18 December 2012 – Sindirações, Brazil’s feed industry association, has re-confirmed that overall feed demand in Brazil may drop 3% in 2012 reaching 62 million tons, mainly due to increased feed costs.
Dr. Ariovaldo Zani, CEO of Sindirações, commented: “The industry has been in reverse gear since Q1 2012, and that has intensified due to the coexistence of three factors: high costs of soybean meal and corn; low prices paid to livestock producers; and the slowdown on poultry and beef exports”.
“The lack of capital of many independent producers has reduced the swine herd throughout the year. Besides, there has been a decrease of breeders, chicks and in the poultry slaughter rate in recent months”, he added.
Dr. Zani pointed out that the broiler and swine industries together require more than 70% of the feed produced in Brazil with almost 90% of the mixture of maize (up 40% in the first 20 days of July as a result of drought in the US corn belt) and soybean meal (more than doubled in price from January to August this year due to severe drought in Argentina and Brazil, as well).
According to Dr. Zani, Brazil’s poultry industry can still produce up to 13 million tons of chicken in 2012 if demand increases in response to the year-end festivities, but will be challenged by Euro Zone weakness and by the drop in exports to the Middle East. However, the chicken meat sector is forecasted to consume only 30 million MT of feed by the end of the year. The production of feed for laying hens, meanwhile, may reach 5.2 million MT by the end of 2012, in response the housing estimates of over 85 million pullets and the overall laying flock of 120 million laying hens.
Dr. Ariovaldo Zani CEO Sindirações
Revenues from pork exports from January to October increased despite Russian and Argentine embargoes. However, swine feed demand only started recovering in July. For the whole of 2012, Sindirações expects a 2.5% decrease in production at 15 million MT.
Beef cattle feed production this year is expected at just over 2.6 million MT, down nearly 3% from 2011. At the same time feed output for dairy cattle could drop 2.5% to 4.9 million MT this year.
Pet food production is estimated at 2.3 million MT in 2012, up approximately 5%. Such growth is driven by the emerging middle class that represents more than half of the Brazilian population and whose pets are considered family members. Finally, demand for fish feed is estimated in 2012 to reach 575,000 MT, up 15%.
Dr. Zani, however, believes that the domestic and global macro-economic contexts will play in favour of Brazil’s feed industry next year. He sees the main drivers being the emergence of the new Brazilian middle class and its consumer potential, the recovery of US employment, the redirection of investments to the domestic market in China and the increased optimism that the Euro Zone situation will improve.
Looking forward to 2020, Sindirações projects that, thanks to the potential of domestic and international demand for animal protein, approximately 40 million MT of broiler feed could be produced; along with 6 million MT of laying hen feed; 19 million MT of swine feed; 3 million MT of beef cattle feed; 7 million MT of dairy cattle feed; more than 1 million MT of fish and shrimp feed; almost 3,5 million MT of feed for dogs and cats; and finally 2 million MT of feed for goats, sheep, horses, etc.; totalling 81.5 million MT (2.54% CAGR since 2011).
