15th May 2009 Ref. 219

To IMTA Members

Meeting between ABEF and EU Poultry Meat Importers – 12th May 2009

Organisations/Companies Represented

ABEF Mr Lohbauer

Mr Zerbini

Miss Martins

Alonso Asociados Mr Martinez (ABEF’s Representative in Brussels)

Foodbridge

Jan Zandbergen

A P Trading

Brazilian Embassy London

Cargill/Seara

Westbridge Foods

Sadia

Lamex

Food Trac

Peter Paulsen/UECBV/EPEGA

Meat Industry Ireland (IBEC)

Dawn Foods/Minerva

M & M Meats/DMIA/UECBV

Perdigao

Vestey Foods

Oakfield Foods

Jeffrey Davies & Davies

Kuhne and Heitz

Teeuwissen Holdings

Tyson/Macedo

IMTA/UECBV

ABEF explained that the meeting had been arranged at the instigation of Cargill/Seara to discuss the current problems concerning the management of the Brazilian allocation system for the certificate of origin under EU Regulation 616/2007 (cooked chicken, salted chicken and turkey preparations).

In addition ABEF explained that the WTO Quota was based on a WTO Panel decision in favour of Brazil in connection with non allowed restrictive import measures on salted chicken against Brazil by EU. This is why according to ABEF, the revenue of the WTO Quota (15.4% duty instead of Euro 1.30 import levy) has to be in favour of Brazil.

During the running of the quota the Brazilian exporters had expressed concern to the EU about the proliferation of importing companies in the EU. However the EU viewed such an application system as non-discriminatory whereas ABEF considered the system to be discriminatory. ABEF had reports from exporters informing them that sales prices had to be reduced as the European importer was forced to buy import licence. As a result, according to ABEF, export prices in the first year of the quotas were the same as prices before the quotas were introduced. ABEF also maintained that in the last three years the EU importers had done nothing to change the EU system.

The EU importers welcomed the opportunity for a meeting.

The European importers disputed the ABEF allegations and commented that the quota system had not been introduced to ensure higher prices for Brazilian exporters. Purchase and sales prices are the result of market forces such as for example the development of prices for peppered turkey. Importers accepted the country specific quota for Brazil but still wanted the ability to source product in Brazil from whichever supplier they wished. Once the 2007/08 system had settled down it had worked, but Brazil had sought more control over the quota by changing the Brazil allocation management system (for certificates of origin). However today’s system was damaging both importers and exporters (on this point both sides were agreed).

The 2007/08 system (on basis of FCFS) was itself a colliding system where importers with an import licence had to find an exporter with product and certificate of origin. This had proved however to be reasonably workable. But some of the big exporters would not sell to EU importers on a non-cleared basis. The current Brazilian allocation system is however proving to be too complicated for a satisfactory management. In addition, details of administration has caused further chaos eg. EU licence applications were made three months in advance whereas applications for Brazilian certificates or origin quota began on the first day of the quarter. EU import licences were valid for 150 days/30 June and Brazilian quota worked on a quarterly basis. ABEF agreed and said they were already trying to get the authorities to change this, but were not hopeful of any change by 1st July.

EU importers stated that trade with Thailand was fine. ABEF maintained it was only fine because the salted quota was not being used and for the cooked the quantity available was sufficient for the quantity imported.

EU importers suggested a return to the 2007/08 system, but ABEF said this was not possible. In reality Brazil wanted a 90%/10% system. EU importers were sure that on the basis of 90%/10% many small and medium Brazil exporters would become the victim of a 90/10 split that is why in the past these small and medium Brazil exporters had protested. ABEF denied any opposition, other than Macedo who was now not a member of ABEF.

Provisional Ideas to change System

1. ABEF suggested a shift to 90%/10% - unacceptable to EU importers.

2. EU importers proposed a return to the 2007/08 system – unacceptable to Brazilian exporters.

3. EU importers proposed – removal of requirement of a certificate of origin combined with Brazil able to allocate quota at their end (ABEF to consult exporters).

4. One Brazil exporter with offices in EU proposed amalgamation of all poultry quotas (possible further consideration of this).

No final conclusion was taken but it was agreed that both sides would keep in touch.

In addition the EU importers mentioned the latest development in the EU with regard to the amendments to the marketing regulations that combined with the EU hygiene rules would result in salted meat preparations not being allowed to be used for further processing of meat preparations. ABEF did not realise that this new condition would have a considerable impact on the demand for salted chicken in EU. ABEF agreed to study this issue further and revert as soon as possible.

Finally, the EU importers mentioned that WHO organisations are stressing more and more the need for lower salt content of food, which could also affect the future demand for salted chicken in the EU from Brazil. An option would be to discuss some flexibility on the 1.2% slated condition.

World Poultry Conference – 13th May 2009

During the presentation made by Stefania Marrone, EU Commission, she stated that since the introduction of 616/2007 there had been no problems with Thailand. In question time ABEF made a statement that a meeting had been held the previous day with EU importers to try and find a common level of understanding. Thailand did not have a problem because demand was less than the quota and they could not supply salted chicken. Brazil could use more of this quota. The EU system resulted in the creation of artificial companies which was most discriminatory and led to speculation and sale of the licence. ABEF said Thailand was not satisfied with the trade in licence. ABEF said the importers were also worried about the basis of the quota.

IMTA responded that while a meeting had been held there was considerable disagreement about the factors affecting returns to Brazilian exporters. The importers concern focused on the difficulty of obtaining certificates of origin from Brazil. IMTA asked the EU Commission whether the use of the veterinary certificate had ever been considered. According to Stefania Marrone such a possibility had been considered, but rejected on the basis that the veterinary certificate could not be copied. The customs and veterinary offices were completely separate and the veterinary certificate assured that the meat was healthy but did not necessarily guarantee the origin.