War in Ukraine likely to cause meat prices to rise in Brazil, consultants say

The price of meat in Brazil is expected to rise over the next few months, as a consequence of the global economic pressure caused by the war in Ukraine.

The projection is made by specialists from the Institute of Applied Economic Research (Ipea), linked to the Ministry of Economy, and from the consultancy of the agricultural sector Safra & Mercado.

Protein is impacted by instability in agricultural commodity prices, which have risen since the start of the confrontation in Eastern Europe, which began almost two weeks ago.

Main inputs used in animal feed, corn and wheat, rose 5% and 3% in prices, respectively, on the domestic market.

Soybean, despite the cost remaining stable during the war, the commodity remains highly valued since the end of last year and with record prices in Brazil.

“We are going to have a direct impact on the production cost of these commodities in Brazil, which are the basis for the production of animal feed. And in the short term, there is no production within the country to replace imported inputs. Thus, for the producers, there are two alternatives: either they keep the same amount of fertilizers, which increases the cost and can reduce the profit margin, or the producers reduce the fertilizers to obtain more competitive prices, but, in this case, with probable productivity losses”, said Ana Cecília Kreter, PhD in Economics and associate researcher at IPEA.

Despite the expectation that the rise in price will affect all meats, experts point to a sharper increase in the cost of pork protein and per kilo of chicken.

According to Fernando Iglesias, an analyst at Safras & Mercado, feeding both animals represents the most expensive portion for the sector.

Data from the Brazilian Agricultural Research Corporation (Embrapa) indicate that the nutrition of chickens and swine concentrates around 80% of the total cost of the entrepreneur. In relation to cattle, food amounts to approximately 25%.

“Most of the nutrition for chicken and swine is carbohydrate, in this case corn. For the feeding of these animals, corn is the most used shot. And soon this grain was greatly affected by the whole question of the war in Europe. Wheat is the substitute for corn, but the input also registers considerable increases.

Chicken and pork feed is 70% corn. The other 30% is soybean meal, which also shows an increase. When we talk about ox, we manage to have a more diversified diet”, explained Iglesias.

At the request of CNN, the specialist from Safras & Mercado also made a projection for the segment in Brazil.

For him, the impact on the cost of animal protein in the country will directly depend on the duration of Russian attacks on Ukraine.

The sector will urgently need productive adjustments to curb the rise of these products as much as possible. Grains are rising in price a lot because of the war.

And the cost in Brazil tends to grow even more due to another reason: with the lower world supply, which was caused by the conflict, exports in the country became a reality.

These productive adjustments are still on the market’s radar so that there is a correction in the route, especially in the cost of swine and chicken”, concluded Fernando Iglesias.