Egg Industry News and Commentary

  —  Apr 12

 
Closure of Processing Plants in Brazil Impacting Poultry Producers

    

An article by Paulo Trevisani in the Wednesday March 29th edition of the Wall Street Journal illustrated the consequential effects of plant closures in Brazil. 

The article noted that suspension of operations in a plant processing 25,000 turkeys and 120,000 broilers per day has prevented contractors and integrators from harvesting flocks. 

  

This has resulted in increasing biomass in houses or alternatively the need to transport birds for distances up to 300 miles even if flocks can be accommodated. In many cases poult and chick deliveries are being cancelled. 

Urgent representations have been made to the Ministry of Agriculture to resume processing which has affected many regions with a high density of poultry. It is noted that the scandals alleging improper inspection and certification involve beef but it is apparent that poultry plants have been embroiled in the situation.  The commercial and social impact of plant closures in poultry-raising areas of Brazil can be likened to the disruption following emergence of HPAI in the U.S. upper Midwest in 2015.

On March 30th, JBS announced furloughs at ten beef plants among the 36 it operates following disruption in the chain of distribution. Embargos have been placed on Brazilian meat products by many importing nations.

The financial implications of the scandal were evaluated by Fitch Ratings on March 30th.  The Agency concluded that providing major importers resume receiving shipments, the worst-case scenario for additional losses across the agribusiness chain might reach $5 billion.  Initial indications including rescinding of embargos by China, Chile and Hong Kong, confirm the moderately optimistic projection made by Fitch Ratings.  Brazil cannot afford a major disruption in an important sector, given the national unemployment figure of 12 percent during a recession.