Sadia S/A, Frangosul, Perdigão Agroindustrial, Chapecó, Ceval and Avipal

Brazilian meat output in 1997 stood at 12.4 million tonnes (50% beef, 36% poultry and 14% pork). The domestic market absorbs around 85% of beef production and around 95% of poultry and pork output.

The local market is more or less evenly distributed. Sadia, for example, which operates in all three segments, retains 13.5% of the poultry market, 12.2% of the pork one and 2.1% of the beef one. Sales of processed and frozen items are more concentrated, with Sadia (the leader in both) retaining respective stakes of 26% and 46%.

The retail segment turns over around US$ 47 billion p.a. (US$ 13.5 billion from poultry, US$ 6.5 billion from pork and US$ 27 billion from beef).

The country has approximately 1 billion head of beef cattle, 16.5% of which is commercial (the world’s largest). Nevertheless, it is by no means the biggest producer. In 1992, output from the leading producing areas totaled 38.78 million t (27% from the USA, 21% from the EU, 19% from the CIS, 10% from Brazil and 5% from Argentina). The leading exporters are the EU (1.25 million t p.a.), Australia (1.13 million t) and the US (728,000 t).

In the poultry segment, Brazil accounted for 8.3% of global output of 49.4 million t in 1996, putting it in second place behind the USA and ahead of China. The biggest foreign shippers are the USA, France and Brazil while the import list is headed by Japan, Hong Kong, Mexico and Germany.

Around 50% of global pork supply comes from Asia (if we add the EU and North America, the figure comes to 85%), which is also the world’s leading consumer and importer. In individual terms, Japan tops the import rankings, followed by Russia (545,000 t in 1995). Other continents are also major exporters, including Europe and North America. World trade turns over 4 million t p.a., with Brazil accounting for 1.75% (1997), 75% of which goes to Argentina and Hong Kong.

Global meat consumption totals 70 million t p.a. of pork, 45 million t of beef and 42 million t of poultry.

Given the shrinking home market in 1999, producers will have to boost their exports. Nevertheless, even here, they will come up against several discouraging factors: 1) lower global growth; 2) the decline in Russia’s purchasing capacity; 3) the increase in EU export subsidies as a means of getting rid of soaring stocks; and 4) the recovery of Asian shipments following the worst of the crisis.

In 1998, we expect the number of beef cattle to move up by 2%, beef supply by 0.5% and consumption by 0.5%, accompanied by flat domestic prices, plus a 26% increase in export revenue (US$ 253 million fresh and US$ 294 million processed), with fresh prices falling by 15% and processed ones moving up 7%. In 1999, we believe production will edge up by 0.4% and local consumption by 1.6%, with a fall in domestic prices and export ones remaining flat.

As for poultry, we expect production to inch up 1% in 1998 (to 4.45 million t), domestic prices to dip by 1% (oversupply, chiefly due to the decline in exports), consumption to rise by 2% and export takings to plummet by 25% (US$ 657.34 million), followed by respective figures of -7%, +1%, -1.5% and -5% (US$ 624 million) in 1999.

In the pork segment, 1998 output should increase by 4.8%, accompanied by a 2% decline in demand and a 10% drop in farm-gate prices, an 18% rise in overseas-shipment volume and a 5% slide in export takings (US$ 134.62 million). Next year, we expect stable production, a fall in internal demand, low domestic prices and a 5% decline in import payments (US$ 134 million).

For the purposes of these projections, we have assumed 0.5% GDP growth in 1998 and a 1.5% slide in 1999.

In the latter year, corn prices are likely to drop, allowing profits to recover somewhat, particularly in the poultry and pork segments.