Importer of frozen beef from Europe in the off-season until the 1980s, in the mid-2000s Brazil became the largest exporter of the commodity, a consolidated position today with 22% of all international trade. A revolution driven by the professionalization of ranchers, who, aided by research, introduced technologies to improve animal nutrition, genetics, management and health.
For a second revolution begins to take place and it may be even faster, and deeper, than the previous one. One study by Embrapa’s Beef Intelligence Center (CiCarne), points out that by 2040, of the current 1.4 million ranchers, about 50% will leave the activity. Naturally, the question arises: Hey, if the business was doing so well, why are so many people getting out? CiCarne points out that, in the last decade, there has been “a growing deterioration of these assets, due to strong cost pressure”. On the other hand, there is a challenge of adaptation, of changing processes and ways of producing, to increase efficiency and competitiveness, while promoting the preservation of the environment and the reduction of social and economic inequalities.
“The sustainability agenda is coming very fast, due to pressure from society, due to pressure from the consumer market. If I can’t show what carbon footprint I’m delivering, I won’t be able to sell. Today we are seeing the international discussion about the carbon tax, the border tax for carbon emissions from products entering the European Community. It’s no use just tracking the slaughtered ox, I have to track the indirect ones, I have to say where this calf came from, where it was recreated and fattened. The advancement of this agenda is absolutely inexorable, the advancement of this agenda is irreversible”, assures José Carlos Pedreira de Freitas, executive coordinator of Liga do Araguaia, an association of 62 ranchers from Mato Grosso that seeks to anticipate market trends.
Certifications to add value and guarantee the meat market
The Liga do Araguaia works on projects funded in part by ranchers, in part by a partner. In one of them, involving 24 farms and a partnership with Dow, over a five-year period, the technification of 80,000 hectares of pastures contributed to reducing the age at which the animals were slaughtered, preventing the emission of 280,000 tons of CO2 equivalent. Associated with Embrapa, ranchers created a low carbon seal; in cooperation with JBS, another project brought professional management tools to the properties.
And two months ago, a group of six farms signed a contract with the Institute for Environmental Research in the Amazon (Ipam) not to open up areas of native coverage exceeding what is mandatory for the Legal Reserve. It is money from Germany and Norway that “buys” the preservation of forests for a three-year contract period. Payment for the environmental service varies between R$40,000 and R$400,000 per farm. “There is a whole compliance that the farm needs to meet. In three years, the farmer will decide if he wants to continue with the project. If you don’t want to, you can open the area and do whatever you want”, says Pedreira.
There is scope to increase the number of cattle per hectare
In addition to the changes aimed at more sustainable production, there is still a lot of room to gain in terms of productivity. The coordinator of CiCarne, Guilherme Malafaia, recalls that the average capacity of livestock in the country is 1.2 head of cattle per hectare/year. “Without inventing fashion”, says Malafaia, “it is possible to double this with available technologies, such as good pasture management, planning and cost control, supplementation of food, better genetics, use of protein salt, and care for good animal health. ”.
“Unbelievably, we still have a large number of ranchers who don’t even make production costs, to know how much it costs to produce an arroba of meat. Extractive livestock farming needs to be overcome, for better or worse. Because the charges are there, like the agreement that Brazil signed to reduce methane emissions”, points out the researcher. He refers to the Global Methane Commitment, signed last year together with 103 other countries, during COP26, to reduce emissions by 30% by 2030.
Owner of a floating herd of about 218 million heads, Brazilian beef cattle are marked by the contrast between backward pockets of hard-nosed animals, created in an almost extractive way, to high-bred species, finished in a confinement system. . Among the vanguard actions, associativism has made a difference, not only in the Araguaia League, but also in similar initiatives involving cooperatives in the South of the country.
Associative model has successful cases in Cooperativa Aliança and Aproccima
In the early 2000s, living in a region of strong agricultural cooperativism, ranchers from Guarapuava (PR) decided to experiment with the associative model to explore a meat niche of higher quality and added value. The 35 breeders who founded the Aliança Mercadológica Novilho Precoce, today Cooperativa Aliança, were pioneers in their own system of herd traceability and certification of Angus beef. There are currently 135 cooperative members who slaughter 25,000 cattle per year. In January, they opened their own refrigerator in which R$ 83 million were invested.
