Brazil poultry may cut production over possible supply glut
The poultry sector in Brazil may reduce its production to avoid an oversupply of chicken in the global market in 2009.
According to poultry company, Unifrango, producers are asked to cut production by 5 percent due to the result of global financial problem.
This also coincided a warning from the Poultry Information Centre (CIA) that supports the Brazilian Poultry Union (UBA) that Brazilian poultry producers need to adapt to the new economic conditions.
According to the director of the industry's internal market and slaughterhouses, UBA and chairman of the Union of Poultry Products Industries for the state of Parana (Sindiavipar), Dominic Martins, Brazil's chicken output reached a record of 488 million birds this year and if the pace of increase continues, there is a big chance of overproduction.
The increase was due to record exports of chicken in 2007, combined with rising domestic consumption, which stimulated heavy investment by the industry. For 2009, production is predicted to be 15 percent higher than 2008, and 25 percent more than in 2007, taking average monthly production to 1.1 million tonnes in 2009. It was 920,000 tonnes in 2008.
The global situation corresponded with the expected seasonal fall in chicken consumption in Brazil during the long school holidays of December, January and Chicken is widely used in school lunch menus.
Furthermore, Martins explained, global instability has reduced the credit available to purchase imports, and cold weather in the northern hemisphere impedes shipping.
The CIA's projected output of 1.1 million tonnes next year would lead to a 135,000 tonnes surplus as, on average, 365,000 tonnes are exported and around 600,000 tonnes are consumed in Brazil.
Hence, Martins warns, there is an urgent need for a planned reduction in output to avoid a surplus.
The state of Parana contributes the largest share of national chicken production. For the period January to September, production had approached 908 million chickens, which is 10.3 percent more than the same period of 2007. Output is continuing to rise, and is expected to be 12 to 15 percent higher than last year.
Martins said Brazil has to adapt the new reality in the market based on the supply resources and behaviour of the market. This year, he said, poultry consumption will grow but will have to adjust next year to avoid a surplus.