The operating results are subject to
seasonal factors and volatility that affect both the
prices of raw material and sales prices of BRF. The
Company’s business is largely dependent on the cost
and supply of corn, soybean meal, soybeans, pork,
milk and other raw materials as well as the selling
prices of poultry, pork and dairy products, all of which
are determined by constant changes in supply and
demand that can fluctuate significantly, and other
factors over which we have little or no control. These
other factors include, among others, fluctuations
in the levels of domestic and global production of
poultry, pork, beef and milk, environmental and
conservation regulations, economic conditions,
weather, and animal and field diseases, the cost of
international freight and exchange rate fluctuations.
The economic sector of activity, both in Brazil and
abroad, is also characterized by cyclical periods
of higher prices and profitability, followed by
overproduction, which leads to periods of lower prices
and profitability. BRF cannot minimize these risks by
entering into long term contracts with customers and
with most suppliers, since these contracts are not
customary in the industry. Financial performance is
also affected by costs of domestic and international
freight, which are vulnerable to fluctuations in oil
prices. Perhaps the Company is not successful in
addressing the effects of cyclicality and volatility of
costs and expenses or the pricing of products and in
this case, its financial performance may be adversely
affected.