Just a day before ABPA CEO Ricardo Santin joined the 11th BRICS meeting in the Brazilian capital Brasilia. Poultry World met up with him in his Sao Paulo office to discuss the current situation in the Brazilian poultry industry. Optimism prevails, but recovery from both domestic and international concerns is still fragile.
For everyone in the highly integrated poultry production chain in Brazil, the Brazilian Animal Protein Association (ABPA) is the ‘go to’ place for the latest statistics on how the industry is doing, both at home and abroad. With 30 companies – representing more than 95% of Brazilian chicken meat exports – feeding the ABPA databases with actual production figures, the association is able to provide a clear overview of the current market conditions.
Knowing in what direction the markets are moving is also imperative to the main objective of ABPA itself. The goal is to significantly increase export volumes and revenues for ABPA member companies and ABPA does this by negotiating to open up new markets, as well as maintain and grow markets which have already been accessed. The ABPA is actively promoting the concept of ‘Brazilian chicken’ to the world while emphasising the high quality of Brazilian chicken meat.
Ricardo Santin, CEO of ABPA. Photo: Fabian Brockötter
Ricardo Santin is CEO of the Brazilian Association of Animal Protein, ABPA, where he has led the poultry division since April 2008. The ABPA works with all the major players in the Brazilian poultry industry. It is involved in government negotiations, new market launches as well as monitoring, trade promotion and the international representation of the Brazilian poultry industry. In addition, Santin is vice-president of the International Poultry Council, where he is involved in working with other poultry producing countries and international organisations such as FAO, CODEX and OIE. Santin will take over the presidency of ABPA from Francisco Turra from April 2020.
What do the statistics tell you?
“If we look at the consolidated data, which we only have up until 2018, over the last decade we have seen almost continuous growth in export volumes, with turnover in US dollars showing a somewhat turbulent trend. This was mainly due to exchange rates. However, in the period 2017to 2018 we lost about 0.2 million tonnes in exports, worth about 0.7 billion dollars, this being 5% and 9% of the total export volume and turnover, respectively.”
The worldwide demand for chicken meat will be even stronger in 2020 and there are only a few countries in the world that can cater to this demand.”
What caused this sudden drop in demand?
“We had this big misunderstanding about Salmonella which frustrated part of our exports to the European Union. The EU halted exports of salted meat because Salmonella was found. The odd thing was that the meat was only rejected if it was exported as salted, which falls under a free tariff quota. The same meat from processors not directly involved could be exported as fresh meat if tariffs were paid. We see this as a hidden trade barrier which had nothing to do with public health concerns. Luckily only some processing plants were affected but we are planning to go the World Trade Organization to have them take a proper look at this issue. There should be no borders for food, especially on grounds that do not make any sense. We have set quotas in international trade agreements, lets abide by that and respect those agreements.”
Even though the stats aren’t very promising?
“That’s true, but that’s behind us now. We are in the process of gathering the 2019 figures for the report we will be publishing early in 2020 and those figures look very promising. From January to August 2019 we saw a production increase of over 4% to meet growing demand. The first signs from the second half of 2019 tell us that growth is accelerating even faster. The Brazilian economy is slowly but surely emerging from a recession with 2.5% growth this year, which has led to extra domestic demand. At the same time we are seeing a shift in international trade flows due to African Swine Fever in Asia. Pork meat has been substituted with poultry for the simple reason that there is no pork meat supply. For example, China just recently imported 100 shipping containers of breast meat, something they never ever did before. Across the board, we see demand rising and we can already conclude that 2019 was a very good year for our industry.”
There should be no borders for food”
What do you expect in 2020?
“We are just in the early stages of this forced transition from pork to chicken. The worldwide demand for chicken meat will be even stronger in 2020 and there are only a few countries in the world that can cater to this demand. Let me be clear, Brazil cannot cover the extra demand all by itself but we are well placed to do our part. The US, EU, Thailand, Ukraine and Argentina will profit too. I always say, Brazil is not better than anyone – but no one is better than Brazil. Our industry is in very good shape with a perfect climate to grow crops and birds, with eager integrations ready to step up their game. We expect Brazilian production to grow to 13 million tonnes at least in 2020. And, as far as I can judge, this is growth on demand, not on based on projections.”
Do you think this surge in demand will last?
“It is, of course, difficult to predict the future. That said, we expect the swine fever crisis to have a positive effect on the demand for chicken for at least the next 3 to 5 years. It’s important for the Brazilian poultry industry to realise that eventually pork production and demand will recover, at least to some extent. That is why I warn our members not to go ‘all in’ based on expectations alone. If the demand is there, we should produce, but not until then. My prognosis for the coming years is positive, I do see very promising signs, but in the end the market will tell us what to produce.”
Any warning signs on the horizon, in your opinion?
“We are competitive, our products are high quality and the carbon footprint is small. But, and there always is a ‘but’. Logistics is an issue and our Brazilian tax system is complicated and although the Bolsonaro government has promised that these hurdles will be overcome, it will take some time. Under our current leadership, and Brazil’s temporary presidency of the BRICS emerging countries organisation, we see that the Brazilian economy has started to grow for the first time in many years. However, that growth comes with increasing competition for the available workforce. As we are in a very labour-intensive business, a growing economy will make poultry production more difficult and more expensive. This is why focusing on increasing production should never be the only focus. This has to go hand in hand with increasing efficiency and automation throughout the supply chain. In the long run, this will only fortify our position as the poultry producing powerhouse we are.”