As the investigation continues into Brazilian packers’ part in the corruption scandal involving the Brazilian president, questions remain about how that will play out in the U.S. and global beef market.

Troy Marshall 2, BEEF Contributing Editor

May 25, 2017

2 Min Read
Brazilian corruption scandal could impact U.S. beef industry

This week, Moody’s downgraded JBS S.A and JBS USA financial ratings as the company’s controlling shareholders have been implicated in the Brazilian presidential corruption scandal. JBS executives are accused of placing millions of dollars in accounts for the president of Brazil. 

The scandal threatens to bring down more than just the administration in Brazil, as there remains uncertainty about the extent to which those making the payments may be affected. 

JBS Chairman Joesley Batista in April reached a plea bargain deal where he discussed the bribery and payments made to Brazilian president Michel Temer. There remains much uncertainty about where the criminal investigations will lead, and what penalties and ramifications will occur as a result of the scandal.

Meanwhile, U.S. beef exports are surging, and that’s good news for cattle prices. However, there are significant challenges.

One of the factors fueling the rise in cattle prices has been the increased export market which has enjoyed double-digit gains so far this year. While the demand for beef exports has been tremendous, there remains a lot of trepidation in the exporting community.

Australia is expected to return from its supply shortage, and they enjoy significant access/duty advantages compared to U.S. products, especially with the death of the Trans-Pacific Partnership (TPP). NAFTA renegotiations also promise to put our two biggest export markets in jeopardy.

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All the details about the reopening of the Chinese market have yet to emerge, but it appears that traceability will not be a major issue at this time in terms of hindering access. China could be a huge boon for the U.S. cattle industry, but it will take some time to develop.

The U.S. remains at a competitive disadvantage with significantly higher beef tariffs or barriers to most markets in comparison to our competitors. Our beef might taste better, but our current price disadvantages relative to competing export countries continues to put us at a disadvantage.

The opinions of Troy Marshall are not necessarily those of and the Penton Agriculture Group.

About the Author(s)

Troy Marshall 2

BEEF Contributing Editor

Troy Marshall is a multi-generational rancher who grew up in Wheatland, WY, and obtained an Equine Science/Animal Science degree from Colorado State University where he competed on both the livestock and World Champion Horse Judging teams. Following college, he worked as a market analyst for Cattle-Fax covering different regions of the country. Troy also worked as director of commercial marketing for two breed associations; these positions were some of the first to provide direct links tying breed associations to the commercial cow-calf industry.

A visionary with a great grasp for all segments of the industry, Troy is a regular opinion contributor to BEEF Cow-Calf Weekly. His columns are widely reprinted and provide in-depth reporting and commentary from the perspective of a producer who truly understands the economics and challenges of the different industry segments. He is also a partner/owner in Allied Genetic Resources, a company created to change the definition of customer service provided by the seedstock industry. Troy and his wife Lorna have three children. 

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