How Russian ban on U.S., E.U. food could turn into a windfall for Brazil

SÃO PAULO — As relations among Russia, the United States and the European Union deteriorate over the Ukraine crisis, there may be one unexpected winner: Brazil.

On Wednesday, Russian President Vladimir Putin signed a decree banning a list of agricultural products from the United States, the European Union, Canada, Australia and Norway in response to sanctions levied by the West. No sooner had Russia issued the ban than Brazilian producers were lining up to fill the gap.

“Brazil will substantially increase its meat and dairy exports,” Brazilian Agriculture Minister Neri Geller said in a statement.

“What we see is a window of opportunity,” said Ricardo Santin, vice president for poultry at the Brazilian Association of Animal Protein, which represents chicken and pork producers.

Brazil exports $8 billion worth of chicken each year, but Russia currently accounts for only 3 percent of that. In 2013, Brazil's Russian chicken sales amounted to 47,000 metric tons, worth $130 million to $150 million.

The country exported 134,000 metric tons of pork to Russia in 2013, which accounted for 26 percent of its exports.

Brazil’s beef industry is also looking for a boost. It sold 303,000 metric tons of beef to Russia last year, worth $1.2 billion.

Coming after the July summit held in Brazil for leaders of the BRICS countries – Brazil, Russia, India, China and South Africa — and the announcement of a BRICS bank, the potential export windfall is being seen as an economic victory for Brazil.

“It’s the kind of event that will have people at Brazil’s Foreign Ministry say, 'See how important the BRICS are and how important it is to develop relations with countries of the South,' ” said Marcos Troyjo, director of the BRIClab at Colombia University and a former member of the Brazilian mission to the United Nations. “This is very, very important to Brazil.”

For the United States, the loss of the Russian food export market is less important. Last year, the United States exported 267,000 metric tons of chicken to Russia, worth $303 million, according to the U.S. National Chicken Council and USA Poultry & Egg Export Council. According to Gwen Sparks, a spokeswoman at the U.S. Department of Agriculture, exports of agricultural products to Russia in 2013 were valued at $1.3 billion, less than 1 percent of total U.S. agricultural exports.

Brazil’s economy is heavily dependent on commodity exports but is underperforming and is expected to struggle to grow 1 percent this year. Brazil is the world’s largest beef exporter, according to U.S. Department of Agriculture figures, exporting around 2.03 million metric tons compared to the United States' 1.14 million tons. The world’s biggest meat producer, JBS SA, is a Brazilian company.

Colombia University’s Troyjo said he did not think the move would damage U.S.-Brazilian relations, which are only now recovering from allegations by former U.S. security contractor Edward Snowden that the National Security Agency spied on Brazilian President Dilma Rousseff and state-controlled oil company Petrobras. Rousseff canceled a state visit to the United States last year in resposne to those allegations.

“Brazil-United States relations are not at the best level. We have seen brighter days,” Trovjo said. “The relationship will not be directly impacted by Brazil doing business with Russia.”

 

Dom Phillips is The Post's correspondent in Rio de Janeiro. He has previously written for The Times, Guardian and Sunday Times.
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