USDA International Egg and Poultry
08 August 2012
Brazil and the US are the largest exporters of broiler meat accounting for about three-quarters of global exports during 2006-2011. The US and Brazil largely supply different products to different markets.
Between 2006 and 2011, Brazil was the world’s third largest producer of broiler meat (measured in metric tons), accounting for 15% of global production. The US and China respectively accounted for 22% and 16% of global production during this period. Brazilian production grew 38% over between 2006 and 2011 in response to strong demand attributable to rising domestic per capita income, the competitive price of broiler meat compared to beef, higher demand from food service industry for frozen/precooked chicken products, and greater demand for Brazilian poultry by China and Hong Kong.
A comparison of the cost of production data for live broilers in 2011 shows little difference between Brazil and the US, mostly because of comparable costs for feed, the most important cost component in live bird production. The biggest difference was the higher costs of chicks in Brazil. Despite rising feed costs, Brazil and the US are the most efficient and lowest-cost broiler producers in the world, giving both countries a competitive advantage against producers in third-country markets.
Brazil is the world’s largest exporter of broiler meat; in 2011, one-quarter of its production was exported, compared with 18% in the
US Brazilian exports are highly concentrated in the Middle East and Asia. For the most part, Brazil and the US have different customers and the top five markets for each country (except for Hong Kong) do not overlap. This is because Brazilian poultry is produced and packaged with specific customers in mind, while the United States tends to offer undifferentiated, bulk poultry products.
The competitiveness of Brazilian broiler exports is bolstered by product differentiation and efforts by Brazilian authorities to overcome sanitary and other barriers that exclude Brazilian products from certain overseas markets. Brazil’s willingness to differentiate its exports by offering a wide range of poultry products for different importing countries has helped Brazil gain market share in a number of third-country markets. Actions by the government to mitigate concerns over the safety of Brazilian poultry in global markets also enhance Brazilian export competitiveness. For example, the Brazilian government certifies its poultry as free of avian influenza (AI), in many cases giving it an advantage over US poultry, which faces bans related to low-pathogen AI (LPAI) in certain foreign markets. Offsetting the competitive advantages enjoyed by Brazilian poultry exporters are high transportation costs, the relatively high value of the real, and rising labor costs. Historically, labor costs were lower in Brazil; however Brazilian labor costs are rising.
Brazilian export packaging is commonly considered to be superior to that of the US industry. Brazilian integrators air-chill poultry products and freeze them immediately after packaging, resulting in lower moisture content than US products. Brazilian producers often hand-pack meat which allows them to group uniformly sized pieces and align them very precisely in a package. The US generally does bulk packaging for exports; in order to sell to individual customers, the bulk shipment must be partially defrosted, repackaged into smaller containers, and refrozen, which results in a product that looks less presentable, especially compared to Brazilian broiler meat.
Brazilian integrators are willing to supply specific types of products that are in demand in certain export markets. For example, exporters produce a “griller,” a small whole chicken weighing between 0.9 and 1.3 kg (about 2.0 to 2.8 lbs.) for the Arab market and specialized boneless leg cuts that require hand deboning for Japan. In the US producers operate plants that are not designed for producing specialized items and have limited ability to differentiate their products and to comply with the production, processing and labeling requirements of multiple countries. As a result the US mostly exports dark meat products and has a limited ability to meet foreign market requirements and preferences, which restricts export opportunities. Brazilian integrators also operate complete halal production systems, allowing Brazil to be a major supplier to Islamic countries. Production lines at most exporting Brazilian poultry facilities meet halal requirements; producers can always sell halal product to non-halal markets, but not the reverse.
Source: US International Trade Commission report on Brazil: Competitive Factors in Brazil Affecting US and Brazilian Agricultural Sales in Selected Third Country Markets www.usitc.gov/publications/332/pub4310.pdf
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