2.1.1 Growth in Demand (consumer)
The consumption of livestock products increased significantly in the nineties, with the possible exception of eggs. Data available for chicken indicate a remarkable jump from 13.6 kg per capita to 23.1 kg from 1990 to 1995. A milder but still important increase took place in the milk consumption in this same period: from 106.34 liters per capita to 126 litters. The evolution of the pork consumption was relatively slower but persistent. It has been suggested that that jump in consumption of chicken and dairy is related to real income increase associated with the end of the high inflation process in 1994. Inflation has been related to a highly regressive money balance tax, the reduction of which increases real income of the population in general and of the poor in special. After the once for all income increase in 1994, the consumption of chicken proceeded in an ascending trend and so did the pork consumption. That did not happen to milk and eggs.
It is important to emphasize the impact that the inflation reduction had upon poverty in Brazil. According to IPEA from 1990 to 2000, the share of poor (not having income for basic needs of food, shelter, transportation and clothing) in the Brazil's population decreased form 44% to 32%, with the major reduction occurring right after the Real Plan implementation.
Table 2.1 Domestic production and growth rated of chicken meat, swine, meat, milk, and eggs
|
Year |
Chicken (Mt) |
% var |
Pork (Mt) |
% var |
Eggs |
% var |
Milk (Mt) |
% var |
|
1970 |
366,000 |
|
766,523 |
|
333,846 |
|
7,421,813 |
|
|
1971 |
367,000 |
0.0 |
802,186 |
5.0 |
355,000 |
6.0 |
7,414,520 |
0.0 |
|
1972 |
422,000 |
15.0 |
772,000 |
-4.0 |
370,000 |
4.0 |
7,393,800 |
0.0 |
|
1973 |
508,000 |
20.0 |
700,560 |
-9.0 |
390,000 |
5.0 |
7,845,500 |
6.0 |
|
1974 |
532,000 |
5.0 |
723,000 |
3.0 |
414,830 |
6.0 |
9,107,800 |
16.0 |
|
1975 |
534,000 |
0.0 |
760,000 |
5.0 |
505,935 |
22.0 |
10,054,500 |
10.0 |
|
1976 |
604,000 |
13.0 |
784,500 |
3.0 |
552,302 |
9.0 |
10,756,700 |
7.0 |
|
1977 |
698,000 |
16.0 |
834,000 |
6.0 |
555,437 |
1.0 |
9,952,172 |
-7.0 |
|
1978 |
858,000 |
23.0 |
850,000 |
2.0 |
642,045 |
16.0 |
10,178,416 |
2.0 |
|
1979 |
1,096,000 |
28.0 |
900,000 |
6.0 |
732,202 |
14.0 |
10,599,032 |
4.0 |
|
1980 |
1,370,000 |
25.0 |
980,000 |
9.0 |
782,430 |
7.0 |
12,060,761 |
14.0 |
|
1981 |
1,491,000 |
9.0 |
980,000 |
0.0 |
780,720 |
0.0 |
11,780,010 |
-2.0 |
|
1982 |
1,596,000 |
7.0 |
870,000 |
-11.0 |
829,210 |
6.0 |
11,924,513 |
1.0 |
|
1983 |
1,580,000 |
-1.0 |
885,000 |
2.0 |
784,840 |
-5.0 |
11,926,372 |
0.0 |
|
1984 |
1,360,000 |
-14.0 |
757,000 |
-14.0 |
964,185 |
23.0 |
12,416,828 |
4.0 |
|
1985 |
1,490,000 |
10.0 |
780,000 |
3.0 |
1,043,667 |
8.0 |
12,572,830 |
1.0 |
|
1986 |
1,620,000 |
9.0 |
825,000 |
6.0 |
1,134,956 |
9.0 |
13,005,055 |
3.0 |
|
1987 |
1,800,000 |
11.0 |
1,200,000 |
45.0 |
1,235,147 |
9.0 |
13,528,388 |
4.0 |
|
1988 |
1,947,000 |
8.0 |
1,100,000 |
-8.0 |
1,178,359 |
-5.0 |
14,082,059 |
4.0 |
|
1989 |
2,084,000 |
7.0 |
1,020,000 |
-7.0 |
1,187,262 |
1.0 |
14,672,798 |
4.0 |
|
1990 |
2,356,000 |
13.0 |
1,050,000 |
3.0 |
1,230,401 |
4.0 |
15,075,930 |
3.0 |
|
1991 |
2,627,700 |
12.0 |
