March 20, 2006


Brazil takes measures to curb falling chicken, corn prices



Brazil's Agriculture Ministry said Friday (March 17) it will open a 300 million Brazilian real (US$141.50 million) credit line to help curb falling chicken and corn prices due to international bird flu pressures.


Chicken-consumption declines in Brazil's main export markets have led to a glut of chicken in the local market. Retail prices for chicken have fallen. As a result, corn prices also have dropped because more than 60 percent of chicken feed is made up of cornmeal.


Parana state, Brazil's top corn producer, saw prices drop to 12.00 real per 60-kilogram bag this month, compared with the average minimum of 14.00 real. Corn millers are buying less corn as chicken producers reduce meat processing by 15 percent on average, cutting demand for cornmeal in turn.


In effect, the government loan is designed to increase demand, said Agriculture Policy Director Ivan Wedekin. Chicken producers can continue buying chicken feed and won't have to slaughter chickens due to the lack of feed, which helps keep chicken stocks in check. Corn millers can continue buying corn from local farmers as chicken producer demand returns, Wedekin said Friday in a press statement.


"The measure has a dual effect on the market because it benefits corn producers and improves the conditions for chicken producers," Wedekin said. This new government loan, made by state-owned Banco do Brasil, has a 8.75 percent annual interest rate, compared with the 16.5 percent benchmark interest rate.


Falling corn prices are a concern for the Agriculture Ministry because Brazil is expected to soon harvest a record breaking 41.7 million tonnes of corn out of the 2005/06 crop.


Brazil is not a corn exporter, so most of the demand comes from local consumers and the chicken and pork feed industry. Local chicken prices have fallen to their lowest level in 11 years, according to the Agriculture Ministry.


Agriculture Minister Roberto Rodrigues had hinted on Thursday at a biofuel conference in the town of Aracatuba, Sao Paulo state, that the government was studying an emergency measure to curb falling chicken and corn prices.


Video >

Follow Us