Brazil: Feed Industry Growth in 2013 Seen Flat
7 January 2014 – Sindiracoes, the Brazilian Feed Industry Association, warns that the domestic animal feed industry’s performance was jeopardized in 2013.
In May 2013, Sindiracoes data indicated that Brazil’s animal feed production in 2013 could amount to 64.6 million tons, up 2.6% from 2012. May 2013’s production forecasts indicated that the losses accumulated in 2012 could be offset in 2013. 2012 was a year impacted by weakened demand and bankruptcy of ventures without working capital, among them, independent farmers, cooperatives, integrated feed millers and feedlots. Demand dropped mainly due to skyrocketing prices of soybean meal and corn that pressured the animal protein producers and meat exporters. This scenario for 2013 now seems less likely to happen.
In a recent update, however, Dr. Ariovaldo Zani, CEO of Sindiracoes, said that total 2013 output figures for Brazil’s feed industry could be impacted by the loss in competitiveness recorded by the livestock production sector.
The production of animal feed and feed supplements from January to September 2013 (amounting to 46.5 million tons), was not able to offset the slump in the same period of 2012.
Poultry feed output decreased 1.3% to 22.1 million tons during the first three quarters of 2013 (mainly because of the scarce supply of chicks for housing) and swine feed dropped 0.6% to 10.89 million tons (due to the forced liquidation of breeders resulting in a scarce supply of piglets, and to the retraction of shipments overseas).
On the macroeconomic level, Brazil’s GDP growth for 2013 is forecast to rise slightly above the 2% threshold. According to Dr. Zani, the modest increase reflects the pressure experienced with local infrastructure bottlenecks as well as inefficient international trade diplomacy.
Dr. Ariovaldo Zani
CEO
Sindiracoes
He said that the Brazilian feed industry last year was also confronted with legal uncertainties, rights and duties issues, successive changes in legislation and regulatory frameworks, excessive bureaucracy and complex procedures, as well as the heavy charge on costs and prices due a cumulative system of taxes (the Brazilian feed industry was affected by a particular set of taxes, mainly the combination of the PIS/COFINS on livestock production chains, and on most of the feedstuffs used for poultry and swine).
This unreliable and unfriendly business environment, according to the Sindiracoes CEO, has severely affected agribusiness entrepreneurs.
Although the end of year celebrations could provide a late push for retail sales and support food consumption, Dr. Zani said that it will not be enough to offset performance in Q4 and that feed entrepreneurs should not be surprised if growth in 2013 is flat.
(dated 07/01/2014)
