Sap Paulo, 13/05/2008 (Agence Europe) - Cattle breeding occupies pride of place in the Brazilian agricultural economy. It has a very strong internal meat market and is also conquering external markets in an impressive way. The Brazilian beef market is therefore not feeling very strongly the effects of the EU restrictions in force since the beginning of the year (EUROPE 9613). This fact was revealed to a group of European journalists on a visit to Brazil (1-8 May) organised by the Association of Brazilian Beef Exporters (ABIEC).
The ABIEC is one of the most powerful professional associations in Brazil. It was set up nearly 30 years ago to promote national meat exports and help companies find new export outlets. Almost 90% of beef exported by Brazil to more than 180 countries comes from ABIEC affiliated companies.
During the international zebu exhibition (Expozebu) in Uberaba, west of the state of Minas Gerais, the Brazilian minister for agriculture, Reinhold Stephanes, proved quite reassuring with regard to the conflict pitting the Brazilian authorities against the European Commission on meat export conditions. The Brazilian minister provided assurances that Brazil “will comply” with European meat traceability standards. The EU is calling for individual identification of all bovines in herds and their sanitary health follow-up. Mr Stephanes declared that “by the end of 2008, we should be able to respect all EU demands”. Nonetheless, the minister did consider that there was no sense to European demands on traceability. This is partly due to the extensive nature of Brazilian cattle breeding, which makes bovine identification particularly arduous (Ed: livestock inspections are still difficult in border regions, particularly with Paraguay and Argentina). Stephanes also explained that the traceability demands were unnecessary because Brazil provided alternative guarantees that proved the good health of the meat (bovines raised on grass, except in extreme drought situations, ban on the use of growth hormones or feeding ruminants on meat-derived flour). There have been no cases of mad cow disease and the Brazilian agriculture minister pointed out that foot and mouth disease is not a human health problem (Brazil hopes that it will have eradicated the problem by 2009 or 2010). To rectify the shortcomings in health controls, the Brazilian authorities have set up an Identification and Certification System of Bovine and Bubaline Origin (SISBOV) whose main aim is to identify, register and provide individual follow-up of all bovines and zebus imported into Brazil. According to ABIEC, 40 million animals have already been identified under SISBOV (as opposed to 7 million in 2005) out of a total livestock of 180 million. Bovines are identified by their tags or electronic chips.
Mr Stephanes also stressed that there was not really a European embargo in force and that the European market is still open to these products. EU bovines have already been absorbed by other countries of the world. The Brazilian minister believes that the Commission has been subject to very strong pressure from European meat producers, particularly the Irish, who are afraid of Brazilian competition. Following a meeting at the end of 2007 with the European commissioner for health, Markos Kyprianou, Mr Stephanes said that he got the impression that the EU was interested in Brazilian meat because it was convinced that the meat was good but it was confronting strong pressure from European meat producers. According to the Brazilian minister, Irish breeders set the powder alight by publishing an “outlaw report” without seeking the required authorisation. This report focused on significant shortcomings in inspections of Brazilian bovine herds (tags found on the ground, absence of foot and mouth disease vaccine etc). These accusations were then relayed by parliamentarians, the Commission and some EU member states. The Brazilian minister challenged MEPs to choose any herd among the 10,000 ones existing to verify that no sanitary problem whatsoever exists.
Following the observations made by Irish breeders, the Commission sent out veterinarians in November 2007 to inspect breeding, slaughter and meat export conditions in Brazil. The Food and Veterinary Office (FVO) identified “several serious and repeated deficiencies in the Brazilian traceability and sanitary control systems”. This led to the European Union demanding implementation of additional controls. In December 2007, the European Commission warned Brazil that from 31 January beef exports would no longer be authorised unless Brazilian meat came from a list of selected herds that fully respected the health obligations in force in the Union. It was not until February that Brazil gave into EU requests and submitted a list of a little under 100 herds (ending up with the current figure of 95), accompanied by the required sanitary inspection reports.