1,120,000 |
7.0 |
1,315,019 |
7.0 |
15,692,142 |
4.0 |
|
1992 |
2,872,200 |
9.0 |
1,188,000 |
6.0 |
1,319,450 |
0.0 |
16,418,820 |
5.0 |
|
1993 |
3,143,300 |
9.0 |
1,250,000 |
5.0 |
1,333,257 |
1.0 |
16,218,200 |
-1.0 |
|
1994 |
3,411,900 |
9.0 |
1,300,000 |
4.0 |
1,384,625 |
4.0 |
16,415,300 |
1.0 |
|
1995 |
4,050,400 |
19.0 |
1,430,000 |
10.0 |
1,415,350 |
2.0 |
17,126,100 |
4.0 |
|
1996 |
4,051,500 |
0.0 |
1,600,000 |
12.0 |
1,372,572 |
-3.0 |
19,230,400 |
12.0 |
|
1997 |
4,460,900 |
10.0 |
1,518,000 |
-5.0 |
1,466,477 |
7.0 |
19,385,656 |
1.0 |
|
1998 |
4,853,600 |
9.0 |
1,652,300 |
9.0 |
1,389,539 |
-5.0 |
19,414,424 |
0.0 |
|
1999 |
5,526,000 |
14.0 |
1,683,600 |
2.0 |
1,467,000 |
6.0 |
19,802,220 |
2.0 |
|
2000 |
5,980,600 |
8.0 |
1,887,800 |
12.0 |
1,509,464 |
3.0 |
20,520,988 |
4.0 |
|
2001 |
6,222,700 |
4.0 |
1,967,500 |
4.0 |
1,537,700 |
2.0 |
22,718,000 |
11.0 |
|
2002 |
6,660,000 |
7.0 |
2,000,000 |
2.0 |
1,550,000 |
1.0 |
23,398,000 |
3.0 |
|
1970-2002 growth rate |
|
10.0 |
|
3.0 |
|
5.0 |
|
4.0 |
|
1985-2002 growth rate |
|
9.0 |
|
6.0 |
|
3.0 |
|
4.0 |
|
1970-85 growth rate |
|
10.0 |
|
0.0 |
|
8.0 |
|
4.0 |
Another variable commonly associated to food consumption is per capita income. It can be shown, however, that its proxy, per capita GDP, presented a very low increase in both the decades of eighties and the nineties. As matter of fact, according to IPEA, after the so-called economic miracle of the seventies, when per capita GDP grew at an average rate of 5.9%, the pattern of growth changed a lot: to 0.98% in the eighties and 0.5% in the nineties.
This pattern change emerged with the end of the industrialization process through import substitution, which produced substantial increases in both the external and domestic public debts, which drove the economy to a low growth trend. All that said, it is possible to conclude that the major part of the demand side driven consumption of livestock products in the nineties is to be attributed to an income effect due to the Plano Real and a small income effect due per capita income. The other factor associated to consumption increase is possibly the significant livestock products price reductions associated to productivity growth and scale economies, two supply side driving forces.
Table 2.2 Per capita livestock product consumption
|
Year |
Pork |
Chicken |
Milk |
Eggs |
|
1990 |
7,05 |
13,60 |
106,34 |
|
|
1995 |
8,69 |
23,10 |
126,03 |
|
|
1996 |
9,00 |
22,05 |
132,35 |
|
|
1997 |
9,17 |
23,83 |
128,16 |
|
|
1998 |
9,92 |
26,31 |
128,59 |
80 |
|
1999 |
10,45 |
29,14 |
129,89 |
86 |
|
2000 |
10,71 |
29,91 |
128,65 |
84 |
|
2001 |
11,08 |
31,82 |
127,14 |
84 |
|
2002 |
11,32 |
33,81 |
- |
84 |
|
Sources: |
1 - Brazilian association of swine production |
2.1.2 Change in the Supply of Inputs and Impact on Productivity
A relevant indicator of productivity change is the evolution of ratio of meat production to the stock of animals. In the case of chicken, this ratio increased from 1.83 kg/head in 1970 to 6.34 in 2002. For pork, the evolution was expressive as well: from 24,85 kg/head in 1970 to 66.67 in 2002. In the case of chicken the annual ratio of increase was 10,5%, while for pork the rate was 8.13%.
