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Brazil – World Agriculture’s Last Frontier

09 October 2008

BRAZIL - Despite being locked out of more than half of the worlds beef importing counties, including South Korea and Japan, because of foot-and-mouth disease (FMD), Brazil still accounts for 32% of the worlds beef exports of more than one million tonnes per year.


Photo: Argentine Beefpackers Association

Brazil is more than a big area of land. It is perhaps the world’s greatest natural resource when it comes to water, land and the soil nutrients essential for life.

Brazil shares land borders with ten different countries and this has been its Achilles heel in regard to FMD, reports the Argentine Beefpackers Association. Brazil has invested heavily to improve the sanitary status of its neighbours in an effort to eradicate foot-and-mouth at its source. Brazil is donating vaccinations and technology in a giant project which it hopes will eventually clear the entire South American continent of FMD within seven years. Brazil itself was pronounced foot-and-mouth free in August 2008.

In a bid to open up new markets in Asia, work is underway in build roads to connect Brazil with ports on the Pacific-coast in Chile. At present, all beef leaves via Brazil’s Atlantic ports, making shipping costs to Asia uncompetitive.

Huge resource base

Brazil has 394 million hectares of farmland available for beef production without felling another tree. Currently, only 68 million hectares are used for grass-fed beef production.

The annual cattle slaughter is 40 million, with beef exports in 2007 totaling 982,000 tonnes.

Currently only 13% of the national herd is finished in feedlots on maize, sugarcane and silage. Brazil is now moving toward more intensive grazing systems, fueled by the endless water supply. Feedlots are being developed to speed-up production with slaughter at 22 months rather than 27 months to meet Asian demand for grain fed product.

Beef processors are making capital available to farmers to produce grain fed beef and the government is offering tax incentives. The larger beef processors operate feedlots of up to 100,000 head often adjacent to their processing plants.

JBS-Swift, the biggest Brazilian beef packer, recently acquired National Beef Inc and Smithfield Groups beef-division in the United States. They also purchased the AMH and Tasman Group in Australia. They account for 10% of the cattle slaughtered in the world. JBS have expressed interest in purchasing Harvey Bay beef in Western Australia and Queensland based Kilcoy.

JBS floated their own banking operation, JBS-Banking-Services, in August of 2008. They have made US$4 billion available to 4,000 farmers to start or expand beef enterprises. The banking services are going to be expanded to Australia and Argentina in 2009.

Brazilian based Mafrig Frigoricicos de Alimentos SA is the world’s biggest poultry company and Sadia are both global poultry companies. Mafrig, Brazil’s second biggest beef processor, purchased UK based Grampian Food Company in June 2008. The deal included 16 beef, lamb and poultry plants with 20,000 employees. Grampian is a major meat supplier to UK supermarket giant Tesco.

The national cattle herd is 183 million head and projections indicate a herd of 230 million head by 2015. Quicker turn-off is envisaged to increase production and increase exports by 30% to 1.3 million tonnes in the next seven years. Main export destinations are Russia, Middle East, European Union, North Africa and Chile with frozen and chilled beef, as well as corned beef and beef extract.

Cattle are predominantly Nelore and Brahman with crossbreeding programs encouraged with Hereford, Angus and Simmental breeds to improve meat quality and growth rates.

Brazil is enjoying a surge in live cattle exports. Perth based, Wellards Rural have two livestock vessels permanently based in Brazil. This Australian company opened regional offices in Brazil this year to manage its live trade operations.

The governments of Indonesia and Brazil are currently negotiating the basis for renewed trade in beef and live cattle. Imports were banned following a FMD outbreak in Brazil in 2001. Brazil has held similar talks with Libya.

Brazil is the words largest exporter of beef, coffee, sugar, soy and grain and the worlds second biggest exporter of poultry and pork. Brazil is self sufficient in stock feed grain and there is an abundance of beef industry by-products to boost the protein levels of pork and poultry rations.

The Brazilian poultry production is second only to the United States and larger than China. There will be 12.5 million tonnes of poultry exported in 2008. The main export markets for poultry are the Middle East and North Africa with Halal slaughtered birds. There has been a move to more portion control poultry product in recent years. Mafrig has interests in Europe and the United States.

Pork production has also increased and 600,000 tonnes of pork will be exported this year, mainly to Russia, China and Hong Kong. There is a strong local demand for pork among the population of African heritage who prefer poultry and pork to beef. Brazilian pork is replacing American and Canadian product in Russia.

The economy is vibrant with good GDP and controls on inflation. The discovery of two major oil fields off the coast this year will boost Brazil’s oil reserves to 60 billion barrels. Much of this oil will be available for export as eighty per cent of cars and trucks are run on ethanol derived from sugar cane. Brazil will be a major oil exporter when it comes on stream in 2009.

Twenty years ago, one per cent of the population controlled 95% of the wealth and land. This was after a century of brutal dictatorships. Current president, Lula de Silva has successfully managed Brazil’s economic expansion for the past five years. Brazil is the world’s fifth largest economy enjoying a “BBB” investment rating from Standard & Poor. The government is committed to narrowing the gap between rich and poor though a series of social reforms. The government currently enjoys a 65% approval rating.

TheCattleSite News Desk



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