Boom time for beef trade
Boom time for beef trade
Brazilian beef producers are
pressing ahead with
improving their herd, while
the countrys processors are
already exporting £455m-
worth of beef. Emma Penny
reports as part of
Zenecas Young Agricultural
Journalist of the Year Award
BRAZIL is famous for its beaches and its footballers, and now it stands every chance of becoming renowned for its beef.
With the biggest commercial cattle herd in the world – over 170m head – it is a country where everything is done on a grand scale, whether it is herd improvement or processing.
One measure of the beef industrys drive to expand is the fact that slaughterings rose by 138% in the three years between 1995 and 1998. Now, about 25m cattle are slaughtered each year in Brazil, producing about 5m tonnes of meat; only 4% of this is exported, the rest being consumed by Brazils 160m population.
Of the 170m cattle, about 80% are of Zebu origin – cattle adapted to tropical climates such as Brahman and the Nelore – while the remaining 20% are breeds of European descent, particularly Hereford and Angus.
European breeds are found mainly in the south of Brazil, which has a more temperate climate, while warmer climes demand an animal which can cope with high temperatures. In some cases, Zebu and European breeds are crossed to produce an animal with some adaptation to warmer weather but better beef characteristics such as the Braford, a Brahman cross Hereford.
In all cases, breeds are selected for their ability to perform well from forage; few cattle are ever housed, and supplementary feeding is rare on most farms.
But now cattle selection is about more than just foraging ability; Brazilian beef producers are embracing genetic improvement via new technology and use of performance statistics such as estimated performance differences, which are similar to the UKs estimated breeding value system.
And despite the fact that farms may have 20,000 or more cattle, forward thinking breeders are forming breeding alliances. Under these schemes, breeders collect and collate measurements from their herds, then select the best cattle for breeding out of a larger population. This means genetic progress in Brazilian cattle is often rapid – and is always targeted at achieving earlier maturity and producing better breeding and beef animals.
Processors are making the most of these improved cattle, with some already setting up quality assurance schemes with supermarket buyers. Cattle entering the schemes must be managed according to specific rules aimed at ensuring carcasses and meat are high quality, and all processes from farm to plate are audited, with feedback readily available on potential improvements.
But like the UK, while retailers are building such schemes, they are usually unprepared to pay more for beef, and Brazilian producers are suffering relentless price pressure.
According to one academic and consultant, José Lobato, Brazilian beef producers need a higher margin between production and sale costs. The average liveweight beef price is about 40p/kg with 30 days payment, although there are few live markets. The deadweight price for steers is about 80p/kg with a killing out percentage of 48-50% and little, if any, payment for quality.
"Cost of production is 33-36p/kg liveweight – depending on the reproductive performance of breeding herds. Herds where heifers become pregnant early and get back into calf again quickly will have lower costs, as will those where male calves are slaughtered early. But the small margin explains why we need to run big herds of cattle; we need to export more to increase prices."
While most of Brazils population was hit hard by last years currency devaluation, it has boosted the export trade, so providing some competition for retailers.
But Brazils devaluation and the Euros weakness has meant that export prices were at an all-time low this spring, but export plants believe that the disappearance of intervention stocks within the EU will boost sales and prices. Last year, Brazil exported a total of 257,000t of beef, with a value of £455m; EU exports accounted for 142,000t of that, with a value of £289m.
But these figures are expected to rise now that states in Brazil are progressively becoming free of foot and mouth, allowing access to more markets.
Besides low prices, Brazilian producers have other problems, and are often worried about being paid for their stock. Most choose to sell to established, trusted abattoirs, some insisting on cash payment.
They are also at the mercy of the market, receiving no subsidies, and while the government used to be keen to lend farmers money though banks, it is now lending far less each year. But banking is one of the most profitable industries in Brazil, according to some producers, with borrowing costing about 10% a month.
But a key fear for many is the governments land redistribution programme, and, specifically, the actions of one political group which is invading and seizing farms.
Redistribution entitles people living in city slums to land, a house, finance and a wage, and many suspect it is being used as a political vote-winner in highly populated city areas. Each year, producers have to submit production figures, and those not meeting government standards – which some claim are set without any scientific basis – are liable to have their land reclaimed and redistributed, with payment in 15 years.
Many producers on large farms have also recently had to prove their ownership of the land, which has meant detailed historical searches. The governments next move is likely to be to insist that producers on mid-sized farms can prove ownership. *
BRAZIL FACTS
• Land area 3.3m sq miles.
• Population 160m – 25% rural.
• Agriculture 10% of GDP.
About 80% of Brazils cattle are Zebu breeds such as the Nelore.