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Producers Association Suggests Cut in Production

by 5m Editor
24 October 2008, at 12:16pm

BRAZIL - The poultry sector has proposed a cut in output to prevent an oversupply of chicken in the global market next year.

As the result of the global financial crisis, producers are being asked to cut production by 5 per cent, according to an article from poultry company, Unifrango.

It reports a warning from the Poultry Information Center (CIA) that supports the Brazilian Poultry Union (UBA) that Brazilian poultry producers need to adapt to the new economic conditions.

According to the director of the industry's internal market and slaughterhouses, UBA and chairman of the Union of Poultry Products Industries for the state of Parana (Sindiavipar), Dominic Martins, four factors motivated the decision which should reduce the surplus between the production and consumption of chicken meat products in Brazil and abroad.

He says the main reason is that Brazil's output of chicken reached a record in 2008 at 488 million birds. If the pace of increase continues, there is a big chance of over-production.

Behind the latest increase was the record exports of chicken in 2007, combined with rising domestic consumption, which stimulated heavy investment by the industry. For 2009, production is predicted to be 15% higher than 2008, and 25% more than in 2007, taking average monthly production to 1.1 million tonnes in 2009. It was 920,000 tonnes in 2008.

The global situation coincides with the expected seasonal fall in chicken consumption in Brazil during the months of December, January and February - the time of the long school holidays. Chicken is widely used in school lunch menus.

Furthermore, Mr Martins explained, global instability has reduced the credit available to purchase imports, and cold weather in the northern hemisphere impedes shipping.

The CIA's predicted output of 1.1 million tonnes next year would lead to a 135,000 tonnes surplus as, on average, 365,000 tonnes are exported and around 600,000 tonnes are consumed in Brazil.

Hence, Mr Martins warns, there is an urgent need for a planned reduction in output to avoid a surplus.

The state of Parana contributes the largest share of national chicken production. For the period January to September, production had approached 908 million chickens, which is 10.3% more than the same period of 2007. Output is continuing to rise, and is expected to be 12-15% higher than last year.

"We will have to adapt to this new reality in the market," said Mr Martins. " From the supply of resources and the behaviour of the market, we had expected growth in poultry consumption this year. With the global economic crisis, we will have to adjust output next year to avoid a surplus."

5m Editor