October 30, 2009

The strong Brazilian real could cause Brazil to lose its status as the world's No. 1 chicken exporter, a position it has held since 2004, according to the Brazilian Chicken Exporters Association (Abef).

Brazil would be replaced by the US, currently the largest poultry producer and the second largest poultry exporter. Argentina, whose poultry production and exports have increased strongly over the last decade, could also take from Brazil some global market share.

Last year, Brazil exported 3.6 million tonnes of poultry, up 11 percent on-year. But this year's growth is expected to increase only one percent to two percent, or may remain flat at last year's export level, said Abef president Francisco Turra.

In September, the average price of Brazilian poultry in international markets was US$1,571 per tonne, compared to US$2,004 in the year-earlier period. Turra said this is due to difficulties to pass along exchange rate losses to prices in dollars.

The forex issue, combined with possible new barriers from the EU as of 2010, and Russia's quota policy, create a very challenging environment for Brazilian exporters.

As a result, Abef has sent a letter to the president, asking the government to pay close attention to the forex situation.

Poultry exporters also want the government to consider a possible tax break, which would increase competitiveness, Turra said.

The Brazilian government has recently announced it will exempt gross revenue from domestic beef sales from the PIS/Pasep and Cofins welfare taxes as from November 1.