Table 2.3 Relationship between meat production and stock of animals.
|
Year |
Chicken meat (kg/stock heads) |
% var |
Pork Meat (kg/stock heads) |
% var |
|
1970 |
1,83 |
|
24,850 |
|
|
1971 |
1,72 |
-6.12 |
25,447 |
2.4 |
|
1972 |
1,69 |
-1.75 |
24,050 |
-5.5 |
|
1973 |
1,87 |
10.77 |
21,229 |
-11.7 |
|
1974 |
1,94 |
3.69 |
21,145 |
-0.4 |
|
1975 |
1,71 |
-11.69 |
21,591 |
2.1 |
|
1976 |
1,78 |
4.06 |
22,284 |
3.2 |
|
1977 |
2,11 |
18.14 |
24,152 |
8.4 |
|
1978 |
2,48 |
17.90 |
25,223 |
4.4 |
|
1979 |
2,83 |
13.92 |
25,214 |
0.0 |
|
1980 |
3,10 |
9.80 |
28,669 |
13.7 |
|
1981 |
3,31 |
6.72 |
30,220 |
5.4 |
|
1982 |
3,40 |
2.51 |
26,224 |
-13.2 |
|
1983 |
3,51 |
3.21 |
27,938 |
6.5 |
|
1984 |
2,94 |
-16.16 |
23,417 |
-16.2 |
|
1985 |
3,17 |
7.86 |
24,188 |
3.3 |
|
1986 |
3,27 |
3.12 |
25,354 |
4.8 |
|
1987 |
3,50 |
7.03 |
36,946 |
45.7 |
|
1988 |
3,82 |
9.11 |
34,246 |
-7.3 |
|
1989 |
3,92 |
2.78 |
30,895 |
-9.8 |
|
1990 |
4,31 |
9.94 |
31,228 |
1.1 |
|
1991 |
4,42 |
2.50 |
32,662 |
4.6 |
|
1992 |
4,49 |
1.57 |
34,403 |
5.3 |
|
1993 |
4,81 |
7.01 |
36,567 |
6.3 |
|
1994 |
5,01 |
4.25 |
36,993 |
1.2 |
|
1995 |
5,55 |
10.83 |
39,654 |
7.2 |
|
1996 |
5,56 |
0.23 |
54,790 |
38.2 |
|
1997 |
5,86 |
5.40 |
51,220 |
-6.5 |
|
1998 |
6,34 |
8.15 |
55,064 |
7.5 |
|
1999 |
6,87 |
8.28 |
54,594 |
-0.9 |
|
2000 |
7,10 |
3.33 |
59,812 |
9.6 |
|
2001 |
6,19 |
-12.84 |
66,867 |
11.8 |
|
2002 |
6,34 |
2.54 |
66,667 |
-0.3 |
|
Overal mean |
|
10.50 |
|
8.13 |
|
1970/85 mean |
|
10.71 |
|
6.28 |
|
1986/2002 mean |
|
11.12 |
|
15.31 |
A synthesis of the evolution of technology in the livestock sector in Brazil is presented in Table 2.4 from the 60's to the 90's regarding the feeding system, production, genetics and medicines.
Table 2.4 Synthesis of the technological evolution.
