Butterfly Effect: Coronavirus-Scarred Brazilian Beef May Burn Trump - OZY | A Modern Media Company
Cattle owned by Brazilian beef producer Minerva SA graze in Barretos, Brazil.
SourceDado Galdieri/Bloomberg via Getty

WHY YOU SHOULD CARE

Cattle farmers who have supported the U.S. president are now opposing his decision to lift the ban on Brazilian beef.

Charu Sudan Kasturi

Charu Sudan Kasturi

OZY Senior Editor Charu Sudan Kasturi's column, "Butterfly Effect," connects the dots on seemingly unrelated global headlines, highlighting what could happen next and who is likely to be impacted.

Venezuela was there, as was trade. But one item missing from the diplomatic menu when President Donald Trump hosted his Brazilian counterpart Jair Bolsonaro for dinner at the American leader’s Mar-a-Lago resort in Florida earlier this month was beef.

“He’s doing a fantastic job. … Brazil loves him, and the USA loves him,” Trump told reporters, lavishing praise on Bolsonaro. “The friendship is probably stronger now than it’s ever been.”

And if a friend in need is a friend indeed, then Trump’s proving a true ally to Bolsonaro. But that’s threatening to undercut support the American president has enjoyed from a sector that has until now backed him loyally: cattle farmers.

At least two members of the Brazilian president’s delegation who were present at the dinner have since tested positive for the coronavirus. But while concerns that they might have also infected Trump have waned after the U.S. president eventually said he agreed to be tested, and the results were reported to be negative, Bolsonaro’s friendship has added a tricky twist to America’s handling of the pandemic.

Largely missed by the media amid the focus on the virus, Democratic primaries and economic turmoil, the U.S. in late February lifted a two-year-old ban on imports of fresh Brazilian beef. The ban had been enforced in June 2017 by the Department of Agriculture after an investigation showed Brazil’s meat industry wasn’t fulfilling safety and health standards. The decision to allow Brazilian beef in again was taken after an audit showed the country had improved its quality checks to permissible levels.

It couldn’t have come at a better time for Brazil, the world’s largest exporter of beef. It’s economy hit by the coronavirus, China — Brazilian beef’s biggest foreign customer — has cut its meat imports. According to a February report by Rabobank, Chinese beef imports are going to stay depressed for at least the first half of 2020. The price of Brazilian cattle has already dropped 10 percent.

But by opening up an alternative market — the U.S. — for Brazilian beef, Trump has upset the American cattle lobby that’s particularly influential in several traditionally red states, and he did it in an election year. The National Cattlemen’s Beef Association, the industry’s largest collective that represents 175,000 cattle producers and feeders, supported Trump through his trade wars. Now it’s unhappy. “NCBA has serious concerns about the re-entry of Brazilian beef to the U.S. market,” the group said in a statement after the ban was lifted, while adding that it supports “the Trump administration’s efforts to enforce science-based trade with all trade partners.”

The United States Cattlemen’s Association has said it was “stunned” by the reversal of the ban. R-CALF USA, another major cattle farmers’ group that has supported Trump in his attempts at seeking more balanced trade deals, has also opposed the move.

What makes their criticism particularly potent is that these trade groups aren’t speaking from an instinctively protectionist mindset. They’re actually taking the Trump administration on over the president’s own promise to fight for fair deals with other countries. Brazil’s government heavily subsidizes its domestic cattle industry, which allows Brazil to sell beef in the international market at lower prices than other countries like the U.S. and Australia. In 2018, Brazil exported more than 2 million tons of beef.

Allowing the beef imports “will pit America’s family cattle farmer and ranchers against Brazil’s $1.2 billion in subsidies to its cattle industry,” Bill Bullard, CEO of R-CALF USA, said in a statement on Feb. 27.

Cattle farmer groups also worry about America’s ability to actually regulate the quality of Brazilian beef and about whether consumers will be able to tell the difference, since current laws don’t require finished products sold at retail stores to mention the country of origin of the meat.

Cattle Industry in Texas

Cattle farmer groups also worry about America’s ability to regulate the quality of Brazilian beef.

Source Getty

It’s a subject that’s already becoming political, and that could prove an irritant for Trump since eight of the 10 biggest cattle-producing states in the U.S. voted for him in 2016: Texas, Nebraska, Kansas, Oklahoma, Missouri, Iowa, South Dakota and Wisconsin.

R-CALF USA is distributing a white paper to members of the U.S. Congress essentially seeking Made-in-Brazil labeling on all products with beef sourced from that country. A bipartisan group of 15 senators, including 11 Republicans — Deb Fischer and Ben Sasse (both Nebraska), John Thune and Mike Rounds (both South Dakota), Kevin Cramer and John Hoeven (both North Dakota), John Barrasso and Mike Enzi (both Wyoming), Steve Daines (Montana), Jerry Moran (Kansas) and Cindy Hyde-Smith (Mississippi) — has written to the Department of Agriculture. They’ve said they have “serious concerns about Brazil’s ability to maintain adequate food safety standards over the long run.”

For now, the actual impact of Brazilian beef on the domestic U.S. cattle industry might be limited. In the months before the 2017 ban, less than 10 percent of the beef imported by the U.S. was coming from Brazil, with Australia, Canada, New Zealand and Mexico ranking higher as source countries.

But America’s cattle industry could face an additional squeeze in the coming weeks. Japan and South Korea, the two biggest markets for U.S. beef, are both badly affected by the coronavirus. That means American beef producers can ill afford losing a slice of their domestic market to Brazil. Trump might yet need to choose between Bolsonaro and the beef industry in the U.S.

Charu Sudan Kasturi

Charu Sudan Kasturi

OZY Senior Editor Charu Sudan Kasturi's column, "Butterfly Effect," connects the dots on seemingly unrelated global headlines, highlighting what could happen next and who is likely to be impacted.

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