Producers in southern Brazil are having difficulties in maintaining production levels of broilers destined to the domestic market. The culprits are the high corn prices and soybean prices.
High costs of these two raw materials are good for the ag producer, but really bad for those transforming them into something else, in this case, animal protein. A higher production cost is obviously affecting producers and impacting consumers, already hit by the economic crisis caused by the pandemic.
Some processing plants in southern Brazil are being affected by interruptions in production lines and layoffs. Other producers are working in the red, while other companies are simply slowing down their growth and investment plans.
Southern Brazilian states produce around 70% of the nation’s poultry and it is there were the problem is. Even with normal crops, they need to bring commodities from other states and even from other countries. This is one of the reasons why the initiative of winter crops came up. That includes other grains (wheat, oats or rye).
Climatic conditions also impact, such as what is happening this season in Argentina and Paraguay in terms on dryness.
Francisco Turra, Brazilian Animal Protein Association (ABPA) Board of Directors president, said that Brazil will bring 500,000 additional hectares of crops to provide 1.5 million extra tons of commodities and reduce dependence. Also, there are already states producing three crops a year, rotating between rice, soybeans and corn.
Is this a point of no return? Transportation within the country is not an easy task. "We cannot wait for logistics to improve overnight. It is impossible to bring raw materials from central and West Brazil," said Turra. Times have changed as well as relationships with other countries.
In spite of having lower yields, Brazil can produce everything and take advantage of its resources, without even touching the Amazon rainforest. It is a country with lots and lots of water. "We have more water than all Asia," said Turra.
Relief may also come from more exports and how the African swine fever (ASF) situation develops.
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