Some Brazilian beef packers are shutting down because they can’t make a profit at sharply higher prices for cattle.
“The price of cattle has risen by about 60 per cent over a year and the industry was able to pass through 40 per cent of costs at best,”said Paulo Mustefaga, president of trade group Abrafigo. “They are having trouble making ends meet.”
He told Reuters news agency that many small and medium-sized plants closed and even Marfrig, one of the largest, temporarily suspended operations at two of its plants.
The 15-kilo arroba, a Brazilian benchmark for cattle prices, hit a historical high of 320 reais ($70.53 Cdn) in recent days, boosted by low animal supplies and heated demand for Brazilian beef exports, particularly from China.
Mustefaga said another factor is belt-tightening by consumers whose incomes are suffering because of COVID-19.
Marfrig, which owns National Beef in the U.S., confirmed to Reuters that it sent employees on furlough at a unit in the town of Alegrete for 30 days. Slaughtering there resumed April 1.
The company also said it temporarily halted a plant in Rondonia state.