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The number of cattle slaughtered in the Mercosur group of countries in South America increased to just under 27m head between January and July this year, over 2m head more than in the same period last year, according to the World Beef Report.
To put this in context, the increase in numbers slaughtered over the first seven month of this year is greater than the total Irish cattle kill in 2023, which was just under 1.8m head.
The increase was spread unevenly between the Mercosur countries of Brazil, Argentina, Uruguay and Paraguay.
Argentina actually recorded a 9% drop in production in 2023, while increases in Uruguay and Paraguay were a relatively modest 6%.
Brazil, the biggest beef producer in South America and the world’s largest exporter of beef, recorded a massive 20% increase in cattle throughput to 16.7m head, a record for the first seven months of the year.
Implications for Irish farmers
A decade ago, a surge in beef output in South America would have meant more cheap beef destined for EU markets.
However, with the surge in demand from China since 2012, going from a few thousand tonnes with year-on-year increases to 2.7m tonnes in 2023 (China Customs), the market focus for South American exporters has changed.
There would also have been concern earlier this year at the prospect of South American, particularly Brazilian, factories processing an extra 2m cattle, as the Unisted States Department of Agriculture (USDA) was forecasting a decline in beef imports by China in 2024.
However, in its July forecast, the USDA reversed this and is now predicting a 450,000t carcase weight equivalent increase in China’s 2024 beef imports.
With an extra 16 Brazilian factories approved by China earlier this year, it becomes clear that the Chinese market will be well positioned to absorb extra supplies from Brazil in the latter part of 2024.
The US has been another growing market opportunity for Brazil in 2024, as the US cattle herd fell to its lowest since 1951.
With cattle prices in the US more than twice what they are in Brazil, Brazilian exporters have been able to increase their sales in the US by 31% so far this year to just over 90,000t product weight, compared with 68,500t in the same period last year.
Interestingly, Irish exporters are competing with their Brazilian counterparts for access to the same 65,000t quota, which was exhausted early in the year with Brazil taking most of it.
That means that both Brazilian and Irish beef entering the US market above the 65,000t limit is subject to a 25% tariff charge.
Mercosur trade deal impact
While growing demand in China and the US has attracted South American exports in 2024, the one thing that could bring the EU back into play as a bigger market is if the Mercosur trade deal comes into effect.
This deal, which was agreed in 2019, has been in cold storage for the past five years. The EU and individual member states have pushed back against it, especially as EU farming rules were further tightened by the Green Deal and Farm to Fork strategy that was introduced by the European Commission in 2020.
Commission president Ursula von der Leyen has been an advocate of the deal and will be heading the incoming Commission, which is due to be in place by November this year.
She had almost closed the deal last December when the Brazilian president visited Europe, but was thwarted at the last moment by the incoming Argentinian President Javier Milei, with France’s President Macron also cool about progression.
The thinking in Brussels is that after the summer break, ratification will be back on the table in Brussels and if it was to happen, that would mean an extra 99,000t of South American beef could access the EU market without the current tariff burden.
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