Agriculture Minister Mission to IndonesiaAgribusiness Seminar

The Brazilian Poultry Sector – Industry and Exports

Jakarta, Indonesia March 15, 2007Christian Lohbauer

International Relations ManagerBrazilian Chicken Producers and Exporters Association

ABEF

The Brazilian Chicken Producers and Exporters Association – ABEF, represents 20 companies responsible for 92% of Brazilian poultry exports. ABEF’s mission is to work for poultry export development, access new markets, and guarantee the highest quality of the world’s most exported chicken.

ABEF

BRAZIL AND THE WORLD

Tempered climate and good infra-structure in the Southern Region contribute for excellent conditions to produce food. Around 75% of broiler production is in the southern region.

Southern and Center-West regions have an average rain precipitation higher than the U.S. or Argentina (USDA)

Territory to be exploredThe Centre-West Region is the new agriculture frontier for

agribusiness development. It represents the largest available agriculture area to be explored in the world

Estimated Million Hectares

Amazon Forest 350 Natural Grasslands 220Legal Natural Reserve 55Annual Plantations 47Permanent Cultures 14Urban Areas, lakes, Roads, Swamps 20 Reforestation 5SUBTOTAL 711Others 50Still Available agriculture Area 90TOTAL 851

Brazilian Aviculture HistoryFrom the end of the 50’s to the 60’s the production initiated its

professional and industrial phase - the Integrative Model was brought from the USA

During the 70’s the Integrative Model was improved and adapted to Brazilian conditions – the exports started in 1973. The domestic market expanded and gave scale to production. In 1975 Brazil became one of the 10 main world exporters

With the economic crisis of the 80’s, governmental incentives were reduced and the integrated companies from the southern region became more efficient than the traditional companies in the southern region

In the 90’s, the aviculture companies started to move to the Center-West following the low cost production of Soya and Corn

In the new century Brazil duplicated its exports and expanded them to more than 140 countries in 5 continents

Pure Lines - Genetics Development

GGP – Great Grand Parents .

GP – Grand Parents …………

Parent Stocks – Breeders ……

Hatchers – Broiler …………..

Industry/Slaughters ………….

Exporters ……………………..

Brazilian Production Structure

Production ChainIntegrative Model

• Raw material• Feed Mill• Farmers• Industry• Supermarket• Consumer

Brazilian Aviculture ProductionSystems Classification

IndependentProducer is responsible for the production from Breeders to day old chickenIntegratedSystem based on coordination between producers and industry since Grand Parents. In the integration producers supply labor and facilities and industry supplies medicine, quality control and balanced foodCooperativeSystem based on coordination between Cooperatives and industry since Grand Parents. In the integration Cooperatives supply labor and facilities and industry supplies medicine, quality control and balanced food

Brazilian Poultry Exportby Region (%)

BRAZIL

NORTH

CENTRE WEST8,%

NORTHEAST0,1%

SOUTHEAST11,8%

SOUTH79,2%

Paraná 27,7%Santa Catarina 27,9%Rio Grande do Sul 22,5%São Paulo 7,1%Minas Gerais 3,8%Mato Grosso do Sul 3,5%Goiás 3,6%Mato Grosso 2,2%Distrito Federal 1,5%Bahia 0,1%Outros ~

2006

Source: ABEF

9,3358,494

7,517

5,977

4,8754,052 2,8712,6792,872

2,556

1,6991,560

8,8118,482

7,1896,6436,505

6,794

0

2

4

6

8

10

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

PoultryPorkBeef

Brazilian Meat Domestic Production(in 1,000 Metric Tons)

Poultry 130% growth Pork 86% growth 1996 to 2006Beef 26% growth

Source: ABEF, ABIPECS, ABIEC

Brazilian Poultry Meat Production2000 – 2006 (Ton)

5.9

76.5

23

9.2

97.1

51

9.3

35.5

46

0

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

6.000.000

7.000.000

8.000.000

9.000.000

10.000.000

2000 2001 2002 2003 2004 2005 2006

Source: ABEF

56,2 %

Companies/Brands

Main Brazilian Poultry Producers and Exporters Companies

Producers

1. Sadia2. Perdigão3. Seara4. Doux Frangosul5. Avipal6. DaGranja7. Aurora8. Diplomata9. Penabranca10. Copacol

Exporters

1. Sadia2. Perdigão3. Seara4. Doux Frangosul5. Avipal6. Diplomata7. Penabranca8. Aurora9. Coop. Lar10. Penasul

Brazilian Participation on Global Poultry Meat Production (1,000 Metric Tons)

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

Brazil 484 1.250 1.490 2.356 4.050 5.977 8.494 9.297 9.335

World 10.142 14.866 19.039 25.082 30.967 44.497 46.739 48.930 60.090

1975 1980 1985 1990 1995 2000 2004 2005 2006

Source: ABEF/USDA

4,6%

15,5%

Brazilian Chicken Meat Exports1975-2007 (Million Tones)

285027132846

2470

1960

1625

1266916

429299273169

40

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

1975

1980

1985

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

(e)

Source: ABEF

Brazilian Chicken Meat Exports1975-2007 (Million US$)

3.420

3

207 239 320

634

829

1.331

1.393

1.799

2.595

3.508

3.203

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

1975

1980

1985

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

(e)