|
1960s |
Milk |
Swine |
Chicken |
|
Food |
- common salt - pastures with native varieties |
- Farm-produced feed with no balance |
- Unbalanced feed |
|
Production system |
- pasture production with no supplements |
- extensive production |
- extensive production |
|
Genetics |
- non-improved, non-specialized breeds |
- Breed specialized in fat production |
- Non-improved national lineage |
|
Medicines |
- No control of FMD |
- No control of Classic Swine Pest |
- no records of medicines |
|
1970s |
Milk |
Swine |
Chicken |
|
Food |
- Introduction of mineral salt - Beginning of the improvement of grass varieties |
- Beginning of the use of balanced feed - Use of concentrated feed with the addition of corn in the farm |
- Beginning of the use of balanced feed |
|
Production system |
- Pasture production without supplementation |
- Beginning of intensive production - Growth of integrated production |
- intensive production - Beginning of integrated production |
|
Genetics |
- Importing of specialized animals of European breeds |
- Import of meat breed animals (DUROC) |
- Introduction of the first European and North-American animals |
|
Medicines |
- Beginning FMD control programs |
- Beginning of vaccination against Classic Swine Pest |
- Beginning Coccidiose control |
|
1980s |
|
|
|
|
Food |
- Introduction of the first varieties of grass obtained in the improvement - Use of chicken bedding as food supplement - Popularization of the use of mineral salt - Beginning of the used of food supplements: voluminous |
- balanced feed from units outside the farm - Feed receives the addition of protein (soy meal) and energy (corn) sources in the farm - Introduction of the used of medicine in the feed (antobiotics, vitamins, etc) |
- balanced feed from specialized units - Use of specific feed according to the life cycle of the bird - Introduction to the use of medicines in the feed |
|
Production system |
- pasture production - Introduction of mechanical milkers |
- Totally confined production - Independent production is predominant - Full-cycle production - Water analysis and treatment - Introduction to the use of cages in maternities |
- Integrated system is predominant - Introduction to the heat and ventilation system - Water analysis and treatment |
|
Genetics |
- Popularization of European breeds |
- Large scale imports of animals of the breeds Duroc, Largewrite, Landrace, Hampshire, etc - Popularization of meat type breeds |
- Introduction to a large number of European lineages - Strong coordination of the industry in the production of 1-day chicks - Sexing of birds |
|
Medicines |
- Strong control of FMD - Beginning of the Brucellosis control program |
- Control of Classic Swine Pest - Beginning of pulmonary diseases control - Control of intestines parasites - Application of vitamins and mineral supplements (iron) |
- Control and prevention of Newcastle, Gumoro, Coccidiose diseases - Use of vitamin complexes |
|
1990s |
|
|
|
|
Food |
- Adapted varieties of grass adapted to open pastures and the winter in the south - Use of voluminous (silage of corn, grass etc.) for winter supplementation - Use of protein enriched mineral salt with specific formularizations for different regions |
- balanced feed with addition of vitamin complexes, medicines, soy and corn meals in the farm, in the case of the independent producers - feed produced in large integrators' units - 58 companies produce the feed mineral nucleus |
- feed produced in large units with sophisticated balancing programs |
|
Production system |
- pasture production with winter/draught supplement - seasonal production slaughter animals in open pasture |
- Use of special cages with special floors for the draining of manure - Use of chlorinated water - Use of manure in agriculture - integrated production exceeds independent production - Use of special cages with special floors for the draining of manure - Use of chlorinated water - Use of manure in agriculture - integrated production exceeds independent production |
- System almost entirely integrated - System almost entirely integrated - Use of automatic systems of feeding and water - Large market for the chicken bedding |
|
Genetics |
- Large scale of the use of genetic improvement - Artificial insemination - embryo Transference |
- Opening of market for companies of genetic material - predominant Use of the artificial insemination |
- total Opening of the market for importation of grandparents |
|
Medicines |
- Use of preventive system of diseases - FMD-free zones without vaccination in the south and with vaccination in the midwest |
- Appearance of the first SPS farms - preventive systematic Control of illnesses like Aujeusky |
- preventive Control of the main diseases searching the reduction of the use of medicine |
2.1.3 Impact of these Changes on Prices
As productivity grew, prices fell and domestic consumption expanded, and so did exports of chicken and swine. From 1990 to 2001, real producer prices decreased by 50.6% in the case of chicken, 38.25% for swine and 47.5% for milk. In this latter case, the price reduction should be attributed to a large degree to market liberalization that opened the Brazilian market to low price imports of milk and dairy products in general from Mercosul and other countries.
Figure 2.1 Average real prices - R$ - March,2003
Source: CEPEA/ESALQ/USP
2.1.4 Growth in Exports
As productivity grew exports of chickens and swine expanded. Table 2.5 presents the growth rates of Brazil's livestock exports in the 1990s. Chicken exports increased at an annual rate of 16.8%, while swine exports increased at the impressive rate of 69.4%, due the astonishing growth pattern observed in the very recent years. Milk exports were also observed to grow; however, exported volumes presented a rather unstable pattern and are very small when compared to domestic production. About the same can be said regarding egg exports.
