Rabobank: Brazil will advance in the meat market in the next decade

In 2023, the world consumption of chicken meat and pork will be 41 million tonnes higher than the current one. In addition, the expansion of demand for beef will be 9 million tons. The data is from OECD (Organization for economic cooperation and development) and the FAO (United Nations food and Agriculture).
Perched on top of those numbers, two experts from the sectors of meat and grain of the Rabobank, banco specialising in agribusiness, they evaluated who might fill this demand. And, of course, with profitability for producers.
Adolfo sources, analyst who operates in the area of animal protein research of the Bank, and Renato Rasmussen, market analyst of grains and oilseeds, believe that Brazil is one of the candidates. The country has two advantages. Acquired a good health status and, due to the geographical position, is off course of diseases, especially those brought by wild birds.
Another advantage is that the country will be one of the few that can increase production with cost reduction, due to expansion of the grain offering and searching for new production regions. In addition, the country also has the internal market to help in the expansion of production. Despite the current difficulties, the situation improves in the next few years.
This growth of demand favors not only producers of proteins, but the entire chain of agribusiness. Rabobank analysts believe that will require investments of $ 6.4 billion over the next decade to a relocation of production of meat for the regions where there is a greater supply of grain.
Cost reduction
This proximity of meat production with the grain allows a reduction of costs. Exemplifies sources with numbers. The additional cost of logistics to bring a pound of flesh from the Midwest to the South and Southeast regions is, on average, of $ 0.15.
But that meat production in the new border regions of grain decreases the costs of chicken for $ 0.30 per pound, while the pork is $ 0.40 lower. "There is great potential for the production of proteins in these areas", says sources.
The grain sector will also be benefited by the advancement of meat production in the country, points out Rasmussen. He believes that the greatest chicken production will generate an extra demand of 5.5 million tonnes of maize and 2.1 million tons of soybean meal per year.
High in the production of pork will require additional demand of 2.5 million tonnes of maize and 700 thousand of soybean meal. Rabobank analysts predict that chicken production jump of 12.3 million tonnes in 2013, to 16.2 million in 2023.
This growth of 3.9 million metric tons means a 2.8% annual evolution. Exports would rise 40% over the same period, reaching 4.9 million tons per year. Already the domestic consumption to rise to 11.3 million tonnes per year, would register an average annual evolution of 2.5%.
The pork market will also improve, with average annual growth of 2.4% for the consumption and 3.3% for exports. In the assessment of analysts at Rabobank, domestic production of pork should reach 4.4 million tonnes in the year 2023, 1 million more than the current.
New Frontiers
Much of the new production of meat will come from new agricultural frontiers, mainly in the Midwest. The advancement of production to new areas will not be easy or cheap. The production system between South and Midwest is different, not only in the size of the property as the culture of the producer.
The system integration and work connected to South cooperatives is not compatible with large-scale production of new frontiers. Logistics and manpower are two problems to be faced by the production of proteins in these new areas.
Rasmussen stands out, however, that the roadworks as the BR-163 and the greater flow of grain from the North can reduce shipping costs by as much as 40%. For sources, one of the secrets of the Brazilian production is that the country learned to assess the needs of the market. The producer adds value by producing special cuts and products specific to the various regions of the world, according to the Bank's analyst.