WASHINGTON, March 16, 2016 - Brazil’s chicken exports are booming and much of that success is being built on U.S. losses.
When China announced a ban on U.S. poultry about a year ago – a response to avian influenza outbreaks in a few states – Brazilian producers were quick to scoop up the business, according to U.S. industry and government officials.
Brazilian exports, buoyed by the country’s weakening currency, have also been taking much of the Russian market after President Vladimir Putin banned U.S. and European suppliers in August 2014.
China bought about $153 million worth of broilers from the U.S. in 2014, but that dropped to virtually zero last year after the ban was put in place. Meanwhile, the effects of the Russian ban were an even bigger blow to U.S. chicken farmers and exporters. The U.S. was selling about $300 million worth of chicken annually to Russia when the ban was enacted in retaliation for U.S. sanctions.
Brazilian exports, meanwhile, continue to climb. Brazil shipped 307,042 tons of chicken to China last year. That’s a 26 percent increase from 2014, and sales are going to be even higher this year, according to USDA’s Foreign Agricultural Service (FSA).
“Broiler exports exceeded expectations in 2015 and are estimated to continue to grow in 2016 by nearly 8 percent over last year’s record,” FSA officials said in a recent report. “The growth in exports will continue to be driven by the devaluation of the Brazilian currency by nearly 50 percent in the past 12 months combined with the continued impact of the avian influenza in several producing countries that has favored the Brazilian product beginning in the second half of 2015.”
As the U.S. continues to be shut out of China, Brazil is working with the country to get more and more of its production and export facilities cleared for trade in an effort to increase shipments, the report said. So far, 47 facilities have been approved by China.
Agriculture Secretary Tom Vilsack has reached out to the Chinese, asking them not to put blanket bans on all U.S. chicken because of regional avian flu outbreaks, but the efforts haven’t paid off yet, said a USDA spokeswoman.
Meanwhile, Brazil continues to fill the chicken demand of Russia too.
“Russia banned imports from the United States and the EU. That leaves (Russia) with only about two or three other possible suppliers,” a USDA economist told Agri-Pulse. “Obviously Brazil is by far the largest.”
The Russian ban on U.S. poultry and other agricultural commodities is set to expire in August, but if Putin decides to extend it, it would not be the first time. The ban was initially set in August 2014, as a one-year punishment for U.S. sanctions after Russia’s military involvement in
Ukraine. But in June last year, Russia announced it would be in place for another year, until August 2016.
Even if Russia does allow the ban to drop, the country’s import demand for chicken is on the decline thanks to a hurting economy, weak ruble and a national effort to boost domestic production and decrease reliance on foreign suppliers.
USDA officials in Moscow are predicting that Russia will import just 130,000 tons of broiler meat this year from all sources, a 50 percent drop from 2015.
But Brazil is still making money off the country’s remaining demand and the U.S. is not. Since August 2014, Brazil has supplanted the U.S. as the largest chicken exporter to Russia. Brazil shipped about 118,000 tons of broiler meat to Russia in 2014 and about 90,000 tons last year.
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