Press Room

Brazil breaks the 50 million tonne mark

San Paolo, Brazil (January 4, 2008) - According to IFIF, the International Feed Industry Federation, Brazil is the forth-largest worldwide feed producer, following USA, EU and China.

“Despite forecast that feed demand would rise up to 6.5% in early 2007, we see it has risen above by over 10% (to over 53 million MT and almost U$13 billion in revenues), driven mainly by the strong performance of meat ‘pack exports of poultry, pork and beef as global customers have demanded more animal protein. Increased domestic consumption has benefited from this economical scenario encouraged by lower interest rate, GDP growth slightly above the level expected and higher worker incomes.”

This is how Dr Ariovaldo Zanni, CEO for the Brazilian Feed Industry Association, explains the vigorous turnaround of the Brazilian feed business, after sanitary turmoil which affected livestock produced locally last year due to the impact of outside avian influenza as well as swine foot and mouth disease locally.

"If the above mentioned factors continue over the coming years, demand will exceed more than 70 million metric tonnes for feed by 2010, despite other players struggling in the same," says an optimistic Dr Zanni in a prospective view.

Newest technologies adopted

Both chemically and fermented additives prices skyrocketed in 2007 being pushed ahead by higher energy costs, inflated freight rates and global demand.

Historically, the Brazilian feed sector has walked an unbalanced track. At one time it was almost completely dependant of imported additives. During 2007, private feed companies exported U$130 million and imported U$700 million – a deficit of U$570 million. In 2006 the industry imported U$570 million (22% increase rate, year on year 2007/2006). This increased inbound trade is due to the adoption of the newest feed formulas, requiring more additives in order to achieve better conversion feed ratios, shorter housing, higher profitability, less output discharged and consumer demands.

Additionally, the corn price has risen above 70% because unexpected record over exports (more than 10 million MT) in order to supply the European Union and its hunger for non-GMO varieties. Domestically, shortages at home in early 2008 has been enough to generate a corn rally in advance, as smaller poultry and swine producers are finding available tight right now.

The current appetite for corn in feed, food, fiber and fuel usage has tightened supply and it seems that biotechnology would be the shortest way to improve available.

For this reason, the representative feed and livestock raisers organizations - Sindiraçoes, UBA, ABCS and ABIECS - posted a requirement to CTNBio – the National Biotechnology Technical Council - in order to get its approval to import two million metric tonnes of genetically modified corn, as an urgent matter, attempting to alleviate this seasonal shortage.

“In summary, complete feed profitability dropped because its average price increased only 17% and we believe that supposed losses are being diluted along the value chain and among stakeholders, including feed manufacturers and livestock producers,” adds Dr Zanni.

Feed safety in Brazil

Setting aside competition, Brazilian feed producers have agreed the best way to maintain its core business is to support continuous GMP improvements as well as to encourage its workers in contemporary learning sessions in order to achieve less idle capacity, higher productivity, fewer defects, a good labour environment and full employee engagement.

Feed enterprises in Brazil currently employ 80,000 workers directly and 400,000 indirectly.

This initiative is an essential part to guarantee the sustainability across the value chain and undoubtedly will remain supporting the competitive advantage of Brazilian meat exporters worldwide, says Zanni.

Regulations

During 2007, Sindiraçoes trained more than 220 professionals in its ‘Feed & Food - Safety Feed Management Program’.

“It is important to emphasize that GMP is mandatory now and its implementation must be widespread through every feed enterprise located within Brazilian borders once the Husbandry Defense Official Department published new regulations (Normative Act #4) to be active in the first quarter of 2008,” says Dr Zanni.

The set of rules updated in the Official Feed Bill #6296 was finally released last month after 10 years of intense dialogue and discussion. It covers topics across the industry such as feedstuffs processing, packaging, ling transport, trading, technical responsibility, advertisement and penalties.

Dr Zanni says that this is not the end: "In fact, it's just the tip of the iceberg. These wider rules are to be deployed through the Normative Act, Technical Notes, etc, in order to get them as detailed as possible.

“This work will depend on a close synergy between the private and public sectors."