Porto Alegre, January 30th, 2025 – The government met last week to study measures that could contain rising food prices. It should be pointed out that strategies such as price control and export restrictions, among others, are outdated ideas that historically do not have the expected effect. On the contrary, this type of intervention causes serious bottlenecks in the production sector, which tends to reduce investments, which is typically followed by a reduction in production in the industries affected by such measures.
The best strategy for containing prices in the country would be the adoption of a balanced fiscal policy, capable of reducing the bloating of the public sector, allowing for a reduction in the tax burden, which in itself would be quite effective against rising prices. Another beneficial aspect would be the potential monetary appreciation that would allow for a reduction in import costs, another point that would contribute to the decline in food prices.
For the meat industry, this is a very complex year, with the prospect of changes in consumption patterns in the country. As discussed in previous publications, we are in a year in which the reversal of the livestock cycle should be consolidated. The expectation is for higher prices for replenishment categories, which in turn should result in the retention of matrices by farmers focused on breeding. The retention of matrices will trigger a process of reduction in the number of animals slaughtered in Brazil, that is, there will be a lower production of beef and other by-products in 2025.
Another important aspect to be mentioned is that beef exports have enormous potential in the current season, with the possibility of setting a new record for shipments. Brazil is working to open new markets, besides expanding markets that are already captive to Brazilian beef.
Moreover, the country is highly competitive in the global market, bringing together the best production conditions compared to its major competitors. The United States, the European Union, Australia, Argentina, and Uruguay face difficulties to a greater or lesser extent in beef production. The conditions in Brazil are also largely favorable to the expansion of pork and chicken shipments.
Sanitary rigor is another important differentiator. While Brazil is a global reference in biosecurity, its competitors face serious difficulties. In the first three weeks of 2025, multiple cases of Avian Influenza have already been registered in the United States, while two cases of foot-and-mouth disease have been registered in Germany, something that had not happened in the country since 1988.
Another aspect that increases Brazilian competitiveness is the behavior of the exchange rate at the beginning of the year. With serious doubts regarding fiscal policy, the outflow of capital from Brazil is evident. Tensions in global geopolitics may point to greater risk aversion among investors over the year, which reinforces the premise of a devalued real.
Even with the current parity, with the dollar below the BRL 5.90 line, there is a significant gain in competitiveness for Brazilian commodities in the international market. For the export industry, the environment is favorable, with an excellent conversion rate from the dollar to the real in international negotiations.
Prices paid for animal proteins have been rising in recent weeks on the international market, which makes the export count even more interesting. This scenario points to a clear orientation of the national meatpacking industry toward exports.
Associations such as ABIEC, ABPA, and the Ministry of Agriculture itself have been working hard this decade to open new markets. This is undoubtedly one of the priorities of the meat industry in 2025:
to open new markets, add value, and expand sales to markets that are already captive to Brazilian meat. This combination of factors is leading to the largest volume in the history of exports of the three main types of meat produced in the country.
The fact is that with such aggressive exports there will be less availability of beef and chicken in the current season. The only one of the three proteins that should grow in domestic supply is pork, even so it seems insufficient to contain a possible high in meat prices in 2025.
The Brazilian population prefers to consume beef, and in its absence they will prioritize the consumption of competing proteins, especially chicken. This preference for proteins with lower added value was observed at the beginning of this decade, during a period of strong growth in shipments at a time of reduced cattle slaughter (2020 to 2022).
The current year indicates a consumption pattern similar to that defined in the aforementioned period, with the population seeking alternatives to meet their needs for animal protein consumption. Chicken, eggs, and sausages tend to gain preference in yet another year in which the meat industry is on track to put pressure on inflation rates.
It should be pointed out that even among industries there will be a large advantage in obtaining revenue when comparing slaughterhouses authorized to export and those that operate only in the domestic market. This type of environment leads to market concentration.
From the perspective of Brazilian farmers, this is an interesting year, with the potential for higher prices of fattened cattle. However, it is also necessary to consider the increase in replenishment costs, with younger categories putting pressure on the margins of farmers focused on fattening.
Price, risk and trading management are becoming extremely necessary in an increasingly competitive and demanding market. The margin for error is minimal, and trading mistakes can result in huge losses. This is the secret to ensuring that both industries and farmers have longevity in the activity.
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