Since the early years, the Guarapuava model has been a school. Inspired by the initiative from Paraná, ranchers from Rio Grande do Sul founded the Beef Market Alliance in 2002, which in 2006 became the Association of Rural Producers of Campos de Cima da Serra (Aproccima). The union brought production scale and associates began to better negotiate noble meats with meatpackers and retailers. Carlos Roberto Simm, one of the founders, says that meat from European breeds of cattle follows the benchmark of wine. “There are three market niches, with price differentiation. Just as there are common grape wines, then varietal and very high quality wines, our meat follows the same logic, and we offer gourmet and prestige labels, which is the top of the market niche”, says Simm, who has his own butcher shop in Caxias do Sul, where it offers more than 90 cuts of beef.
Genetic research points to animals that will produce more tender meat
Approcima’s meats have the Embrapa’s Good Agricultural Practices (BPA) seal. It is possible to know the identification of each animal, sex, breed, type of termination, age, carcass weight and percentage of fat. To guarantee the characteristics valued by the consumer, such as softness and marbling, the genome analysis of the matrices is carried out in the United States. “From a genetic point of view, there are four pairs of genes that give meat tenderness. And there are animals that have no pair. We are doing this analysis and identifying those animals that have all the pairs, which represents a great evolution in terms of quality. And hence the reason for the prestigious label, let’s put this as pricing”, says the creator.
Carlos Roberto Simm predicts that Brazilian livestock will follow two parallel paths. From the Midwest upwards, where it is warmer, the rustic zebu breeds produce animals that serve mass consumption, and further south, in the cold, the production of meat from European breeds of high added value. What does not change, regardless of geographic location, is the pressure for professionalization. “We are in an accelerated process of paradigm shift. It’s a watershed. Either you are efficient, or you are out,” he says.
For Pedreira, from Liga do Araguaia, this is the livestock of the future, which will be established in five or ten years. “Five years ago, when I talked about carbon, the people from Liga do Araguaia laughed. I don’t know what you’re talking about, this climate change thing, global warming, they thought it was nonsense, a government thing. Today you open the newspaper, there is chaos, chaos all over the world”.
Associates, creators lower costs to monetize environmental assets
There are large business groups that are moving in the same direction, but initiatives such as the Liga do Araguaia have a different impact. “A single farm, no matter how big, could not give this character of promotion. The League has a much broader reach, it has a social dimension, it impacts the communities, the region where we are working”. Monetizing environmental assets also involves high implementation costs, due to the methodologies and certifications required. “It’s a long and expensive road. If you don’t have large asset volume, you can’t afford this transaction cost. You have to work with number of big farms. The league itself, with 60 farms, needs to increase the number of farms engaged in order for us to have more carbon, have more assets to offer, and be able to reduce transaction costs”, emphasizes Pedreira.
The reality is that, in a short time, it will become almost impossible to maintain livestock farming with an “extractivist” mentality. The largest meat company in the world, the Brazilian JBS, warned that from 2025 it will only buy animals with traceability, that is, with a “birth certificate”. “JBS slaughters 35,000 head a day in Brazil and 150,000 head in the world. If she advances this agenda, how can the rancher say ‘I won’t do it!’ If you don’t, you’ll be out, you won’t have access to the market”, emphasizes the manager of Liga do Araguaia.
In this market game, ranchers who do their homework will have an ace up their sleeve, up front. “The time will come when we will be able to say: Do you want to continue buying my ox? You have to pay a premium, because my ox has a carbon footprint, good practices, certification, etc. And JBS will say abroad, in Holland, Germany or China: Do you want to buy? It costs more. You have to pay a premium for these attributes”, bets Pedreira.
Leader in meat production and export
Data from the Food and Agriculture Organization of the United Nations (FAO) indicate that Brazil, in addition to being the largest exporter of red meat, has the largest commercial cattle herd in the world, with 217 million heads. From the beginning of the 1960s until today, production in the country has multiplied sevenfold. From 1.4 million tons in 1961, to the current 9.3 million (in 2021) and forecast to reach 11.2 million in 2025. About 80% is to serve the domestic market. In exports, the 159 thousand tons per year, shipped in 1997, jumped to 1.84 million tons in 2021.