April 18, 2011

 

Brazilian pork exports forecast to rise

 

 

Pork exports from Brazil are expected to rise slightly in 2011, with forecast increase in demand over time.

 

For the Brazilian pig industry, selling pork on the domestic Brazilian market was much more profitable than exporting last year. This was mainly due to a record economic growth, coupled with the continued rise in the strength of the Brazilian real against the American dollar and other currencies.

 

In total, almost 45,000 tonnes less pork was exported in 2010 as compared to 2009, a fall of about 10%, while about 140,000 tonnes more pork was sold on the domestic market, an increase of 4.5%. Per capita consumption of pork in Brazil has increased by 50% in the past ten years and stood at 15 kg last year.

 

The situation is expected to change little this year, even though it is forecast that the economy will grow by 4-5% in 2011, compared with a record 7.5% in 2010. The pork industry was operating at close to full capacity in 2010 and although several firms are now investing in raising output, the impact will only be felt in 2012.

 

Prospects for exports should have improved this year. This follows the acceptance by the US that the state of Santa Caterina, the leading producer and exporter of pork, is now free of foot-and-mouth disease (FMD) without vaccination. The state is the first in Brazil to achieve that status. It has been hoped that this decision would encourage the US to import some pork cuts. As a consequence, other major importers which now buy little or no pork from Brazil, such as Japan, South Korea and Mexico, might follow suit.

 

Brazil however, was forced to raise export prices by a whopping 22% last year. The strengthening of the Brazilian real, coupled with the sharp rise in the price of corn, of which almost 14 million tonnes are now used each year to feed pigs, were the causes behind that decision. Although pork prices have risen in Brazil, they have increased far less than those of beef, which is in short supply, causing the price of many beef cuts to rise by 50% last year.

 

Consumer demand for beef remained as strong as in 2009. Per capita consumption remained at the 35 kg level where it has hovered for the past 20 years. The rise in the price of beef allowed the price of pork, as well as of chicken to be raised sufficiently for most companies to be profitable last year, despite the fall in exports. Income rises in Brazil has lead to an increase in demand of meat. The average Brazilian consumed almost 95 kg of all types of meat last year, 10 kg more as in 2005.

 

Pork exports increased 16-fold between 1995 and 2005, when they peaked at 600,000 tonnes, while domestic consumption stagnated. The country was in very poor economic shape during those years, when inflation soared, unemployment was high and the economy hardly grew.