Brazil’s egg producers are being hit by rising costs and stalling demand, while the wider animal protein industry is warning of an impending crisis due to rising feed and other input costs.
After 10 years of almost continuous year-on-year growth, Brazil produced 53 billion eggs last year, an increase of almost 86% over the decade. 2020 saw record egg consumption and the opening months of 2021 registered strong prices.
Now, however, producers are increasingly being hit by a combination of soaring input costs and, more recently, weakening demand. Higher production costs are causing an unprecedented crisis, according to some regional pig and poultry association, threatening the future of animal protein production. They note that the cost of corn is now double that of a year ago, packaging costs have soared by 80%, while the cost of diesel is has risen by 30%.
Prices for eggs in the country have been weak since the end of April and during the second half of May, they reached their lowest level since the start of the year, reports the Center for Advanced Studies on Applied Economics (CEPEA), a research center.
While Brazilian demand for eggs cooled in April, prices, at least, remained stable. The upturn in demand expected for May, however, failed to occur and demand further weakened as the month progressed. Softer demand has resulted in weak prices, exacerbated by agents offering discounts to run down stocks. While prices, may still be above those of last year, the increase has not been enough to compensate for rising input costs, and with fears over the country’s second harvest there are few signs that feed prices will come down.
Unsurprisingly, producers are finding the purchase of feed and other inputs increasingly difficult and, unable to cut production to stimulate prices, some are now producing at a loss.
Solace in exports?
While demand may have weakened on the home market, demand from overseas for Brazilian eggs has grown markedly.
April’s egg exports were 55% higher than those of March and almost 10 times higher than in March 2020. Over the first four months of this year, exports reached their highest since 2016 at 3,950 metric tons.
While this upturn in sales can only be seen as positive, it comes after a particularly weak 2020 for exports, which declined almost 19% by volume. Foreign markets account for only a very small part of total demand, a little over 0.3% last year, according to CEPEA.
