Twice over the past year I've participated in two extremely intense meetings of cattlemen where international trade was the featured topic. Throughout each meeting, the terms “free trade/fair trade” and “a level playing field” rang through the crowd like Big Ben stuck on midnight.
The cattlemen at these meetings were angry with their government for not doing a better job of protecting them. They criticized industry groups for selling out to political interests. They scolded the “press” for not being more sympathetic.
They talked about competition from abroad — each brandishing numbers to back up “the facts.” Each was absolutely convinced these issues were going to make or break their business.
These weren't meetings of disgruntled cattle producers in the U.S., though. The first was last April at a forum in Londrina, Parana, Brazil. The second was this February over dinner in Campo Grande, Mato Grosso do Sul, Brazil. The talk was the same as if I'd been at a convention in South Dakota or sitting in a coffee shop in the middle of Montana.
The Brazilians' main gripe is with their country's foot-and-mouth disease (FMD) status. They believe there's a worldwide conspiracy to make Brazil the scapegoat for FMD. They feel their vaccination and surveillance programs need to be recognized, especially the “FMD-free” (with vaccination) regions and corresponding buffer zones designed to safeguard cattle from infection.
Cattlemen Against Cattlemen?
Beyond FMD, Brazilian cattlemen also say their government has bungled the nation's already-installed mandatory cattle identification (ID) system. Some have accused the government of using the ID system to plot with the large meat packers and exporters/importers, exploiting the cattle farmers by controlling meat prices.
Additionally, they say environmental pressures created by international activists (mostly rich Americans) are also increasing costs and inhibiting infrastructure development. Brazilian landowners must keep (or return) 20-50% of their land in ecological preserve. They can't touch any riparian areas. These costs are “external,” say Brazilian cattlemen, and should be born by the international community.
Nevertheless, the Brazilians maintain they can compete against U.S. producers in Mexican, Canadian and Pacific Rim markets. They say they can compete against the Aussies and Kiwis in Southeast Asia, the Middle East, Europe and Africa.
But, what they can't compete against today, and they know it, is the massive private and public infrastructure that supports U.S. agriculture.
The Brazilians know that competition for markets is not going to boil down to just cattleman against cattleman — it's going to be national treasury against national treasury. Whether it's for infrastructure or as direct or indirect subsidies, second-world countries like Brazil and its neighbors — especially with their unstable governments and shaky economies — will simply be out-spent.
So, should U.S. cattlemen be losing sleep over the competition from the Brazilians?
Probably not today, but that doesn't mean Brazil won't be a formidable foe down the road. Brazil has vast resources and a national mentality to become the breadbasket of the world.
FMD Could Make Or Break
Without incredible advances in cattle genetics and cattle feeding over the next few years, the Brazilians will be relegated to serving the lower-quality markets. Yes, they can produce enormous amounts of industrial and grinding beef, but so can a lot of other countries. Trouble is, world beef demand is going in the direction of higher-quality beef.
Today at least, Australia has more reason than the U.S. to be worried about competition from Brazil. The type of beef raised in Australia is generally on par with Brazilian beef. And, the Aussies don't have deep enough pockets to duke it out in many international markets with Brazil's incredibly low production costs.
The wild card for now is FMD and the success of the fight Brazilian cattlemen are waging against this disease.
Regardless of any other ripple in the playing field, before the U.S. budges on liberalizing beef trade with any South American country, we must be assured that all phytosanitary concerns with regard to FMD are satisfied. This should not be done on a piecemeal basis. Brazil, Argentina, Uruguay and Paraguay must collectively show the international animal health community that they have FMD beaten to the point they don't need to vaccinate for it.
Then, and only then, should we even begin to consider importing fresh beef from those countries. If we get to that point, imports must be managed on a strict and limited tariff-rate quota basis — complete with safeguards to deal with import surges and firewalls to protect against domestic price fluctuations.
Such reasonable protections aren't going to make Brazilian cattlemen jump for joy. But even they can't argue that such demands are unfair.