Brazil

Brazil produced 9.08 million metric tons (MMT) of broilers in 2005 and exported 2.84 MMT, over 30% of the country’s total poultry production. Brazil and the United States combined supply approximately 70 percent of global poultry trade (37.5% and 32.1% respectively). Recent cases of avian influenza in Europe, the Middle East and Africa have led to irregular patterns of poultry consumption. The United Nations Food and Agriculture Organization (FAO) revised projection for 2006 consumption is 81.8 million metric tons, almost 3 million tons lower than the previous projection of 84.6 MMT and slightly lower than 2005. Estimates for 2005 consumption were 82.0 MMT.

Japan is Brazil’s largest market for broiler exports, followed by the European Union. Saudi Arabia is the third largest broiler market. Exports to Japan and the EU are mostly broiler parts, exports to Saudi Arabia are mostly whole broilers. The EU market accounted for nearly 80% of all processed broiler exports from Brazil in 2005.

Brazilian chicken meat exports fell 8% in February 2006 when compared to a year earlier and was 7% lower than January 2006. European sales were down on fears of outbreaks of avian influenza in Europe. The drop in exports led to higher domestic inventories and lower prices. Prices fell up to 30% in some localities as product filled cold storage facilities.

Lower prices led to higher per capita consumption in Brazil. January and February per cap consumption totaled 42 kg compared to 35.4 kg in 2005. Brazil’s poultry industry is reducing short-term production by as much as 25%. Some companies are canceling plans for investment in plant expansion and layoffs are widespread.

Domestic supplies grew to about 300,000 tons of chicken, equivalent to three weeks consumption. Normal supplies are for 10 days of consumption. Cold storage facilities are full and producers are running out of places to store chicken. In addition to large inventories in Brazil, about 200,000 tons of Brazilian chicken is stored in import countries, equivalent to about one month of exports. A Brazilian meat exporter said EU chicken importers were not renewing Brazilian contracts because fear of bird flu has caused EU poultry consumption to drop.

Prices on chilled chicken fell from R$ 1.73 per kilo in December, 2005 to R$ 1.32 per kilo in February, 2006. Live chicken prices fell from R$ 1.00 on January 13 to the current price of R$ .95 and offers at R$ .80 from one company. It costs R$ 1.20 to produce a kilo of live chicken.
Source: FAPRI, UN Food and Agriculture Organization, news wires

EU Compensation for Poultry Producers

The European Commission tabled a proposal to allow the EU budget to share the cost of market support measures in the eggs and poultry sector. Current regulations only allow the EU to co-finance compensation measures when there is a case of avian influenza on a farm or where farmers are prevented from moving their poultry because of restrictions imposed on veterinary orders.

Consumption of poultry and eggs fell dramatically in the member states after avian influenza appeared in Europe. Prices fell sharply and export markets around the world totally or partially blocked poultry products from several countries in the EU.

The only current market support measures available are export subsidies. The Commission proposes to co-finance 50% of the cost of market support measures linked to a drop in consumption and prices of eggs and poultry. The legal change will have to be approved by the European Parliament and by EU farm ministers, probably when they meet on April 25, 2006.

France also wants the EU to subsidize private storage of poultry meat, compensate for stocks that can no longer be sold and for early poultry slaughter if export markets suddenly collapse. Poland has requested new subsidies for poultry slaughter and processing, aid for storage and more poultry products added to the list of items that qualify for EU export subsidies.
Source: European Commission Press Release, new wires

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Source: USDA's Agricultural Marketing Service - 4th April 2006