July 4, 2019 / 4:36 PM / 13 days ago

EU-Mercosur deal boosts Brazil meatpackers' hopes for EU meat mission

SAO PAULO (Reuters) - An historic trade deal between the European Union and South American trade bloc Mercosur last week is lifting expectations for Europe’s next mission to evaluate Brazilian chicken plants, an industry group said on Thursday.

Ricardo Santin, vice president of Brazil chicken and pork association ABPA, said in a telephone interview that the EU mission, tentatively scheduled for November, is part of a regular schedule of facility inspections.

The mission will look into what Santin called corrective measures to improve Brazilian inspections after the Europeans banned imports from 20 plants due to issues detected in 2018.

He said the measures, presented by Agriculture Minister Tereza Cristina Dias to European officials recently, include cutting state inspectors out of key decisions to create “a more vertical” process free of political interference.

“It is early to say if Europe will suspend the embargo on the plants,” Santin said. But he said that was a clear possibility after last week’s accord, which shows Europe’s “recognition of the seriousness of Mercosur institutions.”

Regarding the breakthrough trade deal after two decades of negotiations, Santin pointed to technical details that still need to be worked out.

For example, the deal would allow 180,000 tonnes of duty-free carcass weight equivalent (CWE) of poultry exports from Mercosur. However, the CWE criteria, typically used for cuts including bones, makes little sense for boneless cuts, according to Santin, who suggested the current terms should be tweaked.

The EU has agreed to reduce barriers on 82% of agricultural imports from Mercosur over a transition period. Each country in the two trade blocs must approve the terms of the treaty before full implementation.

Santin said the agreement boosts the importance of the European market to Brazilian chicken exports, which have been declining in relation to Asia.

According to ABPA estimates, it may generate additional revenues of $400 million to $500 million per year.

The deal also bolsters the prospect of Brazil resuming pork exports to the EU. Brussels currently does not recognize Brazil’s ability to segregate meat produced with and without feed additive ractopamine.

The additive is allowed in the South American country but not in Europe, Russia and China. Still, Santin said Brazil has shown it can export to Russia and China by separating production with and without the additive.

The EU-Mercosur agreement allows Brazilian exports of 25,000 tonnes of pork at a duty of 83 euros per ton.

Reporting by Ana Mano; Editing by Brad Haynes and Chizu Nomiyama

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