Marcus Vinicius Pratini de Moraes, the outgoing president of ABIEC, was more critical of the EU blocking imports for animal health reasons and denounced the “sanitary protectionism” orchestrated by Europe. Overall, the ABIEC considers that European markets are relatively closed to Brazilian meat (high entry duties, low number of quotas allocated to Brazil). Several speakers also criticised export support granted to EU farmers.
Biggest bovine meat exporter in the world. The figures speak for themselves given that Brazil produced 9.5 million tonnes of beef in 2007 (as opposed to 7.2 million in 2002). This puts the country in second place worldwide, behind the US (12 million tonnes), the EU (8 million tonnes) and China (7.9 million tonnes). These recent figures (2008) were provided by the United States Department of Agriculture (USDA).
Brazil has been the biggest beef exporter in the world since 2003 (as well as for chicken). The most recent estimates (USDA) illustrated a volume of 2.4 million tonnes of meat exported by Brazil in 2007 (as opposed to 900,000 in 2002). Then comes Australia (1.45 million t), India (0.8 million) and New Zealand (500,000). The EU is in 9th place with an export volume of 200,000 tonnes. Around 20% of Brazilian beef is exported to European Union countries. With a little over 20%, Russia is Brazil's biggest customer in volume. In revenue (data provided by the Brazilian department of industry and external trade), the EU was Brazil's biggest customer in 2007 (US$1086 billion, with particularly good profits in the Netherlands, Italy and the United Kingdom) followed by Russia ($967 million), Egypt ($333 million), Iran ($145 million) and Venezuela ($124 million).
Are European restrictions beginning to be felt? Yes, if we believe initial estimates for the year that display a 33% fall in beef exports to the EU between January and March 2008 (compared to the figures for the same period last year). The fall is less in value (-16% for the European market and $273.6 million), thanks to high general food prices. Brazil is also conquering new markets: Hong Kong (+284% in value, +183% in volume), Venezuela (+278% in value), Saudi Arabia (+67% in value), Algeria (+20%), United Arab Emirates (+107% in value) and even in the Lebanon.
Many Brazilian breeders are hoping for the European market to completely open up. Especially because since 2005 a European embargo has been hitting meat form Mato Grosso do Sul and Paraná due to outbreaks of foot and mouth. Eduardo Penteado Cardoso is an owner of a farm of 3900 hectares with 3500 zebus in Uberaba (Minas Gerais). He raises bulls and heifers for commercial producers and admits that he EU pays the best prices for the best cuts of meat. Nevertheless, farmers from the country can count on a “very active” internal market and new customers, particularly from the Middle East, explained Mr Cardoso. Roberto Coelho, Head of the Fazenda San Francisco in Pantanal in Mato Grosso do Sul affirmed that “Brazilian farmers are, together with the government, trying to improve their controls and their standards to reach the standards we need to sell beef for Europe”. Mr Coelho also pointed out that Brazil is “a very big country, we have a very different kind of farmers, we have a very large amount of small farmers which governments gave land and cows to recently”. The latter believe that learning techniques cannot be learned overnight and it is very difficult to have unique standards like in Europe. Mr Coelho highlighted the fact that Brazilian farmers do not received subsidies like their European counterparts. Mr Coelho has a ranch of 80,000 hectares on which he raises cattle for breeding (Nelore, Montana and Senepol breeds) and produces 26 tonnes of rice a year (in 2007, productivity per hectare was 7.8 tonnes, the equivalent of that in the US). But tourists are also coming in their droves in the hope of seeing the 15 or 16 jaguars that have chosen to live on the land of Fazenda San Francisco. These great predators do have victims and kill an average of 100 heads of cattle a year, but they are significant earners to the enterprises thanks to agro-activities and eco-tourism. The income also helps fund scientific research. The “Gadonça” project aims to study the great carnivorous predators of the Pantanal region (http://www.fazendasanfrancisco.tur.br ).
