EC decision to ban Brazilian poultry has a major effect

Evidence is growing that the decision by the European Commission to ban Brazilian poultry meat is having a significant effect on the sector.

Brazil’s third largest poultry processor Aurora has this week halted production at one of its eight plants for 30 days, closing a unit that processes 12% of total slaughter capacity in the country.

The affected plant in Santa Catarina state employs 1,283 workers – and it is believed that staff are being sent on paid leave to adjust capacity to demand.

It is the second time in just over a month that the privately-owned firm has halted production in Brazil, the world’s largest chicken exporter, citing market conditions related to trade bans and higher feed costs.

While the company said in a statement it was not anticipating any job losses, adding the two plants facing temporary suspension would not be closed at the same time, it is a blow to Brazil’s poultry economy.

The European Commission announced last month a ban on meat imports from 20 plants linked to concerns over imports of poultry meat containing Salmonella.

Reuters reported that the poultry sector is facing further problems due to the domestic corn market going through a period of “speculative” retention” that artificially inflates feed prices, according to Aurora.

Data from the University of Sao Paulo’s Esalq agricultural school and commodity exchange operator BM+F Bovespa revealed that corn prices have risen by 46.5% in 1 year.

“This aggravates the sector’s plight and obliges food processors to buy corn abroad in order to feed almost 520 million birds in Brazil,” said Aurora.