Brazil Sends Delegation to Russia to Negotiate Pork Suspensions

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian Minister of Agriculture, Wagner Rossi, has sent a technical delegation to Russia to negotiate a reauthorization of pork processing facilities in Brazil that are allowed to export pork to Russia. The delegation will present to Russian officials a list of 140 pork processing facilities that meet the quality standards set by the Russian government. Earlier in June, the Russian government announced that 85 processing facilities in Parana, Rio Grande do Sul, and Mato Grosso no longer met their quality standards. The stated reason for the abrupt cancelation is that Russian officials felt that the inspections at the facilities were not as they were supposed to be. Brazilian officials disagree and feel the suspensions were the result of other concerns. Within a week of the announced suspensions, Brazilian officials presented the documentation requested by Russia concerning inspection procedures at the suspended facilities.

The abrupt cancelation of pork export permits to Russia has Brazilian pork producers and processors very concerned. Russia imported 39% of Brazilian pork exports thus far during 2011. During the first five months of 2011, Brazil sold 84,000 tons of pork to Russia. Russia's action also prompted Ukraine to also suspend pork imports from Brazil on June 20.

The immediate impact on the pork sector has been an oversupply of pork for the domestic market and lower prices for producers. According to the Pork Producers of Rio Grande do Sul (Acsurs), pork producers are receiving R$ 1.60 to R$ 1.70 per kilogram for their pork, but their cost of production is estimated at R$ 2.50 per kilogram.

The Minister of Agriculture also announced that President Rousseff has agreed to release R$ 50 million for the upgrading of the meat inspecting laboratories throughout Brazil in order to make them equal to inspection facilities in other countries.