Ecuador’s poultry producers are being held back by government controls on the cost of yellow corn, making production expensive, hampering exports and leading to illegal imports.
Where yellow corn is concerned, feed producers are only allowed to use what is produced domestically and, according to Dr. Edgar Navarrete, president of the country’s leading poultry producers’ association Conave, this is causing a number of problems for the industry.
Dr. Edgar Navarrete, president of Ecuadorean poultry producers’ association Conave, notes that government intervention in the feed market is holding back the poultry industry and depriving the country of foreign currency. | Courtesy Marcelo Nunez C.
“It makes production tremendously more expensive for us as the price of corn is set by the government,” he explains, adding that price setting is politically motivated and unrelated to international markets.
Currently, Ecuador produces approximately 1.3 million metric tons (MT) of yellow corn and 1 million MT is reserved for the poultry industry. While the industry may receive the greatest share of production, it pays a price that is highly unfavorable. The support price is US$322/MT and when shortages arise between December and March due to lack of production, this can rise to US$500/MT.
“This makes us uncompetitive with neighboring countries – Argentina, Peru, Chile and Colombia – where corn is US$200 per MT,” Navarrete continues. “This is highly dangerous for us because, with cheaper production, out neighbors smuggle in product and make a fortune at the borders.”
Products entering the country illegally include fertile eggs, chicks and live adult birds. Dressed chicken from Peru and Colombia and enters the country illegally.
Inefficient, expensive
In an attempt to foster local corn production, the industry had worked hard to prevent the import of yellow corn, but locally produced corn has proved to be too expensive.
Political considerations have proved more important than the needs of the industry and Navarrete notes that politicians that protect the grain industry tend to be vote winners.
Navarrete says: “They allow them not to be competitive, not to be efficient”, he says, and that is why corn is so expensive.
In the case of soybeans, Ecuador only produces 5% of what it needs yet is able to import the remainder.
“We want the authorities to allow us to buy internationally priced grains for the poultry that we want to export. The government needs to see in this the opportunity to bring dollars into the economy where the U.S. dollar is the common currency.
“We want the authorities to allow us to buy internationally priced grains for the chickens that can be exported.”
Avian health
With a broadly similar health status to the rest of Latin America, Ecuador is keen to enter export markets, however, Newcastle disease remains an issue.
Over the last three years, Conave has been working with the country’s animal health agency, Agrocalidad, to bring the disease under control.
Together, they are also looking to compartmentalize the county and allow exports to be made from disease-free compartments. There is a longer-term agreement to eradicate the disease, however, this is complicated by the fact that Ecuador is still home to numerous small farms and backyard flocks. It is estimated that 5-10% of national production still comes from these small producers.
Navarrete says: “We need to solve the health aspect in order to be able to take our products to other countries, as well as work on costs.”
Pandemic’s impact on Ecuador’s poultry production
In 2020, Ecuador produced 476,000 MT of chicken meat, a decline of 10.7% compared to 2019.
The COVID-19 pandemic, and associated lockdowns, hit small producers the hardest, particularly those selling live birds. Public markets were closed leaving many producers without a ready sales channel.
Navaertte explains: “We estimate that almost 45% of chicken production is sold live. Large companies also sell a certain amount in these markets, where traditional processors buy chickens, slaughter them at home and then take them to market. The consumer likes to buy fresh, just-slaughtered chicken.”
However, with the imposition of COVID-19 restrictions, those that reared chicken for sale in live markets stopped producing and those that slaughtered stopped slaughtering. Day-old chicks were discarded along with eggs from hatcheries. Some fertile eggs were sold as table eggs. The price of chicken dropped dramatically.
Large companies were able to weather these difficulties yet were sill impacted by the closure of food service channels, which are estimated to absorb 30% of production.
In the egg industry the story was very different. The country produced 3.5 billion eggs last year and, with the lockdown, Navarrete notes: “Egg sales went crazy,” with prices rising by 40%.
The egg sector also witnessed the emergence of a new type of entrepreneur. The recently unemployed turned to buying eggs from farms and then selling them in the street, which put additional pressure on suppliers.
