May 9, 2018 / 3:32 PM / 6 months ago

Brazil's Aurora halts poultry plant amid trade ban, high feed cost

SAO PAULO, May 9 (Reuters) - Brazil’s third-largest chicken processor said it will idle one of its eight poultry plants for 30 days, according to a statement on Wednesday, shutting a unit that accounts for almost 12 percent of its total slaughter capacity in the country.

Privately-owned Cooperativa Aurora Alimentos said the plant in question employs 1,283 workers. The company said workers at that plant, located in Santa Catarina state, will be sent on paid leave effective July 2 to adjust capacity to demand.

This is the second time in the space of roughly five weeks that Aurora has halted a plant in Brazil, the world’s largest chicken exporter, citing adverse market conditions related to trade bans and higher feed costs.

The first plant to be temporarily idled will be Abelardo Luz, also located in Santa Catarina, starting on June 4. Aberlado Luz accounts for 13.4 percent of Aurora’s slaughtering capacity, the statement said.

“The company does not anticipate firing any workers. Nor does it intend to halt activity at two plants at the same time,” Aurora said in a statement.

Aurora is one of the multiple food processors affected by bans on Brazilian meat products, including chicken and pork, to certain export markets. Embargoes imposed by Europe and Russia on certain Brazilian meat purveyors have had a negative effect on its operations, it said, creating excessive supplies and causing product prices to fall.

Making matters worse, the domestic corn market is going through a period of “speculative retention,” that artificially inflates feed prices, according to Aurora’s statement.

Domestically corn prices rose by 46.50 percent in one year, according to data from University of Sao Paulo’s Esalq agricultural school and commodity exchange operator BM&F Bovespa.

“This aggravates the sector’s plight and obliges food processors to buy corn abroad in order to feed almost 520 million birds in Brazil,” said Aurora. (Reporting by Ana Mano Editing by Marguerita Choy)

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