18 January 2021 - The animal feed sector in Portugal fears being caught in the middle of two pressures: an increase in the price of raw materials and a lack of liquidity for livestock producers, says the country’s feed manufacturers’ association.
“The biggest concerns are the price increases of the main raw materials to levels that we have not seen since the financial crisis in a scenario of low prices for most products of animal origin,” Jaime Piçarra, Secretary General of IACA (Portuguese Association of Compound Animal Feed Manufacturers) told Feedinfo.
According to the IACA official, prices paid to producers have dropped around 20% for swine, 10% for poultry, 11% for eggs and between 1% and 3% for milk compared to the 2019 average.
On the other hand, strong demand for raw materials from China and the drop in production in the Black Sea area, in addition to the impact of COVID-19, put pressure on the prices of raw materials like corn and soybeans.
Due to the current general lockdown, decreed by the Portuguese Government, to initially last for a month, the compound feed industry sector expects a worsening of this scenario, since the decrease in consumption of animal products in the HORECA channel will lead to liquidity difficulties for livestock producers, which will in turn be reflected in the medium term in the feed industry.
The preparations for fulfilling the obligations arising from the European Ecological Pact will also present challenges already in 2021.
"The sector considers that some of the measures will cause European industries in general, and the Portuguese in particular, to lose their competitive capacity. European raw materials and, consequently, final products, will become more expensive due to these requirements, while cheaper products, not subject to the same production rules may enter the European space, via imports," explained Piçarra.
Despite the difficulties, Piçarra said the Portuguese feed sector is not predicting production losses in 2021, but relative stability, noting however, that everything will depend on how the market for raw materials will evolve.
“We think the sector is realistic. We can say that we are relatively pessimistic for this first semester and more optimistic about the outlook for the second semester,” said Piçarra.
According to him, new lockdown measures and restrictions across Europe, which strongly affect tourism and the economy, weaken expectations regarding the much desired recovery.
