BRAZIL has evidently gazumped discussions in Australia to establish a self-managed China quota management plan, designed to avoid triggering China’s recently-imposed 55 percent tariff on out-of-quota exports for the next three years.

Numerous reports suggest Brazil has advanced a plan which would see its exporters servicing the China market limit shipments to 80,000t per month for the remainder of this year, to meet the country’s 1.106 million-tonne 2026 quota limit applied by China.

That would represent a 35 percent reduction on trade last year, that reached an incredible 1.67mt.

Meat import sources in Shanghai told Beef Central this afternoon that they have already heard from Brazilian exporters advising them of a quota management plan being progressed that would see Brazil’s monthly shipments to China ‘rationed’ in order to finish the year below Brazil’s quota trigger.

While earlier it was understood that Argentina was developing its own similar quota management plan for China exports this year, it has since confirmed that it will stick with a ‘first come, first served,’ model. The difference is Argentina has  511,000t of quota for China this year to play with.

The developments in Brazil only add a sense of urgency for Australian exporters to devise and agree to an Australian quota management plan for China for the next three years.

As described in this earlier article published last Thursday, discussions were held by processors in Australia late last week and again today (Wednesday) to seek to progress (or at least to consider) a self-managed quota management plan.

Australia has been granted a quota of 206,000t for China this year, rising marginally in 2027 and 2028. Shipments beyond that figure would attract a hefty 55pc tariff, making trade into China ‘unviable’ exporters say. Some say that if left unmanaged, the quota level could be reached as soon as May.

For comparison, Australian beef exports to China last year reached 273,000t (DAFF data), meaning close to 70,000t of beef would have to find an alternate home other than China this year.

Under Brazil’s quota management plan, the Chinese quota is expected to be allocated in proportion to 2025 sales by the 64 Brazilian plants that were authorised and exported regularly to the market last year. Beef Central understands just three companies – Marfrig, Minerva and JBS – will share the quota.

The proposal has evidently met resistance from some Brazilian meat companies, as it has in Australia.

A meatpacking company owner who attended planning meetings in Sao Paulo this week said the quota management measure could trigger a sharp drop in beef prices in the Brazilian domestic market and weigh on cattle ranchers’ revenues.

Another person familiar with the Brazilian discussions said concern in the sector was widespread.

“The assessment is that the operational impact will be significant,” he said. “We are talking about 500,000 tonnes. There will be an impact on production in Brazil.”

Brazil’s Secretary for Trade and International Relations at the Ministry of Agriculture, Luis Rua, said his government was still working to clarify “operational and procedural details” before formally opening negotiations with Chinese authorities. The main issue was the establishment of a precise “cut-off date” for the application of the quota.

Another participant at the meeting of Brazilian meat processing companies described the outlook as one of “great uncertainty” and said it would be up to the Brazilian government to seek clarification from Chinese authorities.

One option put earlier by Brazilian agriculture minister Carlos Fávaro would be to tap unused quota volumes from other countries, such as the United States, which has been seriously limited in its capacity to service the China market die to license issues, but has a China quota this year of 164,000t.

The Brazilian government did not rule out challenging the measures at the World Trade Organisation and believes it has legal grounds under the Safeguards Agreement.

Brazil seeks exclusion of beef already in the system

In related matters, the Brazilian government is also seeking to prevent about 350,000 tonnes of beef in transit to, or in bonded storage in China shipped before the 1 January quota launch from counting against this year’s 1.1-million tonne quota. If successful, this would ease pressure on Brazilian export meat processors, trade sources said.

• A similar strategy suggested for Australia will be outlined in a comprehensive China quota management plan update in Beef Central tomorrow.