Filip Traen, from the Independência company (near Sao Paulo) believes that Brazil will find it tough recovering its European market share from meat product sales. Independência is an example of an integrated company. One of its slaughterhouses in Uberlândia (Mato Grosso do Sul) includes diversification of activities ranging from bovine meat to leather (the hides are mainly sent to Italy and China), biodiesel, animal flours (for feeding poultry) and lorry transport for the products. Between 1000 and 1200 bovines are slaughtered every day in this abattoir, which also produces 25 kilos per animal in animal flour and between 15 and 18 litres of biodiesel per animal.
European business believes that the EU has a deficit of more than 700,000 tonnes of meat. This could benefit Brazilian operators.
Genetic improvements. The main breed of cattle in Brazil, at 80%, is the zebu (Nelore) from India, introduced to the country in the 19th century: the Brahman, Cangaiam, Gir, Gir Mocho, Guzera, Indu-Brazil, Sindi and Tabapua make up the remaining 20%. The zebu is very well adapted to the tropical climate, but is less rich in meat and has been crossed with European breeds to improve its quality. The main breeds crossed are: the Canchim, Bradford, Simbrazil, Girolando and the Bangus-Ibagé.
Luiz Antonio Josahkian and Gerson Simão from the Brazilian Association of Zebu-breeders (ABCZ) informed journalists how meat and milk production had improved thanks to genetics. Zebu semen sales grew by 56% in 2007 (162,946 samples). Cloning is used but only for scientific purposes. ABCZ has developed a data base with information about more than two million animals participating in the zebu genetic improvement programme. Genetic improvements allow for the slaughter of bovines and age for calving to be lowered. Embraba employs a workforce of 8600, as well as 2000 researchers, and has made some real progress in genetics. One of the leaders of this agronomic research body, attached to the Brazilian department of agriculture, informed us that meat is a priority (beef, poultry and pork) but also soya (productivity for this harvest in Brazil is catching up with that in the US) and coffee. Brazil has set up research partnerships with the US and France, which are very interested in Brazilian expertise in agricultural tropical technologies.
The journalists also visited a subsidiary of the Canadian Alta Genetics Inc group in Brazil, one of the market leaders in bovine genetics. Alta Genetics specialises in the bovine reproduction market (sales of bull semen for artificial insemination) and aims to push forward the milk industry.
Agriculture and environmental protection. When the Brazilian minister for agriculture was asked how the country reconciled agricultural development and environmental protection, he explained that Brazil can “double its agricultural production without cutting down a single tree”. The immensity of Brazilian territory and its land farmed constitute one of the main advantages of its agricultural economy. Brazil devotes around 60 million hectares to different crops and between 220 and 230 million hectares to pasture for rearing. According to several estimates, even without taking into account territory in the Amazonian jungle, almost 90 million hectares of land remain available to increase harvests. The Brazilian minister stressed that rearing could be made more intensive by increasing the number of animals per hectare by between 1.5 and 2 per hectare. This would free up pasture for other forms of farming. Brazil also has significant water resources (18% of the world's resources).
Since the election of President Lula da Silva in 2002, Brazil has developed a more pro-active policy to protect the Amazon basin. 70% of Amazonia Legal (the administrative zone defined in 1966 and mainly in the south of the jungle eco-system) is protected. The remaining 30% has been privatised but legislation is planned to ensure that economic activities respect the environment. The extension of crops or cattle can therefore be extended in 50% of the available land in Amazonia territory, and the remaining 50% must be protected. Only 4 bioethanol factories have been set up in Amazonia Legal.
Participants on this trip were also able to check on the goals of the Brazilian authorities with regard to biofuels. Assisted by the increasingly sharp world energy crisis, Brazil is hoping to become a world leader in “green fuels”. Maurilio Biagi Filho, the president of Usina Moema, one of the biggest ethanol producers in Brazil, stressed that sugar cane based ethanol had replaced 50% of fuels in Brazil and used less than 1% of the country's total agricultural surface area. The advantage of ethanol can be gauged at the petrol station. It is 60% less expensive than traditional fuel at the petrol pumps in Sao Paulo. Brazil has 276 million hectares of arable land, 72% of which is given over to pasture, 16.9% to cereals and barely 2.8% to sugar cane. (L.C.)