MercoPress. South Atlantic News Agency

Meat Congress in Punta del Este.
Subsidies and depressed prices.

Two Mercosur delegates exposed the region's potential in meat production and the growing hurdles to international trade in these commodities particularly the European Union and United States.

During the recent meat congress held in Punta del Este, Uruguay, and hosted by the International Meat Producers Organization , OPIC, Brazilian delegate Gilmar Viana Rodriguez said that in 2002 Brazil exported a million tons of beef, 1,6 million tons of poultry and 476,000 of pork, "which means we are players in the premier league".

However Mr. Viana Rodriguez demanded more transparency in international markets and an end to "subsidies and export promotion financed by the Treasuries of the richest countries in the world. This only helps to down distort prices".

Argentine delegate Arturo Lavallol defined the situation as "the paradox of abundance, the more subsidies, the more production, the more production, lesser prices and more misery for developing countries".

Mr. Lavallol further on said that dairy production in rich countries receive annual subsidies equivalent to 44 billion US dollars; beef production 28 billion; rice 26,5 billion and wheat 17,6 billion.

The European Union consolidated beef tariffs at 130%,; Switzerland 172%; United States between 11 and 27%, plus global annual import quotas equivalent to 696,000 tons in the US and 265,000 tons in the EU.

Mr. Viana Rodriguez exemplified with a beef shipment that leaves the port of Santos at the price of 2,000 US dollars the ton. "When it reaches the EU it must pay tariffs equivalent to 3,050 Euros plus an additional 12%, bringing the total to 5,400 US dollars, which will obviously come from the consumer's pocket".

The Brazilian delegate added that even when "Brazil annually exports a million tons of beef, it only has a 5,000 tons quota in the EU. Something obviously is wrong in the way markets function". Mr. Lavallol pointed out that the recently approved Farm Bill will distribute 118 billion US dollars among US farmers, "linked to a greater production that is normally dumped in world markets depressing prices even further".

The Argentine delegate also explained that "the quota system limits the volume of sales and punishes suppliers that are left at the mercy of importers. Besides selective quotas such as those granted by the United States to Australia harms countries entitled to lesser quotas such as Argentina and Uruguay, creating different competition conditions".

Mercosur delegates to the OPIC congress said that the region's target is to make effective the World Trade Organization Doha Development Round three points: better access conditions to markets; export subsidies gradual reduction with the purpose of their complete elimination; substantial reduction in financial support to faming so as to help eliminate market distortions.

Uruguay meat exports recovering

Uruguay meat exports during the first quarter of 2003 reached 100 million US dollars, a slight increase over the same period a year ago, but a considerable jump regarding beef overseas sales that increased 11%.

According to the latest release from the Uruguayan Meat Institute, Uruguay in the first three months of 2003 shipped overseas 81,332 tons of beef, mostly to Nafta countries, (38%), Israel (16%), Mercosur (14%), European Union (14%) and Algeria (9%).

Second come lamb with sales of 2,640 tons divided between the EU and Mercosur.

As to April prospects, the number of reported contracts has increased 16% all involving beef sales. United States Agriculture Department estimates Uruguay will be exporting this year between 380 and 400,000 tons of different meats, mostly beef.

Canada recently reopened its market to Uruguayan fresh matured cuts and United States to cooked beef, meaning the country has virtually recovered all markets since the outbreak of foot and mouth disease two years ago.

In spite of the encouraging prospects, Uruguayan farmers are complaining that cattle prices remain depressed, selling at 0,599 US dollar a live kilo for steers and 0,506 US dollar for live cows.