Tax takes away from poultry sales to Saudi Arabia

Tax takes away from poultry sales to Saudi Arabia

Even though the country is still the biggest buyer of product from Brazil, the hike in tax charges caused shipped volume to decline by 20%. Brazil’s industry association expects sales to pick up in 2018.

Sao Paulo – Middle East countries remain the biggest buyers of poultry products from Brazil. Year-to-date through November this year, 1.326 million tons were shipped to the region, or 34% of total exports during that timeframe. Asia placed second at 32%, with Africa in third at 16%. Exports through November were down 0.8% in terms of volume, while revenue was up 6.9%. The Brazilian Animal Protein Association (ABPA, in the Portuguese acronym) disclosed year-to-date results for the poultry, pork and egg industries at a press conference this Wednesday (13).

Five out of the ten biggest buyers of product from Brazil are Arab countries. Saudi Arabia topped the list at 542,000 tons purchased (13.8% of total sales from Brazil); the UAE ranked sixth at 230,000 tons (5.9%); Egypt placed eighth at 138,000 tons (3.5%); Iraq was ninth at 108,000 tons (2.8%) and Kuwait ranked tenth at 106,000 tons imported (2.7%).

ABPA CEO Francisco Turra said the “industry is regaining its foothold on the global market in the wake of (Brazilian federal police operation) Operacao Carne Fraca, the biggest culprit in the year-on-year drop in sales.” Presently, out of 77 countries which banned Brazilian meats as a result of the operation, only Santa Lucia, Trinidad Tobago, and Zimbabwe still have bans in place.

Even though the Middle East remains the biggest importer of poultry from Brazil, its imports slid by 5% year-to-date through November. Revenue from exports to Arab countries alone were up 5.88% to nearly USD 2.5 billion, but sales volume dropped 1% to 1.51 million tons. Saudi Arabia’s imports were down 20% in terms of volume.

ABPA vice president for Markets Ricardo Santin imputed this to “a hike in the local import tax, which moved up from 5% to 20%. This meant prices and stockpiles had to be reviewed, hence the drop in sales.” Another potential reason might have been the fact that Saudi Arabia has put labor charges in place, which according to Santin has “prompted people to migrate away from the country in big enough numbers that domestic consumption declined.” Saudi Arabia is home to a large amount of expatriate workers.

Santin also said he sees exports to Saudi Arabia going up again in 2018 once the industry has adapted to the new tax rates and prices. “We expect to regain at least 50% of what we have lost in 2017,” he said.

Despite the drop in sales from Brazil to Saudi Arabia, Yemen and Oman, sales remained the same as last year in the case of the United Arab Emirates, and were up 89% to Iraq, 74% to Egypt, 7% to Kuwait and 10% to Qatar.

Santin spoke on the increase in sales to Egypt and Kuwait. “Exports to Egypt went up due to an issue they had with the avian flu, but things are going back to normal now,” he said. “And Iraq is a country in recovery, and it’s in the process of rebuilding a consumer market. The country is regaining its strength and diversifying its suppliers. They don’t want to just buy from Turkey and the United States, and they added Brazil as a player due to our quality and sanitation standards,” he said.

Brazil retains a 36% share of the global poultry market. Its share increased by6 8% over the last 15 years. Not only is it the biggest exporter, it’s also the world’s leading halal poultry producing country. “We wish to follow through with our partnership of 40-plus years with Arab countries. We first began to export to the Middle East, and today the Arab market is a priority for Brazil,” Santin said. Halal goods are those made in accordance with Muslim tradition.

Other products

Pork sales from Brazil to the Middle East were up 4%. However, sales to the UAE – the tenth biggest buyer of pork from Brazil – slid 10%. Pork consumption is prohibited under Islamic rule, therefore sales to the UAE are intended to cater to expatriates and tourists.

Egg exports from Brazil declined by 54% to the UAE – the biggest buyer of the product from Brazil – and by 61% to Saudi Arabia, the fourth biggest buyer.

Early 2018 will see the ABPA join Dubai’s Gulfood expo, bringing over more than 18 Brazilian companies. Shawarma sandwiches made with Brazilian pork will be on offer from them.






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