November 6, 2023

 

Brazil maintains global lead in low pork production costs

 

 

 

Brazil has retained its global leadership in the cost of pork production per kg among 17 countries, Swineweb reported.

 

In 2022, the production cost per kg of live pork was US$1.28 in Santa Catarina and US$1.13 in Mato Grosso. Despite a 10% and 12% increase in the two Brazilian states, respectively, compared to 2021, these values are still lower than in the United States (US$1.42 per kilogram), Denmark (US$1.49), Spain (US$1.66), Netherlands (US$1.74), and Germany (US$1.83). The average cost among the 17 countries in the InterPIG network is US$1.72 per kg.

 

Data from the InterPIG group, representing institutions from 17 pork-producing countries, including Brazil, revealed a significant increase in global pork production costs in 2022. Factors contributing to this rise included the prices of corn and soybean meal, influenced by climatic events and geopolitical factors such as the Ukraine war, impacting fertiliser costs and reducing the global grain supply.

 

Global inflation in prices (electricity, vaccines, medications, and construction) and labour remuneration also played a role.

 

Brazil also boasts the lowest prices received per live kg of pork, with US$1.06 in Mato Grosso and US$1.10 in Santa Catarina, compared to the US average of US$1.58 per kg. Despite increases, the Brazilian pork industry remains competitive due to lower animal feed and labour costs.

 

The lower costs in Brazil are attributed to efficient production and pricing. The country has competitive zootechnical coefficients, thanks to technology adoption and livestock health investments in biosecurity and agricultural defence. Additionally, lower labour remuneration and facility costs contribute to Brazil's cost advantage. For instance, in 2022, the hourly wage in Brazil was around US$3, significantly lower than in Spain, where it stood at US$16.29.

 

The main determinant of lower costs in Brazil compared to other countries is the cost of animal feed. In Mato Grosso, the average cost was US$0.87 per kg due to low feed conversion and lower feed prices. In Santa Catarina, the cost was around US$1.02, influenced by higher feed prices despite good feed conversion. Notably, Denmark and the US had costs of US$0.96 and US$1.03 per kg of live animal, respectively.

 

Looking ahead to 2023, there is a trend of falling feed prices and stable overall prices, providing an opportunity for Brazil to expand its pork exports. The researcher Marcelo Miele from Embrapa Suínos e Aves highlights the potential for Brazil to move up to the third position in the international pork market, surpassing Canada in exports.

 

-      Swineweb

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