BRAZIL SOUTH AMERICA

Group 2: Balazs, Bilal, Diana, Gao, Karla

Largest South American country 5th largest population worldwide (191million

people) Area: 8.5millionkm2 (Consisting of 47% of

area of the continent) 9th largest economy in world

BRAZIL’S INTRODUCTION

12% of fresh water in the planet 23% of population work in agri-business Relatively low prices of land and labor No extreme weather, no deserts

BRAZIL’S INTRODUCTION

Largest commercial beef herd worldwide 2nd largest producer of the beef globally,

producing 9.7 million tones Carcass Weigh Equivalent

Exports beef to 180 different countries, without any subsidies from government

IMPORTANT FACTS ABOUT BEEF PRODUCTION

In the international meat trade market, for each 10kg of beef trade, 3kg come from Brazil

Biggest beef consumer globally Low cost of beef production, 60% lower than

Australia, 50% lower than USA

Roughly 150 million animals used for beef production

Uses 140 million hectares of land 6.8 million direct or indirect employees Pasture system is used for feeding animals No. of beef processing plants and abattoirs

are 750

Two imported components:

Zebu Cattle ◦ Originated from the Indian Subcontinent

Tropical grasses◦ Originated from Africa

PILLARS OF BRAZILIAN BEEF PRODUCTION

1.8 million farms Small size farms produce:

◦ < 500 heads/year Medium size farms produce:

◦ >1000 heads/year Commercial Farms produce:

◦ >4000 heads/year

BEEF FARMS

Crossing Breeding used in all regions of the country

European breeds used for cross breeding:◦ Angus◦ Red Angus◦ Simmental◦ Charolais◦ Polled Hereford◦ Limousin◦ Braunvieh

CROSS BREEDING

POPULAR BEEF BREEDS

NELLORE

GYR

GUZERAT

WORLD BEEF HERD SIZES

DISTRIBUTION OF BRAZILIAN BEEF HERDS

Herd208 millions of cattle heads

Import live animals5.262

Grazing area: 172 millions HaDensity: 1.2 animals/Ha

Offtake rate: 18.9%

Culling/year 39.5 millions

Export of live animals404 853

Meat Production 9.1 millions T.

Finished animals in Feedlots

3.4 millions (8.6% of culling)

Carcase yield (Nelore) 51-55%

Export 16.5%1.5 millions T.Carcase mean

weight: 233 Kg

Internal market (83.5%)7.6 millions T.

40 Kg./year per capita

62 countries108 countries87 countries

Offal/others173000 T

11%

Industrialised260 000 T

17%

In Natura1.1 million T

71%

Russia 28%Iran 16%

Egypt 12%Others 44%

EU 27: 53%USA: 12%

Others: 35%

Hong Kong: 66%Russia: 5%

Others: 29%

EXPORTS 20% world’s beef export. 2006: Europe banned the use of antibiotics

in animal production Brazilian packing plants regulated their use (ionophores used as growth promoters)

Implants or beta-agonists are forbidden 27 Brazilian states: only 16 are considered

foot-mouth disease-free areas, and 15 of them are only free with vaccination

ARGENTINA

53 Million headsMostly european breeds - CriolloExports: average 20% (Currently 7%)

Production systems: Cow-calf operations: extensive grazing

systems Finishing: 90 days feedlots or semi intensive

on pasture with supplementary feeding.

GHG PRODUCTION

CO2 and N2O Amazon deforestation…

GHG PRODUCTION In the last 20 years Brazil showed the

greatest growth rates in annual methane emission estimates (2.12%/year)

Brazil showed the greatest growth rate of beef production (4.01%/year).

Brazil: (−1.82%/year) of net increase in rate of methane emissions per unit of product (kilograms of methane/kilogram of beef)

LAND USE – GRAZING Brazilian beef operations are mostly based

on perennial tropical grass graying systems.

The production cycle conducted exclusively on grazing systems with only mineral supplementation during the dry season leads to older animals at market. This productions cycle from birth to market averages 36 months.

LAND USE – GRAZING Grazing combined with stocker phase

(concentrate supplementation) or feedlot operations during the dry season (winter) in the recent decade.

Birth: end of winter / beginning of spring Weaning: beginning of fall, calfs are avg. of

7 month old.

1970 78.6 million cattle 124.4 million ha pasture /NATURAL/ 0.51

anim/ha 29.7 million ha pasture /CULTIVATED/

2006 171.6 million cattle 57.3 million ha pasture /NATURAL/

1.08 anim/ha 101.4 million ha pasture /CULTIVATED/

- 67.1 m ha natural pasture + 71.7 m ha cultivated pasture

TRENDS OF PASTURE LAND USE

INCREASED PASTURE EFFICENCY

Millen 2011, Current outlook and future perspectives of beef production in Brazil

BRAZIL CHALLENGES/ LIMITATIONS FOR BEEF PRODUCTION

BRAZIL - Challenges/ Limitations for Beef Production

1. Maintaining/Increasing Production on reduced pastureland.

The recently overhauled “Forest Act” (2012)-force farmers to replant trees on illegally cleared areas (80% of rural properties in the Amazon should be covered by forests). -Farmers will be limited from expansion

Expansion of cashcrop production (soybean)- has increased land prices- forced cattle production to move to the North

2. MAINTAINING CURRENT GROWTH

- While there is potential for further increase in productivity, the industry is heterogenous, uncoordinated and strategically not well-defined.

