July 23, 2012

Brazil to buy surplus swine to aid pork producers

Brazil will acquire 76,000 tonnes of excess live swine at BRL30.4 million (US$15.05 million) through a minimum-price plan which will aid domestic producers in withstanding the country's oversupply of pork, said the Ministry of Agriculture on July 19.

The temporary aid program will pay producers BRL0.40 (US$0.20) per kilogramme, and aims to help pork producing regions resume their traditional product flow and cover basic production costs, the government said via press release. About 76,000 tonnes of live swine should be moved through the programme.

"With this action, developed after negotiations with the (pork) production sector, we believe that the government has done its part in full, and within what was realistically possible," said Mendes Ribeiro Filho, Brazil's agriculture minister. "The expectation is that the situation will be eased and producers can cover production costs, since we are guaranteeing income for farmers in this difficult moment."

A special credit line of BRL200 million (US$98.98 million) with low interest rates was announced for producers on July 12. Available for the rest of this year, it features a fixed rate of 5.5%, and producers can extend their pre-2012 debt for one year at that rate.

A separate line of credit for matrices retention by independent pork producers, established under a 2012/2013 stimulus plan for agriculture and livestock on June 28, will only be increased if there's major demand. That lending option can provide up to BRL2 million (US$988,000) per producer, with repayment in two years at 5.5% interest.

Industry leaders spoke with Ministry of Agriculture officials and senators last week on the high production costs they're facing from elevated corn and soy prices, and the meat oversupply that has occurred from months of Russian and Argentine trade embargoes.

A lack of frozen meat storage options in Brazil has exacerbated the problem, producers said. Producers claim they're currently earning BRL1.60 (US$0.79) per kilogramme for pork, on average, while their production costs average BRL2.50 (US$1.23)-a difference of around US$0.44.