BRAZIL’s POULTRY INDUSTRY JUNE î 2016 In this second edition of Monitor – a newsletter that periodically publishes Repórter Brasil’s studies on economy sectors and production chains, we look into the billion dollar poultry industry, which grinds the rights of farmers and workers throughout the country MONITOR #2 ISBN 978-85-61252-24-3 _____ STAFF Editor Marcel Gomes “Brazil’s poultry industry” Research and writing André Campos Photos André Campos / Repórter Brasil (p.11) MPT/RS (foto de capa, p.15 e p.16) Arquivo Repórter Brasil (p.5, p.9 e p.11) Spread sheets source United States Department of Agriculture (USDA) / Avisite (p.3, p.4, p.5) National Social Security Institute (INSS) (p.13) Labor Unions (p.14) Ministry of Labor and Social Security (MTPS) and Labor Prosecutor’s Office (MPT) (p.15) Layout Gustavo Monteiro This publication was supported by funds from the Sigrid Rausing Trust and the European Union. Its content is licensed under Creative Commons 2.0 – reproduction is allowed as long as the source is cited. ______________________________________________________________________________ REPÓRTER Brasil – OrgaNIZATION FOR COMMUNICATION AND SOCIAL PRojectS General Coordinator Leonardo Sakamoto Executive Secretary Marcel Gomes Financial Coordinator Fabiana Garcia Assistant Coordinator Marília Ramos Address: 169 Bruxelas St., São Paulo - SP - Brazil Postal Code 01259-020 Contact us [email protected] www.facebook.com/ONGReporterBrasil @reporterb ((55 11) 2506-6570 #2 R (55 11) 2506-6562 TO I (55 11) 2506-6576 (55 11) 2506-6574 MON INDUSTRY poulTRY BRAZIL’s • 2 • AN OVERVIEW OF THE INDUSTRY SUMMARY 1. About four out of every eleven kilograms of poultry exported in the world come from Brazil 2. The economic crisis has helped the industry by encouraging the replacement of more expensive red meat with white meat in Brazilians’ diet 3. The poultry production chain creates 3.5 million direct and indirect jobs 4. Two Brazilian multinational companies – JBS and BRF – account for almost 50% of poultry slaughtered in the coun- try and 70% of poultry exports 5. BRF owns Plusfood, which has manufacturing plants in England and the Netherlands; JBS owns UK-based Moy Park and US-based Pilgrim’s n 2015, Brazil overtook China as WORLD'S LARGEST PRODUCERS (thousands of tons) the world’s second largest poultry Iproducer, behind only the United YEAR VARIANCE States. Figures provided by the Brazil- 2014 2015 2016 14/15 (%) 15/16 (%) ian Institute of Geography and Statis- EUA 17,299 17,966 18,365 3.86 2.22 tics (Instituto Brasileiro de Geografia e Brazil 12,692 13,080 13,480 3.06 3.06 Estatística, IBGE) indicate that Brazil- China 13,000 13,025 13,100 0.19 0.58 ian production reached 13.14 million tons last year – 5.4% over 2014 and the EU 10,330 10,600 10,845 2.61 2.31 highest level ever recorded in history. India 3,725 3,900 4,200 4.70 7.69 Nothing less than 5.8 billion hens were Russia 3,260 3,550 3,650 8.90 2.82 slaughtered in the country in 2015. Mexico 3,025 3,100 3,160 2.48 1.94 Argentina 2,050 2,060 2,100 0.49 1.94 The figures from 2015 reflect Turkey 1,956 1,980 1,990 1.23 0.51 the increasing economic importance Thailand 1,570 1,650 1,650 5.10 0.00 of that industry. In the last 15 years, Others 17,642 17,033 16,796 -3.45 -1.39 it has doubled in size, expanded ex- Total 86,549 87,944 89,336 1.61% 1.58% ports fourfold, and increased its share in Brazil’s trade balance. According to statistics from the federal government, mestic Product (GDP) to drop by 3.8% 2016, but at a slow pace”. Despite the fresh poultry came fourth among the in 2015 – a scenario that should not importance of exports to the industry, country’s exports Last year, after soy- change in 2016. As Brazilian economy the domestic market absorbs most of bean, iron ore, and oil. shrinks, the United States Department the output – about 68%, according to of Agriculture (USDA), the leading the Brazilian Association of Animal Despite producing fewer chick- global agency for agricultural statis- Protein (Associação Brasileira de Pro- ens than the US, Brazil has been the first tics, foresees a 3% increase in locally teína Animal, ABPA). country in the international trade of the produced poultry for this year – an- product for some time now. About four other production record for Brazil’s In addition, devaluation of out of every eleven kilograms exported poultry industry. Brazilian currency (real, R$) against in the world come from the country. the US