2018 marked one of the most critical moments in history for Brazilian chicken, egg and swine producers.
Suspension of Brazilian chicken meat exporting plants by the European Union, the continuity of the Russian embargo of pork, the establishment of new halal criteria by Arab countries, and the application of the wrong measures of China's anti-dumping duty were some of the factors that placed the sector in a period of great challenge, whose peak occurred at the end of May, during the truckers' strike.
In addition, several internal factors impacted on the loss of competitiveness of poultry and swine production.
In this context, the highlight is the increase in production costs, especially due to increases in corn and soybean meal. In the case of corn, the average increase is 53 percent compared with the same period last year (August 2017). Currently, increase in soybean meal exceeds 43 percent. The exchange rate factor and the reduction of the grains supply in this harvest have substantially impacted this scenario. As a direct consequence of this increase – besides the fact of the rise in transport costs – was the announcement of corn imports from Mercosur countries at the beginning of July.
The freight rates table is also another factor of loss of competitiveness. The truckers' strike demonstrated to Brazil just how much poultry and swine production depends on road logistics. The country's poultry and swine industries use dedicated transports — for sanitary reasons — for animals and products. Exactly for this reason, they are loyal carriers, mainly in short distances. With the new table, the cost of logistics of the sectors shows an average increase of 35 percent, to reach about 80 percent in some cases, such as transportation of feed.
By adding these factors — freight tables and rising production costs — meats and other poultry and pork products prices tend to increase by around 15 percent for the final consumer.
The losses could be greater, thanks to the strong diversification of animal protein import markets of Brazil. In the international market, a large part of exports that were previously destined for Russia went to countries in Asia (China and Hong Kong) and South America (Chile, Uruguay and Argentina). In chicken meat, China, Mexico, Yemen, United Arab Emirates and other markets reduced the impact of the European embargo.
Chicken meat: reductions in production and exports
Production and consumption
It is predicted that chicken meat production will show a reduction between 1 and 2 percent this year, in relation to the 13.058 million metric tons (MT) produced in 2017, to be around the 13 million MT.
This reduction is caused by the decrease in broiler chick housing estimated between 3 and 5 percent, which impacts the available supply of chicken meat.
At the beginning of 2018, the projection initially estimated by the ABPA was for a growth between 2 and 4 percent.
The estimated per capita consumption for this year is 42 kilos (in 2017, it was 42.07 kilos).
Exports
It is predicted that chicken meat production will show a reduction between 2 and 3 percent this year, compared with the 4.32 million MT shipped in 2017, to be around the 4.2 million MT.
At the beginning of 2018, the projection initially estimated by the ABPA was for a growth between 1 and 3 percent.
From January to July 2018, Brazilian exports of chicken meat reached 463,100 MT in July. The figure is 20.6 percent higher than the 384,000 MT exported in July 2017 -- the largest monthly flow of shipments recorded in the history of the sector.
It is expected that, by August, the estimated exports will exceed 400,000 MT, which should place the monthly average of this activity in the year close to the historical averages recorded in 2016 and 2017.
Performance of exports generated revenues of US$711.6 million, 15.7 percent higher than July 2017 of US$614.8 million.
With the significantly higher number of exports last month, the balance of shipments registered in 2018 reduced the levels of accumulated losses compared with the previous year.
Between January and July of this year, 2.3 million MT were exported, 8.2 percent below the 2.505 million MT that occurred in the first seven months of 2017 (between January and June, contraction was 13.5 percent).
Revenue from international sales this year totaled US$3,675 million, 12.4 percent lower than the US$4,197 million obtained last year.
The main destination, which is Asia, imported 790,000 MT between January and July (1.4 percent more). For the Middle East, in the second position, 752,100 MT (-10 percent) were imported. African nations, with 323,400 tons (-15.2 percent); European Union, with 139,500 tons (-29.2 percent); Americas, with 188,900 tons (+8 percent); Europe Extra-EU, with 60,000 tons (-26.9 tons) cent; and Oceania, with 1,200 tons (-3 percent) complete the list.
Eggs: increase in production and consumption
Production
It is predicted that egg production will show an increase of up to 10 percent this year, compared with the 39,900 million eggs produced in 2017, to reach 44,200 million eggs.
The estimated per capita consumption for this year is 212 eggs (in 2017, it was 192 eggs).
At the beginning of 2018, the projection initially estimated by the ABPA was for a flat growth.
Exports
Egg exports totaled 5,800 MT between January and July, 59 percent higher than the 3,660 tons shipped in the same period of 2017. In revenue, there was an 84 percent increase, with US$9.33 million this year compared with US$5.07 million in 2017.
