The higher prices of competitive meats in the internal market, a firm domestic demand, the gradual recovery of international prices, the growth of overseas sales (14.8 per cent) and a small decrease (-1.0 per cent) in internal availability were the main items that sustained the pork market in 2007. However, the performance of the economy left much to be desired. The supply of pigs was greater than the demand, stocks were still high in industries during the first semester and there was a strong pressure on costs in the second, due to the increase in grain prices, which did not allow for a better performance in the whole chain, as the increase in costs cannot be totally passed on to the consumers. Under these circumstances, it is considered that part of the productivity gains achieved during the period, in the field and in the industry, were passed on to the society.

The international market operated, for a good part of the year, under the influence of the 2005 foot-and-mouth (FMD) outbreaks. The states that were involved had difficulties in increasing their export volumes and negotiations to sell into new markets were delayed. FMD is the only factor that impedes the sector from having more than 62 per cent of the world's pork market. Also, the conjuncture was strongly influenced, by the fact that Santa Catarina, the largest producing state in the country, was not selling to the Russian market.

The recognition of Santa Catarina as being an FMD-free area, without vaccination, alters this unfavorable situation because it allows for the possibility of the definitive elimination of FMD as a barrier to access, facilitating, in the medium term, the opening up of markets that pay more for the product. However, the difficulty that the country has to maintain a credible official certification, can continue hindering the access to these markets, what is important is the effort carried out over recent years, in offering health guarantees, by public institutions or by the companies.

Brazilian Pork production (thousands of tons)

Production

With this disturbing short-term picture, production had a more moderate growth, interrupting the rigorous expansion from the previous two years. Because of the relative ease in placing product nearer to the consumers, production from the integrations and the cooperatives maintained their growth levels, contributing so that industrial production increased by 4.45 per cent (2.64 million tons). This result was not bigger, because the spot market, which represents about 20 per cent of industrial production, had difficulties accessing the market, which shrank between 5.0 and 7.0 per cent. Likewise, the subsistence production levels fell, due to the lack of competitiveness. This performance was also influenced, in the final quarter of the year, by a lower slaughter weight. Therefore, the total production for 2007, which was estimated to reach around 3.1 million tons, finished the year with 3.0 million tons, an increase of only 1.85 per cent.

Herd

Sows housed in Brazil (thousands of heads)

The increase in production happened mainly because improved productivity rather than an expansion in the breeding stock population, because new farms were built to replace less productive ones and the replacement of adult animals for those having a greater genetic potential was intensified. However, new projects continued to be implanted in the agricultural area. With this, the population of slaughtered animals per sow housed increased over the last three years by 12.5 per cent, with the number of finished pigs per sows per year going from 19.2 to 21.6. The herd of industrial sows, estimated to be 1.48 million head remained stable in 2007. Representing 63 per cent of the total, generated 90 per cent of the total production. While the subsistence herd of 887,000 (27 per cent of productive sows) generated only 10 per cent of total production. This indicates that a strong modernization trend is underway in the sector - including production on ranches, biosecurity, handling, nutrition and health - the result of which has been a constant increase in productivity.

Slaughter

Commercial pig numbers over the past three years has increased by 19.8 per cent from 26.4 million head at the end of 2004 to 31.8 million head in 2007. Also in this period, the average weights of slaughtered animals increased by about 5.0 per cent. On the other hand, subsistence production (pork that is consumed on the rural property, occasionally selling excesses) continued its downward path.

In the same period, the slaughtering of the ABIPECS member companies increased by 22.6 per cent, consolidating their market participation, while the slaughters of other companies increase by only 1.9 per cent. The slaughtering of swine under Federal Inspection - SIF, reached 24.3 million head in 2007, showing an increase of 3.7 per cent in relation to 2006. In the same year, the associated companies, that perform 88.0 per cent of the SIF slaughters and 67.0 per cent of industrial production in the country - because of their good position in the market - slaughtered 21.4 million head, a growth of 7.7 per cent. Those that are not SIF members, due to difficulties in accessing the market, decreased by almost 20.0 per cent. For the same reason, it was estimated that the slaughtering with state and municipal certification decreased by 2.8 per cent. Of the total industrial production, 76.4 per cent were slaughtered under Federal Inspection and 23.6 per cent under other forms of certification.

Brazilian Pork Production (thousands of head)

Slaughter of swine by type of certification and self-consummation in Brazil (Millions of Head)

May 2008