W1 Beef Update: Paraguay's Beef Industry Triumphs in 2023 and Brandenburg's Cattle Inventory Decline

Paraguayan Beef Expands Export Markets Despite 2023 Global Price Retreat

Throughout 2023, the average price per metric ton (mt) of beef in Paraguay witnessed a year-on-year (YoY) decrease of 7.6%, settling at USD 4,770. This decline translated to a loss of USD 390/mt in 2023. While the 2023 average price is lower than the value of USD 5,160 recorded in 2022 and USD 4,890 in 2021, it surpassed those of USD 4,140 in 2019 and USD 4,110 in 2020. Similar devaluations were observed in other major livestock-exporting nations. The average meat price in Argentina was USD 4,088 with -27% YoY, USD 4,757 in Brazil with -21% YoY, USD 5,703 with -16% YoY in Uruguay, USD 8,772 with -3% YoY in the United States (US), and USD 7,475 with -10% YoY in Australia.

In terms of sales, Paraguay exported 315.5 thousand mt of beef, indicating a reduction of 5.5% YoY from 333.7 thousand mt in 2022. Although lower than 2021 and 2022, this figure exceeds the volumes of 2019 and 2020. From Jan-23 to Dec-23, Chile emerged as the primary importing market, receiving 128.1 thousand mt valued at USD 664 million, followed by Taiwan with 38.2 thousand mt equivalent to USD 187 million, and Brazil with 28.9 thousand mt amounting to USD 162 million.

In a significant development, a coalition of US government officials, cattle farmers, and beef organizations vehemently opposed the import of fresh beef from Paraguay, citing concerns over the persistent challenge of foot-and-mouth disease. However, the final ruling by the US Department of Agriculture's (USDA) Animal and Plant Health Inspection Service favored the Mercosur country member, thereby permitting Paraguayan beef into the US market effective from December 14. Grappling with foot-and-mouth disease eradication, Paraguay faced a 25-year ban on its beef exports to the US. The potential threat posed by the disease, estimated by the USDA to cost over USD 200 billion in the event of a severe outbreak in North America, fueled the opposition. Some senators announced their intent to file a Congressional Review Act resolution to overturn the decision, contending that the USDA's decision relied on 2018 information, and that no on-site inspections have occurred since 2014. Supported by industry associations, the resolution seeks to uphold US beef standards and consumer confidence.

Following a favorable inspection by the Saudi Arabia Food and Drug Administration (SFDA), Paraguay National Animal Quality and Health Service (SENACSA) announced the approval for beef exports to Saudi Arabia. This marks a significant development, especially in the context of Brazil's expanding influence in Muslim markets. Known for its robust economy, Saudi Arabia is opening its market not only to major players but also to smaller meat-producing nations like Paraguay. The approval from Saudi Arabia comes on the heels of recent authorization for meat exports to the US, signaling a broader international expansion. The ongoing inspections for markets such as Japan, South Korea, and Mexico are poised to strengthen Paraguay's global standing.

Actionable Recommendations

With a 7.6% decline in 2023 compared to other major exporters, Paraguayan beef offers attractive pricing possibilities for buyers. US market access allows buyers to diversify their sources and potentially negotiate improved terms with Paraguayan suppliers. Saudi Arabia’s approval and ongoing inspections for Japan, South Korea, and Mexico present opportunities for increased market reach and potential price leverage.

Expanding exports to the US and Saudi Arabia opens new avenues for growth and reduces dependence on existing markets for suppliers. Competitive pricing in 2023 provides an opportunity to attract buyers through cost-effective solutions while maintaining profitability.
It is important to note that the US Congressional Review Act resolution and ongoing inspections in other countries could potentially impact the market access for Paraguayan beef.

Declining Trends, Dominant Breeds, and Regional Concentrations in Brandenburg Cattle Inventory

As of November 3, 2023, the cattle inventory in Brandenburg, Germany, stood at 436.7 thousand heads, reflecting a notable 2.2% YoY decrease. This figure represents the lowest value recorded since the reunification of Germany, signaling a significant shift in the regional livestock landscape. The decline in cattle numbers is observed across various age groups and utilization categories. Specifically, the number of dairy cows witnessed a 2.4% YoY decrease, totaling 123.6 thousand heads, while nursing and mother cows experienced a 2.5% YoY decline, reaching 78.3 heads. Calves saw a reduction of 1.5% YoY, and young cattle registered a notable 4.9% decline. Additionally, cattle over two years of age declined by 5.0% YoY, totaling 23,500 heads. Notably, the number of dairy cows per dairy cow farm remained relatively stable, hovering around 226 heads.

Analyzing the breed distribution, Holstein-Black emerges as the predominant breed, constituting 48.8% of Brandenburg's cattle population and a substantial 90.8% of the breeds dedicated to milk production. Crossbreeds of beef cattle dominate the meat-use breeds, totaling 82 thousand heads, while crossbreeds of beef cattle with dairy cattle are the prevailing category among the dual-purpose breeds, amounting to 26.7 thousand heads. Delving into the regional dynamics, the Prignitz district emerges as the focal point for cattle keeping, boasting the highest population of 51.7 thousand heads, closely followed by Elbe-Elster with 45.9 thousand and Uckermark with 43 thousand cattle.