However, exports in 2012 are promising well, and January figures show an increase of 8.5 per cent in volume and 4.1 per cent in value compared to January 2011.

New markets are opening for Brazilian pork exports. Towards the end of 2011, the USA finally approved imports from the state of Santa Catarina, one of the biggest pig producing states in Brazil and the only state free of foot and mouth disease without vaccination. Although it is not expected that exports to the USA will be high, this approval is seen as a quality stamp for Brazilian pork and should help to open other markets.

China is another market which opened its doors to Brazilian pork in late 2011. The first shipments took place at the end of the year, and in 2012, although still timid, they are increasing. China is seen as a huge potential market for Brazil. Although only three plants have been certified so far by the Chinese authorities, it is expected that more plants will be approved as the trading relationship grows.

2011 saw a shift in the major destinations of exports. For many years Russia was the main destination and even recently accounted for more than 50 per cent of exports. But with a ban on imports from Brazil imposed during 2011, volumes fell and Russia took only 24.5 per cent of total exports in 2011. Hong Kong moved into first position, with 25.12 per cent, with Ukraine in third position with 11.95 per cent, followed by Argentina with 8.14 per cent. It will be interesting to monitor where China positions itself in the destination table of exports for 2012. Almost certainly, it will move up the ranks over coming years.

Of the four biggest importers of pork in the world, Brazil exports only to one of them, Russia. It still has to open the markets of Japan, South Korea and Mexico. The difficulty in opening markets is largely due to two factors: sanitation and politics. Animal sanitation for export products is the responsibility of the federal government, which has not shown itself to be particularly competent at imposing health controls over recent decades. However, there has been a slow advance which has contributed to the opening of some markets.

Once health requirements have been satisfied, then come political negotiations, and in this area Brazil has shown little ability at overcoming the protectionist measures which so many countries impose. The country has only recently come to the world commercial stage and has not yet acquired the bargaining skills which seem to be so necessary to open new markets.

However, 2011 was not a good year for independent pork producers in any region in Brazil. ABIPECS, the Brazilian association of pork exporting industries, reports that the number of pigs slaughtered in 2011 rose only between one per cent and 1.5 per cent compared to 2010, but the pigs were heavier, adding a further three per cent to the meat supply. So, in total, meat supply rose by four per cent or more.

At the same time, according to ABIPECS, both domestic and foreign demand fell, putting pressure on pig prices which, during most, if not all, of 2011 were below production costs in most regions. This situation was aggravated by high corn prices throughout the year, increasing producers’ losses.

Poor financial results have been the norm for independent producers almost constantly since the financial crash in October 2008 and an increasing number of producers are throwing in the towel and leaving the business, often with high accumulated debts from their attempts to survive the crisis. This is particularly true in the southern region of Brazil, where the percentage of hogs controlled by the large integrators has grown constantly over recent years.

At the same time, the number of smaller independent plants has fallen, creating a situation where the producer no longer has enough buyers for his hogs to create a market. Once the number of major buyers is down to one, as was the situation in the state of Rio Grande do Sul in recent years, it becomes impossible to get a fair market price. And now, that single buyer has sufficient own production so there are no major buyers left!

The interstate costs of shipping pigs are high, bolstered by state taxes which cannot be recovered. So there has to be a very high price differential between states to make it feasible to ship to another state, and that situation has not existed for a long time.

So far there seem to be few indications that a buoyant market for Brazilian hogs in 2012 will bring prosperity to independent producers. The pig crisis of 2002/2003 illustrated the apparent paradox of an industry which was booming while producers were experiencing one of the worst crises they had ever seen. But the markets for live hogs and for pork products are two different markets. If the live hog market is over supplied while the pork product market is booming, the producer does not reap any benefit.

It remains to be seen what 2012 will bring for producers. The next chapter will be coming soon!