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PED virus could bring Brazil smiles or sadness

What do Haitian immigrants and Porcine Epidemic Diarrhoea (PED) virus have in 
common? They are both new developments and both could prove to be a friend or a foe to the Brazilian pork industry.

By Patrick Knight

When estimates for 2014 were made, Brazil anticipated exporting about 15% more pork than the 510,000 tonnes sold abroad in 2013. This equalled about an extra 75,000 tonnes. With domestic demand for pork strongly following the sharp rise in the price of beef, however, it will be difficult to export much more than what was already planned. Raising production will take time.

Export prices of Brazilian pork have weakened in recent months, but this was compensated for by the fact that the Brazilian currency, the real, has fallen by about 18% against the US dollar and other currencies in the past 12 months. This meant farmers were not prejudiced by the fall in prices.

It may not be too late for a change though. Although slightly less pork was exported in the first quarter of 2014 as in the same period of 2013, Brazilian sales to Russia, still the leading customer and destination of 26% of all exports last year, began to increase in March. More than 9,000 tonnes went to Russia in March 2014, 33% of all exports. For a large part, this is due to the fact that Russia has ceased buying pork from the European Union (EU) members, in the wake of the discovery of African Swine Fever in Lithuania and Poland. This means that the country will need more from other sources.

Equally pleasing was the fact that Ukraine bought 8,000 tonnes in March 2014 as well. This country did not buy Brazilian pork during much of 2013 because of a dispute. In addition, officals say that sales are up sharply so far in April, notably to Russia and Ukraine.

PED virus
Prospects are even better when the ongoing outbreak of Porcine Epidemic Diarrhoea (PED) virus in the United States is taken into account. The virus is expected to have a major impact on the world pork trade figures, since the US is expected to export up to 200,000 tonnes less this year than last year. This may lead to demand from several markets which until now bought little or no pork from Brazil.

However much PED may seem to be a friend, at the same time, Brazil is anxious to prevent PED to occur within its own borders. The virus, after all, is not only present in the United States and Mexico, but also in two countries with borders with Brazil, being Peru and Colombia.

At the first glance these borders appear relatively harmless, as these are located close to the Amazon region, where there is no commercial production of pork, while access between the countries is mainly by water.

Following the opening of a new 'Trans-Andean' highway, two years ago, however, a road now runs from Peru to Brazil.

Another threat may be formed by thousands of immigrants from Haiti, as well as from some African countries, which have been entering Brazil from Peru each month recently. They hope to find work in the south, and thus may pose a new source of risk.

Brazil imports some live breeding stock, as well as serum and semen, most from the United States. Until now, quarantine arrangements have been made by the companies concerned, with the authorities in the various states taking responsibity for ensuring regulations are adhered to.

Brazil, warned that PED virus might enter the country, takes biosecurity seriously.

Following the recent completion of a new quarantine facility at a port in the south of São Paulo state, and following the scare caused by the spread of PED, all imports will have to come in this way from now on. They will remain a month in quarantine at the new facilities, and the central government in Brasilia will be responsible for authorising the freeing of goods after that.

In the past three years, formal export agreements have been made with Japan, the world's leading pork importer.
The Brazilian industry had hoped to be able to ship up to 180,000 tonnes to Japan, 10% of Japan's total import requirements. This, however, has not materialised yet as only 70 tonnes of Brazilian pork went to Japan in 2013, compared to the 300 tonnes sold there in 2012.

In addition, formal export agreements have also been made with China, thus fast becoming an important pork importing country as well. For long, no pork was directly allowed into China until recently. All pork for southern China was shipped into Hong Kong and subsequently found its way. Disappointingly, in 2013, China bought only 160 tonnes of pork from Brazil last year, compared to over 300 tonnes in 2012.

Both Japan and China normally import large quantities of pork from the United States, so it is hoped that more Brazilian pork will be exported to Japan and China as 2014 progresses.

It is worth noting that Brazil has greatly diversified its exports of pork in the past few years. While 20 years ago, 90% of exports went to either Argentina and Uruguay, and 75% of what was sold abroad ten years ago went to Russia, the list of leading importing countries now includes Hong Kong, Argentina, Angola and several countries in Eastern Europe, apart from Russia and the Ukraine. No country now imports more than a third of the total shipped.

Singapore, Thailand and the Phillipines now buy some Brazilian pork, while Argentina remains one of the ten leading markets. With Argentine economy deteriorating, however, and with tough new import controls introduced in an attempt improve the trade balance, exports to Argentina are expected to slow from now on.

Pork production
Two thirds of the pork produced in Brazil are produced in Brazil's three southern states, Rio Grande do Sul, Paraná and Santa Caterina. For exports, their share is even bigger than 66%. Although both Rio Grande and Paraná are important producers of both maize and soya, which form more than 95% of the feed given to pigs, farmers growing grains in these coastal states want to export as much as possible. They get better prices for their grains than farmers in states situated centre west, due to high transportation costs to ports from there.

To meet demand for feed in the south. large quantities of both soya meal and maize are now trucked south from Mato Grosso and Goias up 1,500 km along congested, and poorly maintained roads, which greatly pushes up the cost of feed for farmers in the south. This is why most of the latest generation of pork processing plants, usually handling poultry as well, are being built in the centre west, to take advantage of these low feed costs there.

Cost of labour, however, has risen extremely fast in Brazil over the past few years, while the population in the centre west is low, so expensive labour largely cancel out much of the advantages of low cost feed. It has become increasingly difficult and costly to find labour prepared to work in meat processing factories.

It may not come as a surprise that the solution to the problem of finding cheap labour are the same new immigrants from Haiti.

[Source: Pig Progress Vol 30 nr 4, 2014]

Patrick Knight


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