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Bright Spots in South America's Egg Industries

by 5m Editor
28 October 2008, at 12:00am

Our series of reports from the International Egg Commission's Annual Meeting in Shanghai last month concludes with the region of South America. Well respected and long-time contributor from the poultry industry, Terry Evans, has selected the highlights of the reports from Brazil, Guatemala and Uruguay, specially for ThePoultrySite.

Brazil


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"Modern technology gives high production rates at low cost."

Last year was the worst out of the past five for Brazilian egg producers with higher costs, overproduction and an unhelpful currency exchange rate for exports.

Because of its geographical position, Brazil is of low risk for an avian influenza (bird flu) epidemic.

It is the leading exporter of soya with a market share of 37%, and the third largest producer of corn, which is used exclusively for food or feed, as none is used for ethanol, this being produced from sugar cane.

Modern technology gives high production rates at low cost. Hence, they are extremely competitive producers and in the chicken meat business, although Brazil is the third largest producer, it is the leading exporter with a 45% world market share.

A relatively poor infrastructure regarding roads, the rail network, sea ports and storage hampers growth, while a complicated fiscal system acts as a disincentive to investment and trade, even between states.

Another area that requires attention is the level of egg uptake that averages only 120/person/year.

Since 2007, Brazil has started to export eggs to Japan, certain African countries and the Middle East. Since 2006, exports to the European Union have been forbidden due to a residues issue. They are hopeful that this situation will be resolved by the middle of 2009.

Guatemala


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"A strategic plan has been developed to expand [annual per-capita egg consumption] to 200 eggs over the next five years"

The worldwide raw material crisis has hit egg producers hard. In 2007, feed costs rose by 30% and then from January 2007 to June 2008, they increased further by 23% making a more than 50% rise in the cost of rations in 18 months. Producers' returns went up by 45%.

However, when Mexico has low prices, and so does Guatemala as Mexican eggs are smuggled across the border. These contraband eggs account for about 18% of the market.

The country is self-sufficient in both soya and maize.

While the commercial flock totals just 8-10 million for a human population of 13 million, market problems arise because a large sector of the population keep many backyard hens.

Average annual per-capita consumption stands at only 155 eggs but a strategic plan has been developed to expand by 5-6% a year to boost this figure to 200 eggs over the next five years. A new marketing programme is being created, primarily aimed at schools, to help them achieve this goal.

Uruguay


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"Uruguay offers many advantages to foreign investors."

Uruguay is a small country with a human population of only 3.5 million. Being a member of MERCOSUR gives it trading advantages with Argentina, Brazil and Paraguay.

The laying flock totals just 2.75 million and the industry is self-sufficient, so production more or less equates with consumption.

The industry is free of Newcastle disease, which is a benefit when compared to its neighbours.

Egg consumption is reasonably high at 220 eggs/year.

Production is highly concentrated and mainly in the hands of family businesses. Output is split 70% brown eggs to 30% white, with 85% coming from cages.

Most farms produce their own feed. As feed prices are determined by the grain export prices from Argentina, which include export taxes, domestic producers have to pay higher prices for their feed than in neighbouring countries. However, local grain production is increasing which should result in lower feed costs.

Some 99% of eggs are sold in shell. There is only one small egg processing plant.

A sanitary barrier prevents import of shell eggs, which means that the domestic market is protected, hence internal prices are above international rates.

Processed egg products can be imported. Small quantities of eggs are exported, mainly to stabilise internal prices.

There is a need to increase local production of grains to become self-sufficient and therefore independent of prices in Argentina.

Uruguay offers many advantages to foreign investors as it is politically and economically stable, and is much less regulated than its neighbours. It has free trade agreements not only with MERCOSUR countries but also with Mexico and other important markets. There are tax incentives for investors and temporary admission, which allows raw materials and other products to be brought in without payment of import duties. Business can be conducted in any currency.

Further Reading

- You can view other reports from the IEC Annual Meeting 2008 by clicking here.


October 2008