Source: ABEF

Brazilian Poultry Consumption(kg/hab)

0,0

5,5

11,0

16,5

22,0

27,5

33,0

38,5

2000 2001 2002 2003 2004 2005 2006

29,9

31,8 33,8 33,3 33,935,5 35,7

Source: ABEF

Brazilian Poultry Meat Destination(2006)

Domestic Market71 %

Exports29%

Source: ABEF

Main World Poultry Producers(2006)(Million Tons)

United States 16.162

China 10.350

Brazil 9.336

European Union 7.425

Mexico 2.610

World 60.090

Source: ABEF; USDA

Main World Poultry Meat Importers2006

Other Countries39,1%

Canada1,6%

Romania1,8%

Emirates 2,1%

South Africa2,3%

Ukraine3,1%

China4,7%

Saudi Arabia5,5%

Hong Kong6,3%

Mexico6,4%

Japan10,5%

Source: IKAR

Russia16,5%

Main Brazilian Poultry Importers (2006)

Country

1. Saudi Arabia 9. Kuwait

2. Japan 10.Germany

3. Hong Kong 11. Singapore

4. South Africa 12. Yemen

5. Russia 13. Romania

6.Nederland 14. China

7. Venezuela 15. UK

8. United Arab Emirates

Brazilian Main Importers-World Regions(2006)

Others 9%

Russia 8%

Asia 29%

Africa 9%

South America 6%

Middle East 26%

European Union 13%

Source: ABEF

Brazilian Poultry Exports by Product(volume)

34%

62%

4%

Whole Chicken

Processed

Cuts

3%

37%

60%

Source: ABEF

Obs: 20052006

Brazilian Competitive Advantages(for all meats)

Production systems integrated and technologically updated

Competitive domestic market

World Class companies and brands

Ideal natural conditions to production

Enough Corn and Soya beans available to feed animals

Sanitary System recognized by the European Union and Japan

Emphasis on sanitary protection

Poultry Sector in Brazil 2006

Third most important export product of Brazilian Agribusiness

Sixth export product of the total Brazilian Exports (after Soya complex, oil, aircrafts, automobiles, sugar/ethanol)

Brazil exports poultry to more than 140 countries

The sector represents 1,5% of the country’s GDP

4 millions jobs depend on the poultry sector

Avian Flu

Since 2003

About 30 Countries Affected

145 deaths around the world

Risks to BrazilMigratory Birds

Foreign visitors

Vessels from Africa

Migratory Routes

Biosecurity Procedures

National Plan for Prevention of Avian Influenza and Control and Prevention of the Newcastle Disease - Plano Nacional de Controle e Prevenção da Doença de Newcastle e de Prevenção Influenza Aviária – PNSA (1994) e Instrução Normativa nº. 17 de 7 de abril de 2006

Import of live birds from affected countries prohibitedIntensification of ControlSystematic Pathogenic Analysis in critical Points of bird

migration

Flow Chart of Public and Private InstitutionsBrazilian Poultry

MAPA

AgricultureState Secret.

EMBRAPA and

Universities

SDA, DDA,

DIPOA

UBA Poultry Associations

Official Laboratories

ABEF Diagnostic Laboratories

Independent Producer

SINDAN / SINDIRACOES

Poultry Industry

Public Area

PNSAPNCR

Sanitary Barriers

Biosecurity Program

Specific actions are taken to prevent flock diseases throughout the production system;The complete process is monitored by a technical staff;Industry has its own Microbiological, Diagnostic and Feed laboratories to support the production area (monitoring, diagnosis);Visitors control;Breeder farms and hatcheries are isolated;Water and environment periodic monitored.

Biosecurity Program

Cleaning and disinfections program in all production stages;Shower and uniforms (hatchery and breeding)Vaccination for the main flock diseases;Established HACCP concepts throughout the production chainProduction Chain TraceabilityGPS location

Breeders Farms

Biosecurity Procedures

Water Source Protection

Water Reservoir

Truck Desinfecction

Feed Mill

Brazilian Poultry Exports – Main Markets in Asia (tons)

2003 2004 2005 2006

China 11,644 60,176 116,551 27,475

Singapore 64,062 66,387 74,462 74,594

Japan 184,950 323,087 404,769 322,803

Korea 3,022 901 4,819 19,805

Saudi Arabia 288,133 332,612 380,522 339,467

United Arab Emirates 99,920 120,528 131,737 147,129

Kuwait 59,774 100,658 141,500 99,564

Yemen 60,969 68,507 59,051 57,730

Malaysia In negotiation

Source: ABEF

The Indonesian Market (thousand tons)

2006 200

Domestic utilization 1,052 1,002

Exports 0 0

Imports 2 2

Source: FAO

The Halal Certification in Brazil

Brazil has been one of the first exporters to be qualified in the Halal slaughtering;Guidelines for slaughtering, storage, handling and transportation fully observed in every stage of Halal food processing;

Brazilian Poultry Global Challenges

20071- Avian Influenza Threat2 – European Protectionism/quotas administration3 – World Corn Demand4 – Sanitary requirements used as non-tarrif barriers5 – Institucional Marketing 6 – National Infra-structure7 – US$ Exchange Rates

christian@abef.com.br