April 15, 2021

Beefpackers in Brazil stop production as cattle prices surge

Multiple small, medium, and large beefpackers in Brazil have stopped production in some locations following a rise in cattle prices that can't be passed to consumers, with declining demand also a contributing factor, Reuters reported.

Paulo Mustefaga, president of trade group Abrafigo said beef production facilities have either stopped or remained idle as they adjust supply to beef demand.

Mustefaga said cattle prices have increased 60% over a year, with the industry only able to pass through 40% of costs.

The Brazilian benchmark for cattle prices, the 15 kg arroba, reached BRL 320 (~US$55.95; BRL 1 = US$0.18) thanks to declining cattle supplies and increased demand for beef exports to China.

Mustefaga said the lower purchasing power of Brazilian families is another issue forcing beefpackers to reduce slaughtering, as the COVID-19 pandemic slowed the country's poor economy activity.

Major Brazilian meatpacker Marfig told Reuters that it sent workers on furlough at its plant in Alegrete for 30 days. Beef slaughtering resumed at that plant on April 1. The company also said it stopped operations at its Rondonia state plant.

Minerva Foods, the biggest beef exporter in South America, stopped operations at its Mato Grosso state plant and did not set a timeline for resuming operations. The company stopped operations at its Sao Paulo plant for 20 days but production there has resumed.

- Reuters