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Email Content: Poultry Industry News, Comments and more by Simon M. Shane

Broiler Production in Brazil-Lessons for the U.S?


USDA-FAS GAIN report on Brazil, BR2021-0069, dated February 26th projected 2021 broiler production in Brazil.  For the market year beginning January, USDA projects total production at 14.150 million metric tons, 1.9 percent higher than in 2020.  Projected exports will be 3.905 million metric tons up 4.3 percent from 2020 and representing 27.5 percent of production. 


During 2020, Brazil exported 3.741 million metric tons valued at $5.2 billion with a unit price of $1,390 per metric ton.  By comparison, the U.S. exported 3.577 million metric tons valued at $3.56 billion with an average unit value of $995 per metric ton.  The U.S. figure includes both bone-in chicken and feet since the USDA elected to combine the two products from April 2020 onwards.  Figures for volume and value from Brazil exclude feet and represent 26 percent of all world chicken exports. 


Domestic consumption in Brazil will attain 10.25 million metric tons up 1.1 percent from 2020 and corresponding to a per capita consumption of 106 pounds, based on a consuming population of 213 million.  The increase in domestic consumption occurred despite a 15 percent increase in retail price of chicken during 2020. Chicken increased at a disproportionately lower rate compared to beef, the major source of animal protein. 


Forecasts for 2021, take into account, the increased costs of ingredients.  In January 2021, corn averaged $230 per ton and soybean meal was $370 per ton.  Increases in production cost for chicken through 2020 were reflected as a progressive escalation through the year with a December value of 34 cents per lb. compared to 24 cents per lb. in December 2019.  The average retail price for frozen chicken in 2020 was 41 cents per lb.


Brazilian chicken comprised 22 percent of import volume by China during 2020 amounting to 3.99 million metric tons valued at $5.73 at a unit price of $1,436.  The large demand by China for pork and chicken was occasioned by the ongoing losses due to African swine fever commencing in late 2018 and extending through 2019 and 2020 as herds were being restored.  Demand by China, Saudi Arabia and Japan has led to expansion in production dedicated to the export market.  Currently Brazil has 46 plants authorized to export chicken meat to China and the Middle East, concentrated in the five major producing states.  A specific market for Brazil is the supply of halal chicken with Indonesia now regarded as a potential large-scale importer.  Exports during 2020 were supported by continuing outbreaks of H5N8 avian influenza in the EU, Eurasia and Southeast Asia.


In comparing exports both with respect to volume and unit price, it is evident that Brazil can offer importers specific products suitable to their demand.  This includes carcasses consigned in narrow weight ranges from 1.0 kg at 0.1 kg increments to 1.5 kg.


 In addition to WOGs, bulk parts and added-value products Brazil offers halal, non-GMO, antibiotic-free and other categories.  In contrast, the degree in product differentiation from the U.S. extends simply from right to left leg quarters.  The U.S. is essentially selling a commodity on price with 95 percent shipped as frozen bulk quarters in addition to feet, which despite a far lower nutritional value, enigmatically command a higher price than dark bone-in meat. If the U.S has aspirations of increasing the proportion of exports of RTC from 16 percent of output and attaining unit prices and levels approaching Brazil, Thailand and individual producers in the Ukraine, an importer-oriented approach to specific needs will be necessary. This implies dedicated complexes with nutritional programs, harvest weights, processing and presentation consistent with the frequently narrow specifications of importing nations.   

Copyright © 2024 Simon M. Shane