Youngmeat chicken
confinementwas
forced to redefine
its course in 2016, and
the blame goes to the
higher production
cost anddrop in
consumption
Terrain
evaluation
After periods marked by stability in the
production scenarios and meat chicken mar-
ket, during which the sector was making bold
strides, 2016 threw cold water on the busi-
nesses. The national unstable economic activi-
ty, whose backdrop was political turbulence, in
the second half of the year cast direct reverbera-
tions on the activity.
Substantial increases to the production
costs, particularly feed costs, basis of the food
supply chain, on account of the high prices of
corn and soybean, as well as the drop in con-
sumption, in light of the fading purchasing
power of the population, had reflections on
young meat chicken confinements, first ther-
mometer pointing to what is in store for the fu-
ture, in a matter of some weeks, with regard to
chicken slaughter. The president of the Brazil-
ianAssociationofMeatChickenBreeders(Apin-
co),JoséFlávioNevesMohallem, saysthat inthe
caseoffeed,thehighercostenduredbythesup-
ply chain ranges at about 20%. “This is what the
producers were not able to pass on to the final
consumers”, he emphasizes. According to him,
as the domesticmarket was signaling recession,
consuming less, if the sector ended up passing
on to the finished product the higher produc-
tion cost stemming from the price of feed, this
wouldmean the inhibition of themarket.
This context of high foodprices of the flocks
and the drop in domestic consumption was
made even worse by the oscillations of the ex-
change rate. With the dollar highly appreciat-
ed, revenue from abroad, in light of the good
numbers related to chicken meat exports over
the first half of 2016, ended up by providing
the companies with the capacity to counterbal-
ance the losses to a certain extent. However, as
the dollar began to recede in value, businesses
with the foreign buyers were affected, especial-
ly in June and July, at the turn of the first to the
secondhalf of the year, when shipments abroad
began to drop.
Mohallem mentions that in a comparison
between the first half of 2016 and 2015, in the
businesses of the sector, there was a 3-percent
increase in production, attesting that the sup-
ply chainwasworkingwithpositive and reliable
projections. However, in September 2016, lat-
est parameter availableuntil theendofOctober,
the two periods, 2015 and 2016, had already
reached a tie. “In the last months in 2016 the
trend points to a drop, with the year coming to
a close, in our projection, with a 5-percent de-
crease”, he notes.
DISARTICULATION
The president of the Apinco, José Flávio
Neves Mohallem, maintains that the dwin-
dling scenario is macro in all Brazilian re-
gions. In the case of chicken confinement,
should there be a reversal in market expec-
tation, the reaction of the sector should
never be instantaneous. “When we have
a number of broodstock chickens in pro-
duction, there is need to keep them for 18
months, and a change in the plans can only
occur after this period”, he explains. Even
at slaughter, when a company’s structure
is in operation, changes in the course im-
ply in immediate costs, particularly when
it comes to readjusting the use of the in-
stalled capacity, whether in equipment or
in labor.
The taskof the segment as awhole, from
the area of the production of meat chickens
to slaughter, it is fine adjustment to demand,
looking attentively to 2017. “The expectation
is still positive”, Mohallem confirms. He re-
calls that the political scenario is no longer
thatturbulent,andthattheforeignclientsare
confident and loyal to Brazil. “Let us now see
how the exchange rate will act over the prof-
itsandmarginsofthesector“,hecomments.
Sílvio Ávila
41
