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News and analysis on the global poultry
and animal feed industries.
on January 18, 2008

Brazil: poultry giant's metamorphosis

Impressions of an industry undergoing growth and rapid change.

Now leading the world in terms of poultrymeat exports, the Brazilian industry is fighting hard to maintain its number 1 position. While countering criticism from several international quarters on its standards and practices, the leading companies there are also battling each other to expand their influence.

There is plenty to admire about Brazil's poultry industry. It is blessed with many advantages including plentiful and relatively cheap natural resources, but it has made the best of these to become the leading supplier of poultrymeat to a protein-hungry world from a distant ‘also-ran' position just a decade or so ago. Perhaps for these very reasons, the Brazilian poultry industry's metamorphosis has attracted suspicion and criticism.

I made my first visit to Brazil at the end of last year as a guest of ABEF, the Brazilian poultrymeat producers and exporters association, also visiting poultry plants and the Latin American Poultry Congress in Porto Alegre.

Brazil as a leading poultrymeat producer

According to the latest USDA statistics, Brazil is ranked number 3 in the world in terms of broiler meat production, with a provisional estimated output for 2007 of 10.105 million tonnes of ready-to-eat equivalent. It holds the same place in the ranking of turkey meat producers, with an output of 320,000 tonnes. For both meats, Brazil is catching up with the leaders.

It is in terms of poultrymeat exports that Brazil's performance has been remarkable. It overtook the USA in terms of broiler meat exports in 2004 and holds second position for turkey meat exports, as shown in the graphs below.

This success has been achieved despite considerable currency fluctuations as well as trade barriers and adverse media attention from some countries keen to protect their own poultry industries from cheap imports.

Chart 1: Brazil's broiler meat exports show a marked upward trend since 2002 

Chart 2: Brazil's turkey meat exports show a gradual upward trend in an erratic world market 

Leading players

The latest figures for output by the top polutry companies show how two companies are clear leaders in terms of poultrymeat output in 2006. Sadia and Perdigão together produced a total of almost 1.2 billion birds that year more than 25% of Brazil's total.

Since these rankings were compiled in early 2007, there have been several developments in terms of mergers and acquisitions between these companies and with foreign interests. In 2006, Sadia had attempted a hostile take-over of Perdigão, which was rejected by the latter's shareholders. A year later, in October 2007, Perdigão purchased the Eleva group, and thus surpassed Sadia as Brazil's number one poultrymeat producer. Eleva included Avipal (number 5 in the 2006 rankings). Indeed, the acquisition made Perdigão the leading poultrymeat and pig producer in all Latin America.

Perhaps bruised by its unsuccessful attempts to gain control of Perdigão, Sadia appears to be looking beyond its national borders, recently announcing investments in Russia and the United Arab Emirates.

Foreign companies also have interests in the Brazilian poultry industry. European number one, Doux of France, owns Frangosul, and Seara has partnered with US-based Cargill, and Chicago-based OSI owns Penasul Alimentos. Last November, it was reported that Tyson Foods of the US is making its entry to Brazil by means of a joint venture with Predileto Alimentos (formerly Pena Branca), number 9 in the 2006 Brazilian rankings.

Table 1: Top 5 countries for the production of broilermeat and turkeymeat in 2006 

Table 2: Brazil's top 10 poultry companies in 2006 

Countering criticism

Brazil's rapidly growing exports of poultrymeat have caused concern in some importing countries, and continue to do so. There has been a good deal of adverse publicity in the media on a number of fronts. Much of this criticism is unfounded, and the reason for it may lie more in the desire to protect local production in the importing country than in fact.