dollar increased the competi- Brazilian poultry is now found in 150 To some extent, the crisis has tiveness of Brazilian poultry abroad, countries from all continents. been an ally of the industry by en- helping to offset the fall in the price of couraging the replacement of more the product in global markets. In Janu- These figures show an indus- expensive red meat with white meat ary 2016, for instance, data from Bra- try that goes against the country’s in Brazilians’ diet. According to the zil’s Secretariat of Foreign Trade (Se- crisis and grows considerably amid a USDA report published in March, “this cretaria de Comércio Exterior, Secex) recession that caused the Gross Do- situation is expected to continue in show that Brazilian poultry exports • 3 • yielded US$ 451.1 million – 8.8% less WORLD'S LARGEST EXPORTERS (thousands of tons) than 2015. However, when convert- ed into real, that figure increased by YEAR VARIANCE 40.4% during that period. Similarly, 2014 2015 2016 14/15 (%) 15/16 (%) the volume exported also increased by Brazil 3,558 3,740 3,880 5.12 3.74 14.1% compared to January last year. USA 3,312 2,990 3,221 -9.72 7.73 EU 1,133 1,150 1,190 1.50 3.48 NATIONAL CHAMPIONS Thailand 546 580 570 6.23 -1.72 China 430 395 375 -8.14 -5.06 ccording to ABPA, the poultry Turkey 379 340 360 -10.29 5.88 production chain accounts for Argentina 278 200 225 -28.06 12.50 Afive million direct and indirect Ukraine 167 180 190 7.78 5.56 jobs – nothing less than 5% of Bra- Canada 137 130 140 -5.11 7.69 zil’s employed population. The orga- Belarus 113 120 100 6.19 -16.67 nization reports that slaughterhouses Others 417 406 437 -2.64 7.64 alone employ 400,000 workers. The Total 10,470 10,231 10,688 -2.28% 4.47% data take into account not only poul- try but also pork – which absorbs a smaller portion. WORLD'S LARGEST CONSUMERS (thousands of tons) Brazil’s Southern region con- YEAR VARIANCE centrates most of its poultry slaugh- 2014 2015 2016 14/15 (%) 15/16 (%) ter – 59.6% in 2015 according to IBGE USA 14,03 14,99 15,23 6.85 1.58 – as well as poultry farms – 63.5% in China 12,83 12,88 13,00 0.39 0.82 2014 according to ABPA. There are ap- EU 9,90 10,16 10,37 2.56 2.12 proximately 180,000 farms dedicated Brazil 9,13 9,34 9,60 2.27 2.78 to the activity. India 3,71 3,89 4,19 4.74 7.73 Poultry raised by such large Mexico 3,73 3,85 3,92 3.08 1.79 number of small and medium Brazil- Russia 3,67 3,77 3,73 2.69 1.06 ian producers are supplied mainly Japan 2,22 2,24 2,25 0.85 0.22 to two major Brazilian multinational Argentina 1,77 1,86 1,87 4.96 0.81 companies. According to the ranking South Africa 1,57 1,63 1,66 4.01 1.83 produced by Avisite – the main web- Indonesia 1,56 1,62 1,64 3.83 0.92 site for information on poultry in Bra- Others 20,77 20,01 19,89 -3.70 -0.56 zil – together, BRF and JBS slaughtered Total 84,852 86,276 87,376 1,56% 1,27% 2.6 billion chickens in 2014, almost half the country’s total figure. When it comes to exports, concentration is nal de Desenvolvimento Econômico BRF and JBS are two major ex- even higher. Both companies account- e Social, BNDES), which acquired the amples of the “national champions” ed for about 70% of poultry shipments new company’s shares. policy that guided the actions of BNDES in 2013, according to the Brazilian – the largest investment bank in Brazil Poultry Association (União Brasileira JBS had also received equity in- – during the second Lula administra- de Avicultura, Ubabef). vestments and major loans from BNDES tion and President Dilma Rousseff’s in the past decade, and those funds were first term in office. Its core aim was The companies’ control over largely used to purchase companies in to strengthen Brazilian multinationals poultry processing and trade is the re- the poultry industry. The bank current- that could take global leadership posi- sult of an economic concentration pro- ly holds 24% of the company’s shares. tions in their respective segments. cess started in the late 2000s, for which JBS’s turnover jumped from R$ 3.5 bil- participation of the Brazilian State was lion (US$ 1 billion) in 2004 – when it decisive. In 2009, Sadia – then the larg- still focused only on beef – to R$ 120 INTERNATIONALIZATION est poultry processor in Brazil – faced billion (US$ 34 billion) in 2014, when serious economic difficulties when it became the largest private company he Middle East and Asia are the it announced its merger with its main in Brazil in terms of sales.