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Brazilian Cattle Production Costs Rise 21 Per Cent

10 March 2011
Meat & Livestock Australia

BRAZIL - Operational costs for Brazilian cattle producers increased 21 per cent during 2010, according to a survey conducted in 10 cattle producing states by the Brazilian National Agricultural Confederation and the University of São Paulo.

Despite the 21 per cent rise in operational costs for the past year, producer margins actually increased year-on-year, with average grown steer prices lifting 40 per cent. Comparatively, cost increases for 2010 were the second highest on record, after the 33 per cent increase in 2008. In 2009, production costs actually retreated 3.4 per cent year-on-year, while cattle prices declined seven per cent, largely the result of lower demand due to the global economic crisis.

According to the 2010 survey, significantly dearer restocker cattle accounted for the majority of the rise in producer costs, which accounted for 28 per cent of the total costs. One of the most noticeable changes in the cost structure for Brazilian cattle producers during 2010 was a decline in the proportion of costs taken up by mineral supplements, falling from 29 per cent in September 2008, to 21 per cent in 2010.

Meanwhile, the cost of labour for Brazilian cattle producers has increased steadily in recent years, with the legal minimum wage rising. At the beginning of 2004, labour costs made up 16 per cent of total production costs, compared to 23 per cent for 2010 - the second highest cost of production behind cattle purchases.

Reflecting the increased costs for cattle producers, the Brazilian government has been concerned about rising inflation. It recently increased its overnight lending rate to 11.75 per cent p.a., with the aim of achieving 5.53 per cent consumer price index growth in 2011 (Carta Pecuária).

TheCattleSite News Desk



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