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Brazil pork and poultry
Photominer, Bigstock
on April 27, 2016

Broiler, pig production costs dip in Brazil

Although the trend is still upwards, the costs to produce chicken and pork fell slightly in March

Costs of production calculated by CIAS, the Central Intelligence Poultry and Swine with the Brazilian Agricultural Research Corporation (Embrapa), fell by 4.5 percent for broilers and 0.4 percent for swine in March when compared to the previous month. For each sector, the February 2016 production cost figures were the highest on record.

Broiler production costs

For broilers (ICP Frango), the score reached 214.8 points, compared to the base index of 100 points in January of 2010. In February, the index was 224.9. March’s decrease was attributed to lower feed costs (4.57 percent). For the first quarter of the year, the index has risen 7.2 percent, and is 21.4 percent up from 12 months ago.

Pig production costs

Compared to the basal index of 100 in January of 2005, the score for pig production costs (ICPSuíno) stood at 217.8. This compares with 218.7 in February. Again, a small reduction in feed costs was the main factor in the fall. The index has risen by just under 7.0 percent so far in 2016 and stands 21.3 percent higher than at the same point in 2015.

The indices of production costs were created in 2011 by socioeconomics team of Embrapa Swine and Poultry and Conab. The ICPFrango score represents typical broiler production costs for a ventilated poultry shed in the state of Paraná, while ICPSuíno is based on a typical “full cycle” pig production system in the state of Santa Catarina.

Fears for future corn supplies, prices in Brazil

Earlier in April, the chief executive of the Brazilian Animal Protein Association (ABPA), Francisco Turra, voiced concerns over a possible shortage of corn in Brazil, while exports remain high, particularly to the U.S. This action could leave Brazilian users – including broiler and pig producers -- short of supplies and push up prices, he said.
Brazil exported a record-high volume of 30 million metric tons (mmt) of corn last year, according to a recent Rabobank report, and shipments may be even higher this year.

Until the last few years, almost all the country’s corn crop was used by the animal protein sector in Brazil and exports were rarely more than 7 mmt. Then, arable farmers adopted the practice of growing corn as a second crop following soybeans to boost farm income and take advantage of the long growing season.

In 2016, Rabobank considers that Brazilian corn prices have been pushed to record-high levels by the devaluation of the real – by as much as 60 percent over two years. 

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