Linked exchange rate
Amid the present scenario of the Country’s economic crisis, the good performance registered by chicken meat and pork exports
has struck a balance between internal supply and smaller consumption rates. However, although shipments are on the rise, the sector
is facing high production costs, resulting into lower margins for the exporters. A depreciation of the exchange rate would imply in the
need adjust the prices in dollar, a fact that would affect the competitiveness of the Country in the international marketplace.
According to the executive president at the Brazilian Association of Animal Protein (ABPA), Francisco Turra, there is great concern
about the effects of a possible change in the value of the dollar. “It is of paramount importance to keep the exchange rate close to R$
3.50 to the dollar. We have locations where a sack of corn fetches up to R$ 60, practically twice as much as the price expected for this
time of year”, he comments. The higher prices of corn, a crop that represents more than 50% of all feed ingredients, along with factors
like energy costs, fuel and labor, exert pressure on the sector’s margins.
The official maintains that costs have already been passed onto the consumers and that an exchange rate above R$ 3.50 helps bal-
ance the accounts. A sharp depreciation of the dollar, however, would further aggravate the need for an adjustment of the internation-
al prices in force. This increase does not take occur overnight, and would make things worse for several companies already operating
in the red. The need for a sharper price adjustment (in addition to the adjustment now underway) in the foreign market will cause one
more problem: the loss of competitiveness against the international competitors.
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