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Bird Flu Sends Chicken Prices Below Production Costs in Brazil

There are no signs of bird flu in Brazil, but its presence is being felt. Bird flu, which has already had a negative impact on chicken sales in Europe and Asia, is beginning to exert pressure in Brazil. And the pressure is not positive.

The Chicken Exporter Association (Associação Brasileira dos Produtores de Exportadores de Frango) (ABEF), reports that while exports remain strong (up 14% in January), it is feeling pressure as it negotiates contracts for future sales and especially on prices.

With bird flu shutting down markets in various countries, supply is greater than demand and buyers want lower prices, points out Ricardo Gonçalves, the ABEF executive president.

According to the Poultry Union (União Brasileira dos Avicultores (UBA), the country exports around half of its poultry production, with a 43% market share of poultry sales worldwide. For example, fully 40% of all baby chicks born in Brazil are exported.

Ariel Mendes of UBA says that the pressure on prices is bad news. It costs US$ 0.55 (1.20 real) to produce a kilo of live chicken, he says, and in São Paulo the market price has already fallen to US$ 0.46 (1 real). "We are operating in the red," he declared.

Exports Up

Exports of Brazilian chicken in January reached 213,700 tons, up 14%, compared to January 2005. Even better news was that the revenue reached almost US$ 281 million, up 41.5%.

There was a large disparity in sales of whole chicken (which was down 6% in volume, and up only 19% in revenue) and chicken cuts (up 26.5% in volume and up 53% in revenue).

However, compared to December, there was actually a drop of 22% in revenue from chicken exports and 13% in volume.

Agência Brasil

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