Meat

Background

Brazil: Records reached for chicken in 2021

Chicken production in Brazil in 2021 is forecast to increase by 4%, reaching a record of 14.4 million mt.

Driven by increasing exports and greater domestic demand, Brazil´s chicken production in 2021 is forecast at 14.4 million mt, which is an increase of 4%. Meanwhile, chicken consumption is likely to reach a record of nearly 10.5 million mt, up 4.5%, based on the assumption that the Brazilian economy will rebound by 3.5% in 2021.

Brazil’s domestic consumption of chicken is likely to grow further in 2021 and reach a record of nearly 10.5 million mt. Photo: Omar Mahmood
Brazil’s domestic consumption of chicken is likely to grow further in 2021 and reach a record of nearly 10.5 million mt. Photo: Omar Mahmood

An increase in chicken exports, domestic demand, and carcass weights, as well as stable feed costs, support this projected production increase.

Brazil earns 11.3% less with chicken exports
Brazil´s chicken meat exports revenues have fallen 11.3% in the first 8 months of 2020 compared to the same period last year. A lower exchange rate costs Brazil US$ 0.42 billion.

Bumper soybean and cron crop yields

Expected bumper soybean and corn crop yields for the 2020/2021 crop year are likely to provide good supplies of feed, but because of record exports of these commodities, feed costs will likely be higher in 2021 compared to 2020. Parana is the top chicken producing state.

Southern states have competitive edge

The production system is highly integrated in the south region. The southern states have the advantage of proximity to the main southern ports in Brazil, which handle 90% of all chicken exports. Although the production system in the south allows a competitive edge to Brazilian products, the region depends typically on the transportation of feed from other regions of Brazil and the import of corn from Paraguay.

Brazil: Dutch settlers adapting to new poultry opportunities
The Zegeren farm in Holambra, Brazil, is a 3rd-generation operation. At the heart of the farm there is a 24,000 bird parent stock facility, surrounded by an orange plantation and a potted plant business.

A 23% increase in production costs of chicken

The average cost to produce chicken meat in the first 7 months of 2020 increased by 23% compared to the same period in 2019. This was influenced mostly by higher feed costs (corn and soybean meal), which accounted for just over 70% of the total cost of chicken production. Producers are concerned with the increasing cost of production due to record exports of both soybean and corn during 2020, which supported prices for these commodities. Strong international demand for corn and soybeans is projected to spill over into next year, but feed costs for the chicken industry are expected to stabilize at a high level.

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Chicken accounts for 45% of meat consumption

Chicken consumption in Brazil accounts for about 45% of total animal protein consumption. Based on the assumption that the Brazilian economy will rebound by 3.5% next year and there will be higher consumer purchasing power, the country’s domestic consumption of chicken is likely to grow further in 2021 and reach a record of nearly 10.5 million mt, up 4.5%. Furthermore, the Covid-19 pandemic resulted in the widespread closures of restaurants and food service outlets, schools, and a reduction of tourism and travel. The higher retail prices for beef meant many consumers shifted to chicken. According to trade sources, domestic consumption as a share of total production in 2020 is likely to increase from 68% to 72% while exports of total chicken production will decline from 32% to 28%.

Chicken exports to rebound

Post forecasts chicken exports to rebound by over 3% in 2021 to reach nearly 4 million mt, driven mostly by continued steady world demand, partly due to a combination of African Swine Fever and Avian Influenza. Brazil has a well-diversified chicken export market and is less dependent on China than are other exported meats, such as pork. China and Hong Kong account for about 20% of Brazilian chicken exports, while the Middle East and Africa, for instance, account for nearly half of Brazilian chicken exports.

The information in this article has been extracted from a USDA GAINS report prepared by Joao F. Silva.