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Brazil poised to increase feed production volume

Brazil expected to increase its feed production volume to 100 mmt during next several years.

By Eugene Gerden, freelance contributor

Brazil is expected to increase its feed production volume to 100 million metric tons (mmt) during the next several years based on the level of pork and poultry production in the country and the global commodity market, according to feed industry experts and analysts in the department of feed production of the Russian Ministry of Agriculture.

At present, Brazil remains the largest feed producer in Latin America and the third largest on a global scale. Last year, it produced almost 70 mmt of feed, twice as much as India, the world’s fourth largest producer. Local analysts believe the country has not yet fully realized its potential in the global feed market.

In fact, the volume of feed production in Brazil has been growing for the last seven years. Analysts predict the growth is expected to continue until at least the beginning of 2020, largely due to the large raw materials base of the industry and low production costs.

The current market environment remains favorable for Brazil feed producers. This year the country set another record in terms of corn and soybean crops production -- major components of feed in Brazil.

In contrast to other major feed-producing nations, low production costs have been historically considered as the main advantage of the Brazil feed industry.

Official statistics of the Brazil Ministry of Agriculture, the country’s volume of feed production in 1990 was 13-15 mmt and almost double at 32 mmt by 2000.

One reason for such growth has been a significant rise in the production of poultry and pork in the country, which, in turn, has provided an impetus for the local feed industry.

The increase of feed production in Brazil in recent years can also be explained by the rise of living standards, allowing with greater purchasing power for meat, milk and poultry.

Finally, the growth of the industry has been encouraged by the easing of customs regulations in regard to exports, which has stimulated competition in the industry.  

At the same time, the majority of Brazil’s analysts in the field of feed business and agriculture, believe a further increase in production will largely depend on the further exchange rate of the real.

According to experts of the Brazil Ministry of Agriculture, further devaluation of the real may result in the re-direction of a significant part of corn produced in the country for exports as a weak real will make exports more profitable for Brazilian farmers than the deliveries for the needs of domestic feed producers.

Currently, corn accounts for 60% of the structure of mixed feeds in Brazil and its re-direction for exports, such as China (which in recent years has significantly increased its corn purchases from Brazil) may lead to a significant rise of prices for it in the domestic market and negatively affect the local feed producers.

Overall, according to recent statements of experts from the Brazil Ministry of Agriculture, the ever-growing consumption of meat, milk and eggs in the country, along with the country’s rising living standards will contribute to the growth of the Brazil feed production over the next several years.

At present the annual volume of meat production Brazil is varied in the range of 26-28 mmt and is estimated to grow to 35.7 million metric tons in the next 10 years.

Poultry and pork industries currently remain major consumers of feed in Brazil. The share of poultry feed is estimated at 50% of the entire market.

In value terms, Brazil’s feed industry is estimated at around $10 billion (U.S.) and, according to predictions, is poised to grow to $12 billion by 2021.

TAGS: Business
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