Difficult year ahead for Brazil’s animal protein sector

Experts from companies, research institutes and financial institutions talked about industry concerns in 2014 at Avesui in Florianopolis, Brazil. 
Short- to medium-term factors are expected to act as a drag on Brazil’s animal protein production but, longer term, there are important opportunities that must be capitalized upon. The opening of the 14^th edition of the Brazilian pig and poultry trade show Avesui, held in Florianopolis, Brazil, saw a discussion of the outlook for animal protein in the country, and offered a mixed picture.
Commenting on demand from the home market, Ariovaldi Zani, CEO of feed association Sindiracoes, said: “The year ahead will be difficult, as there will need to be adjustments. These adjustments are necessary but will result in less money for families to spend, and because of this the population will experience some difficulties.”
But economic conditions at home are not the only problems that the sector will have to confront. Other difficulties highlighted were growing competition for grain and oilseads from the bioethanol industry, and the need to explain to animal rights groups the importance of science in animal production. 
Pig, poultry exports
Looking internationally, delegates were reminded of the important opportunities offered for exporters by Colombia and Mexico, particularly the latter, given problems  it has experienced with its animal health controls.
China, however, was highlighted as being of particular importance for longer-term export opportunities.
By 2020, it has been calculated that some 400 million people will have migrated from China’s countryside to its cities. This number is twice the population of Brazil and almost four times that of Mexico.
Adolfo Fontes, analyst with Rabobank in Brazil, said: “This is a great opportunity for pig and poultry meat,” continuing that China’s younger generation tended to eat more chicken meat.
China will have a growing impact on the world’s supply and demand for food, as it must look outside its borders to feed its people. Within 10 years, it is estimated that 90 percent of China’s demand will be for processed products, and this is where exporting countries – such as Brazil – must make the most of opportunities.
The industry must work with government to facilitate trade in processed products, delegates were told, but at the same time achieve a balance between trade in processed products and commodities. Brazil is an exporter of both. 

Brazil imports most US wheat in 35 years

For 2012/2013, Brazilian wheat production has been revised upward to 4.38 million metric tons but remains over 24 percent below the 2011/2012 production level, according to the United States Department of Agriculture's Foreign Agricultural Service (FAS).
To meet 2012/2013 domestic consumption - estimated at 10.74 million metric tons - Brazil has had to import 7.12 million metric tons, due to a severe production shortfall in Mercosul supplier countries, especially Argentina. This enabled U.S. wheat exporters to ship 2 million metric tons from January to September, the largest export volume to Brazil since 1978. For 2013/2014, production is forecast at 4.77 million metric tons, almost 9 percent above 2012/2013 due to stronger prices. 2013/2014 imports are forecast at 7.7 million metric tons.
Record 2012/2013 corn production, estimated at 81 million metric tons, was negatively affected by a wholly inadequate infrastructure, low international prices, and a record U.S. harvest, according to the FAS report. Given the foregoing conditions, exporters - responsible for shipping an estimated 20 million metric tons - have incurred significant losses. For 2013/2014, corn production is forecast at 72 million metric tons due to lower prices.
Milled rice production for 2012/2013 is estimated at 7.99 million metric tons, up marginally from 2011/2012. The estimate is buoyed by new cold-resistant varieties which are increasing yields in the state of Rio Grande de Sul, where 70 percent of Brazilian rice is grown. Milled rice production for 2013/2014 is forecast at 8.3 million metric tons and exports are placed at 850,000 metric tons.

Brazilian animal feed production down three percent in 2012

Production in the Brazil animal feed industry decreased about three percent in 2012, according to data from Sindirações, the Brazilian Feed Industry Association. Broiler feed has nearly half the market share, but was down two percent from the previous year, and fish feed's share increased the most, at 15 percent.
Dr. Ariovaldo Zani, Sindirações CEO, said the industry produced nearly 62 million metric tons of animal feed, compared to 64.5 million metric tons one year ago. In addition, 2 million metric tons of animal feed supplements were produced.
The figures in the Sindirações report were based on actual figures from January through September 2012, and projected estimates for the remaining months.
Broiler feed
Brazil's broiler industry represented an estimated 48 percent of the overall feed demand in 2012, reaching about 30 million metric tons. This is down two percent and two metric tons from a year ago.
Layer feed
The production of feed for laying hens was projected to hit 5.2 million metric tons in 2012, up 0.3 percent from a year ago, in response to the housing estimates of more than 85 million laying chicks.
Beef cattle feed
Beef cattle feed came in at 2.6 million metric tons, down nearly 3 percent from 2011, while the feedlot rate remained mostly steady.
Dairy feed
There was a 2.5 percent decline in production with 4.9 metric tons of feed for dairy cattle, the result of reduced investment in dairy activity in an attempt to improve its gross margin that has been hurt by high feed costs and low prices paid for milk.
The limitation in the milk supply is also intensified because of drought, Zani added.
Swine feed
Revenues in pork exports increased by 4.5 percent, as well as 12 percent for the amount shipped, despite Russian and Argentine embargoes.
Considerations and forecasts
With the potential of domestic and international demand for animal proteins, the projections for 2020 show a production of about 40 million metric tons of broiler feed, 6 million metric tons for laying hens, 19 million for swine, 3 million for beef cattle, 7 million for dairy cattle, about 1 million for fish and shrimp, 3.5 million for dogs and cats, and 2 million more for goats, sheep, horses and other domestic livestock. The demand for supplements may result in the production of nearly 5 million metric tons, Zani said.
"The domestic [animal] feed industry has struggled to mitigate the current challenges and contributed greatly to the sustainability of the Brazilian animal protein production chain," said Zani.