Green credentials

Christian Lohbauer of ABEF countered claims that large areas of the Amazonian rainforest are being destroyed for feed production, saying that this is completely untrue. Amazon forest is not being cut down for this purpose and anyway, the climate and soils in this region are unsuitable for growing maize, soybeans and other feed grains. He did highlight that there are more than 90 million hectares of the country that could be brought into cultivation when required. With land in high demand for the growing of crops as renewable energy sources, the availability of additional land is good news for Brazilian agriculture. Much of this virgin' lies in the central western states, to which there is a slow drift of poultry production in order to reduce the cost of transporting feed ingredients. Currently, three-quarters of the country's poultrymeat is produced in the southernmost states of Rio Grande do Sul, Santa Caterina and Parana.

Although world prices and supplies affect agricultural production in Brazil as elsewhere, having abundant resources feed ingredients, suitable arable land, labour locally has helped to cushion the country from the extreme pressures experienced by many other poultry-producing countries in recent months.

GM feed

There are areas of the world where genetically modified (GM) crops have been welcomed, and other where they are regarded with scepticism and extreme caution. A number of GM varieties, including feed crops, have been authorised to be grown in Brazil but Mr Lohbauer emphasised that the Brazilian poultry industry is able to supply broilers guaranteed fed non-GM feeds if that is what the importing country requires.

Poultry health programmes

At a press conference, Marcel Mota (co-coordinator for the National Sanitary Programme for Poultry in the Ministry of Agriculture) explained that a poultry health programme was set up in 1993 to certify areas free of avian influenza (AI) and Newcastle disease. Since then, mycoplasmosis and salmonella have been added to the programme, which involves regular surveillance at slaughterhouses. Only essential visits to farms are permitted because of AI risk.

Animal welfare issues

Pressure in some western countries from animal welfare organisations has made this a top priority topic, particularly in Europe, where much Brazilian poultrymeat is destined. Methods of production should not be considered a barrier to trade but that has not stopped the media in some countries from making accusations of animal cruelty against Brazilian exporting companies.

Professor Irenilza de Alencar Nääs made an interesting presentation at the 2007 Latin American Poultry Congress. She stressed that animal welfare has become an overly emotive subject, and called for a scientific approach to be taken to the various issues. Taking ventilation as an example, she called for general standards to be established regarding temperature, humidity and ammonia levels, rather than the stipulation for a particular piece of equipment to be installed in the house. A tunnel ventilation system with fail-safe devices, for example, might be appropriate in temperate climates but not for the open-sided houses used in Brazil. Similarly, maximum stocking density should depend on the birds' comfort and health, not on a numerical limit.

Emotion and anthropomorphic consideration should play no role in establishing acceptable standards, Professor Nääs asserted. Instead of behavioural studies, she favours more research into the factors that cause animal stress or distress. There are many among the world's scientific community who would agree with her.

Poultrymeat safety

Visits to two poultry processing plants confirmed that leading Brazilian poultrymeat companies take product quality and safety seriously. Visits to farms were not allowed for reasons of biosecurity arising from outbreaks of highly pathogenic avian influenza elsewhere in the world. Under stringent hygiene conditions, visits to two processing plants were permitted. Standards of cleanliness and hygiene were high, including showering and changes of clothes for personnel and access only to certain areas of the plant. Both older and newer plants had been designed for high hygiene standards and the evidence shows that these standards are adhered to.

Care of employees

Discussions with processing plant managers confirmed that they take worker safety and welfare seriously. Pay rates are markedly lower than in western countries, and consequently, staffing levels are noticeably higher. It is not a glamorous job and staff turnover is rather high at 20-25% per year. However, poultry processing companies tend to pay their workers well above the minimum rate, and they offer other benefits that include transport between local towns and the plant,opportunities for further education and social events.

Any factory work can increase the risk of repetitive strain injuries that are painful and can prevent employment altogether. It is widely recognised that periodic breaks with stretching exercises can prevent these injuries and so there are regular programmes of short breaks throughout the shift for workers to take supervised exercise.

My week-long visit to poultry plants and the Latin American Poultry Congress left me with the impression of a still-growing industry, determined to maintain its place at the forefront of the global poultry community and eager to do so with integrity.

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