Paraguay's beef likely won't boost tight US supplies, importers say

By Tom Polansek

CHICAGO (Reuters) - Washington's decision to accept beef from Paraguay after 25 years will probably not change the overall volume of U.S. imports, even at a time of tight supplies and high prices, due to a quota on shipments, U.S. meat importers said.

U.S. beef prices set records this year after drought drove ranchers to reduce the country's herd to its smallest level in decades, and meat companies are relying more on imports to process into ground beef for hamburgers.

Paraguay has not negotiated to sell beef to the U.S. under its own quota agreement, so it must compete with other countries in the same situation to fill a group tariff-rate-quota, said Stephen Sothmann, executive director of the Meat Import Council of America.

The quota for these countries, including Brazil, Ireland, Japan and Namibia, is about 65,000 metric tons annually with a tariff of 4.4 cents per kilogram, Sothmann said. Suppliers filled the quota early this year, he said.

"There's typically now a pretty big race to get product in under that quota," Sothmann said. "The likelihood of this changing the amount of supply of imported beef is very limited."

Suppliers face a steep 26.4% tax on the value of products shipped above the tariff-rate-quota, making those deals economically unviable.

The U.S. Department of Agriculture forecasts total U.S. beef and veal imports at about 1.6 million metric tons this year. Paraguay may eventually ship 3,250 to 6,500 metric tons annually, or 5% to 10% of the tariff-rate-quota for the countries without individual agreements, the USDA said.

Analysts expect Paraguay to compete with producers like Brazil to supply lean beef that is blended with fattier U.S. supplies.

The U.S. reinstated Brazil's ability to ship raw beef in 2020 after a halt over food-safety concerns. Namibia first sent commercial beef to the U.S. in 2020 after 18 years of trade negotiations, but has not made shipments since, U.S. records show.

The U.S. previously blocked beef from Paraguay due to concerns about the livestock disease foot and mouth, but said an extensive review found shipments are now safe under certain conditions.

(Reporting by Tom Polansek; Editing by Rod Nickel)