MercoPress. South Atlantic News Agency

Paraguay confident it can recover the Chilean beef market as it has with Russia

Beef exports are expected to reach 850 million dollars in 2012

Paraguay expects a significant upsurge in beef sales this year, despite the reported outbreaks of foot and mouth disease, because of the strong demand from Russia, according to local analysts.

Beef is Paraguay’s second export item after soybeans, and the fall in overseas sales hit hard on the livestock sector which is expected to suffer a 20% contraction this year according to central bank estimates. However signals are encouraging since this year’s exports are estimated in 850 million dollars, above the 700 million and 161.000 tons of 2011.

“Russia helped to spur the market because despite the fact it only purchased frozen beef, the volume has been greater and is almost 70% of Paraguayan production” said Belen Servin, economist for the Paraguayan economy Analysis centre, CADEP.

Russia and Chile traditionally have been Paraguay’s main clients for beef but Chile ceased purchases when the FMD outbreaks reported in November 2011 and January this year, which paralyzed exports.

According to CADEP, Russia will purchase 600 million dollars in beef this year compared to the 220 million dollars of last year, while Brazil will take 112 million. Paraguay’s Animal Heath and Quality Service, Senacasa, confirmed the data.

“If all rolls as up to now we should have a slight surplus (in 2012 compared to 2011). This is a fact. We have worked hard and sustainedly despite FMD and we have managed to keep the trust of our markets” said Hugo Idovaga, head of Senacsa.

The target now is to recover the Chilean market which is far stricter than the Russians from a sanitary point of view, which Paraguayan officials trust it can be achieved as the country in on course to again be considered free of FMD with vaccination.

“We’re planning to return to the Chilean market at a lower status. A category without sanitary status but free of FMD” said Idovaga who added that Brazil and Australia moved in when Paraguayan beef was forced out of Chile.

On the bright side, limited exports forced beef into the domestic market bringing prices down and helping to counter inflation which this year is expected to be below 5% according to central bank estimates. However the situation will change radically in the first half of next year when local beef prices are expected to soar 18% to 22% as exports recover, according to the central bank.