Overcoming lack of infrastructure- roads railways, processing plants to comply with international standards

Manage public perception about of deforesting the Amazon to create grazing for cattle; GGE

Controlling greenhouse gas emissions

3. GAINING MARKET ACCESS AND KEEPING THE COUNTRY A LEADER IN THE MARKET

Delivering a traceable product-requires huge investment.-Control systems susceptible to bribery. It is possible for tags to be removed and cattle to move without documentation.-Address potential for abuse in biosecurity and disease control.

Manage the dynamic, aggressive global market-Competition for market share will increase from Argentina, Australia with similar production systems.

Overvaluation of the Brazilian Real, (1,7:1) with US Dollar – - This has directly reduced the competitiveness of Brazil's low value commodity exports.

3. GAINING MARKET ACCESS AND KEEPING THE COUNTRY A LEADER IN THE MARKET

Managing breeding programmes- Increased resistance from producers to changes in herd genetics causing ''backyard'' deals.

Improving quality of product-Currently producing lower value, slower growing and poor muscle grass- fed beef cattle. -Brazil is a top producer in terms of quantity , not quality

YET;''The future portends market segmentation of meat demand based on quality attributes.''

ARGENTINA Future is uncertain: continuous government intervention in order to provide for domestic

market and control inflation. Global share of exports will not increase in the short term because of government's objective

to control inflation.

CHALLENGES

- Gaining market access - Their image as a reliable supplier has been damaged.-Increasing cow- calf herd which was reduced in the past years.- Beef cattle production on less land- More land is being used for grain and oilseed production.

Increasing investment especially to expand capacity to take advantage of the current economic environment.

High export taxes – Government has removed rebates on exports.

Production will increase as intensification increases.Is not expected to increase its global share of exports because of government's goal to reduce inflation – (15% tax on all exports to lower prices in domestic market).It is possible to take advantage of;

1. The current decline in beef production in the EU.2. Increase in demand in the EU as there is a rebound from the BSE crisis.3.Increasing demand from Russia as World oil prices are increasing.4.FMD outbreak in Brazil.5. Use corn feeding – highly productive cheap in Argentina6. Trade liberalisation and elimination of farm domestic support policies- all Mercusor countries.7. Currently high meat prices – Even if supply increases and prices fall Mercusor countries have low costs and will thrive than other countries.

A PERSPECTIVE FOR BEEF PRODUCTION IN ARGENTINA

Has potential to maintain dominance as one of the biggest beef exporters. Will face stiff competition from mainly Australia which has similar production but

supplies premium beef cuts to EU markets. In the long term; The current efforts may pay off; (aggressive marketing,traceability system, favourable exchange rate, subsidised

credit, infrastructure development, improvement in animal genetics, stable government) TO INCREASE PRODUCTION.

Herd sizes will increase – low production costs. Brazil will benefit from trade liberalisation and removal of farm support schemes;

will be able to deal with fluctuations in input costs. Intensifed farming will increase as a response to land pressure.

A PERSPECTIVE FOR BRAZIL BEEF INDUSTRY

BRAZIL: FUTURE PERSPECTIVE

Herd sizes will increase – low production costs.

Intensifed farming will increase as a response to land pressure- produce relatively cheap feed .

Brazil will benefit from trade liberalisation and removal of farm support schemes; Will be able to deal with fluctuations in input costs Intensifed farming will increase as a response to land pressure- produce relatively

cheap feed . Diet will be more grain-based

Although feedlot numbers (currently 4%) will increase, they will continue to push the ''natural product'' as a marketing initiative. (Thompson, 2008)

Increases of production will be offset by consumption as income increases; Net surplus will decrease

.

SUMMARY- CHALLENGES & LIKELY TRENDS

Reduced pastureland • Intensification

Maintain current growth • Modernization

Keep leading and expand market access

• Globalization

SUMMARY-BRAZILIAN BEEF PRODUCTION SYSTEM

Economic sustainability

Large domestic consumption World’s leading exporter 2nd LARGEST PRODUCER

Environmental sustainability

Challenges of land use and deforestationGHG emission

BreedingZebu cattle

Cross breedingLarge beef herd size

FeedingPerennial tropical grass

Grazing system or feedlotINCREASED PASTURE EFFICENCY Management

Family holdingsLow cost of beef production

ABIEC(Brazilian Beef Processors and Exporters Association)

Beef qualityAntibiotics

Implants or beta-agonistsBSE/FMD

Feeding:• Development in Center-West region;• Pasture subdivision;• Recovery and maintenance of soil fertilization;• Feed supplementation for critical periods

Breeding :• Animal genetic improvement• Develop specialized pedigree herds

Management:• Sanitary control;• Adjustment of the genotype-environment• Keep traceability

SUGGESTIONS

SUGGESTIONS Quality• Achieve good feeding, breeding and management

Economic sustainability• Domestic:

• develop infrastructure and publication• International:

• Governmental subsidy and organizations’ investment• Build well traceability• Extend new market(Iran, Egypt)

Environmental sustainability• Produce more with less land• Utilize by-products: use the waste beef fat to make biodiesel• Develop regulations to control GHG and deforestation

THANK YOU!