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By Patrick Knight, Sao Paulo, Brazil
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Favoured by a climate particularly suitable for growing soya and maize, the leading ingredients fed to poultry, with plentiful supplies of water and with relatively small populations, several countries in Latin America began to make an impact on the world poultry scene about 20 years ago. The surge in production and exports, notably by Brazil, has subsequently transformed world trade in poultry. But after two decades of stagnation, which paradoxically encouraged exports, the Brazilian economy began to grow fast five years ago, which has resulted in domestic demand for chicken increasing dramatically.Exporting from Brazil is also now handicapped by the strength of the country’s currency, the real. So a new phase which could favour other countries in the region, notably Argentina, may have begun.Five countries in Latin America for which detailed statistics are published by USDA, Brazil, Mexico, Colombia, Argentina and Venezuela, produced a total of about 4.2 million tonnes of chicken in 1990, a year when a total of 27.4 million tonnes was produced worldwide. Already by far the leader, Brazil produced 2.4 million tonnes, Mexico almost one million tonnes and the other three produced almost 800,000 tonnes between them.
Three of the five countries, Brazil, Argentina and Venezuela, exported 326,000 tonnes of chicken in 1990, a year when a total of 2.3 million tonnes was traded worldwide. Ten years later, the same five countries plus Chile, produced 10.5 million tonnes, and between them exported 950,000 tonnes.
Whole bird export
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| Consumption per capita increased considerably in Mexico, but domestic production capacity was unable to keep pace to meet this growing demand. |
Until about 10 years ago, inflation in Brazil was extremely high, a phenomena which resulted in the value of the Brazilian currency remaining low. The weak real made exporting attractive, as when converted into local currency, in which virtually all farmers and processors costs are incurred, the revenue from exports meant selling abroad was up to 50% more profitable than selling the same goods on the domestic market. Less than 12% of Brazil’s total production was exported in the 1990s but since then, the share sold abroad has occasionally exceeded 30%.
Foreign investors
The situation has changed dramatically recently, the Brazilian economy has grown by an average of about 5% each year, helping make the country a favourite destination for foreign investors. One result of this has been that the Brazilian real, has risen strongly against the US dollar and other currencies. The strong real has had two negative effects for exporters. One is that the products Brazil exports have become less competitive than previously, the other is that revenues from exports buy far less in Brazil than before.
While exporting has become less attractive and lucrative, the Brazilian economy has been performing well enough to allow the disposable incomes of about 30 million people to increase sufficiently to allow them to buy much more in the past few years. This has included more higher value foods, including chicken, the lowest cost meat. Per capita consumption of chicken in Brazil rose from 35 kgs in 2005, to a massive 45 kgs last year, one of the highest in the world. As well as this, much of the extra chicken is consumed in the form of high value processed goods, rather than basic items. Several large exporters no longer bother to sell whole birds on the domestic market.
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Source: World Poultry, Vol. 27, No. 6, 2011
