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Brazil FMD case could grow EU market for U.S. beef

As Brazil faces more cases of foot-and-mouth disease, customers of the largest beef exporter, such as Europe, could begin to look elsewhere for reliable supplies.

U.S. beef interests are hopeful the European Union countries would begin to consider more purchases of grain-fed vs. grass-fed beef.

Brazil's Agriculture Ministry confirmed Monday that
six properties in Parana state already under investigation for foot-and-mouth
disease have tested positive for the virus that causes the disease, according to the Dow Jones newswire.

In October 2005, following a confirmed FMD case, 41 countries restricted purchases from the South American country of Brazil.

One of the obstacles for the U.S. beef industry is the fact that Europe has set a quota on U.S. beef imports because of the use of hormones in U.S. production . Therefore, European buyers aim for grass-fed beef, leaving Brazil and Argentina to control marketshare. U.S. grain-fed beef is exported more to Asian countries.

In 2005, U.S. beef exports to the EU totaled 37,600 metric tons worth $36.5 million, compared to 623,000 metric tons of U.S. beef to Asian countries.

Jim McAdams, National Cattlemen's Beef Association past-president, said Europe is a region that has a lot of potential for U.S. beef.

"We would like to have more of that marketshare, and I could see this FMD situation helping us do that," McAdams said. "Keep in mind though, we are selling high - quality , grain-fed beef. They might be more interested in lower value products."

McAdams added, "What we don't want to get in to is competing with Brazil on price. Our strategy is to open world markets to high - quality U.S. beef that people are willing to pay more for."

Lynn Heinze, U.S. Meat Export Federation, said the likelihood of U.S. beef penetrating further into the EU countries has improved with the latest world Doha trade talks.

"I think the trade barrier with the quota issue will improve and the fact that the EU is a beef deficit area," Heinze said. By 2010, it's projected the EU will be in a 500,000 metric ton beef deficit."

Though the hormone issue between the U.S. and EU remains, an FMD-type of an event could spur interest in U.S. beef, Heinze said.

The Hilton hotel chain offers U.S. grain-fed beef as a high-end product on their restaurant menus in Amsterdam. This marketing program will be spread throughout Europe, Heinze said.

Korea in March, No.3 market in 2003 before the U.S. BSE case was confirmed. Mexico, traditionally the number two buyer of U.S. beef, is now buying both bone-in and boneless beef.

Overall, U.S. beef exports in December 2005 were up 47% on a volume basis compared to a year ago. However, that total is still just 35 to 40 percent of what the U.S. beef exports were in 2003.

"Our exports are recovering from the BSE issue in 2003, but we have a ways to go. If we can get Korea and Japan back, two of our top five markets would move us forward," Heinze said.

As Brazil faces more cases of foot-and-mouth disease, customers of the largest beef exporter, such as Europe, could begin to look elsewhere for reliable supplies.

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