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“The world will need Brazil to eat.” This forecast is given by Marcus Vinicius Pratini de Moraes, president of the Brazilian Association of the Meat Export Industry (Abiec, Associação Brasileira da Indústria Exportadora de Carnes). He said that based on his vast experience as minister of Industry and Trade (1970-74), Mining and Energy (1992), and Agriculture (1993-2002). Pratini de Moraes points out several comparative advantages for Brazilian meat, including the absence of hormones (forbidden in Brazil) and the fact that cattle are exclusively fed with vegetable-origin products, eliminating the risk of mad cow disease. Furthermore, Brazil has been achieving impressive growth rates in the rural area. In ten years, for instance, corn production has grown 50% and cotton production, 180%. An ox, that six years ago would go to the slaughterhouse at age four, now goes to the cold storage plant at 14 months. Today, the occupation rate is less than one ox per hectare, but it should reach 2.5 animals per hectare. This means that, of the 220 million hectares of pastures in the country, a large part will be freed for agriculture. And, according to Pratini de Moraes, without the need to “touch a single bush in the Amazon forest.”
Brazil Forever – In Brazil, we have “green” cattle, fed with grass. This makes the difference if compared to the rest of the world. Is it possible to sustain this cattle-raising method without expanding areas, without devastating more of the nature, just by increasing productivity?
Pratini de Moraes – Brazil has 850 million hectares, with approximately 350 million making up the Amazon forest. And we have 220 million hectares of natural and cultivated pastures. In these pastures, Brazil raises about 185 million heads of cattle. With genetic and productivity improvement, cattle are being slaughtered at increasingly younger ages with more weight... And many cattle raisers use a semi-confinement system over the last three to four months before slaughter, which allows the area used by herds to be greatly reduced. We’re already seeing a transfer of cattle-raising areas for soy plantations. And the tendency is that these 220 million hectares, which aren’t entirely used for raising cattle, but could be, will be less occupied... Probably, by the end of this decade, we won’t be using more than 100 million hectares. Therefore, cattle raising will leave 120 million hectares for agricultural use. Strictly speaking, Brazil could develop its cattle-raising activity without touching a single bush in the Amazon. Besides, we have 90 million hectares available that are suitable for agriculture in the Mid-Western, Southeastern and Southern regions. Some areas have been used in the past, but aren’t being used right now... Today, some pasture and agricultural areas are going through a recovery process. A good example is the Ariri region, in Paraná where 300 thousand hectares that were abandoned are being fully recovered for agriculture and raising cattle through a program started in 2001. Therefore, we have many areas that, with a small investment, could be used for agriculture and/or raising cattle. Today, producers are very concerned about assuring sustainable development, which is fundamental, because it affects the marketing of our products abroad. What happens frequently – and it’s something we’re concerned with – are forest burnings in the Amazon, which are caused by small producers, native Indians, who have been doing this for thousands of years, and by lumber and timber dealers. In this case, forceful action is recommended to prevent this from continuing. For cattle raisers, soy and cotton producers, planting or raising in the Amazon would be impossible. In addition to that, occupied areas aren’t being expanded. Entrepreneurs are actually making a better use of the land, improving genetic productivity, reducing cattle-raising areas, and producing more. We could show that by using the productivity levels of the past ten years. Between the 1993/94 and 2003/2004 crops, wheat productivity grew 60%; sorghum, 26%; corn, 50%; cotton, 180%; soy, 26%; beans, 43%; and rice, 46%. The 50% increase in corn production was obtained without the need for planting one single additional hectare... There were changes in terms of plantation locations, but not in the size of crops. There was an amazing growth of agriculture, as well as a productivity improvement in raising cattle... Previously in Brazil, cattle used to be slaughtered at age four, and today this happens between 18 and 24 months of age... Some producers send their heads to the slaughterhouse at 14 months... There are area and time savings, animals are more rustic and have a higher food conversion rate, gain more weight in less time, and all of this means less areas required for the activity.
BF – What’s the occupation rate per hectare?
Today, less than one animal per hectare. However, we could reach an average of 2.5 animals per hectare, continuing to produce green cattle, fed on grass, using the semi-confinement method in the end – we should point out that it’s not confinement – and always with vegetable-origin food, basically soy flour, corn, sorghum, cotton and wheat middlings... Thus, Brazil can continue to increase productivity, using smaller areas and producing more agricultural goods.
BF – Among the criticisms made by foreign environmental organizations to our production mode, some mention the use of pesticides and the water contamination issue.
PM – I believe that when agricultural development became faster, about 20-30 years ago, there was a great increase in pesticide consumption. However, today the Brazilian Agricultural Research Corporation (Embrapa, Empresa Brasileira de Pesquisa Agropecuária) and rural unions are doing a great job at increasing the awareness for greater control and reduction of the use of toxic products. On the other hand, when it comes to raising cattle, hormones used in some countries, are forbidden in Brazil. This is an important factor for classifying our meat as green. I had an experience with this theme a few years ago, when Canada, in a completely absurd manner, accused Brazil of having mad cow disease. Brazilian cattle don’t have this disease simply because they’re herbivorous. Our cattle aren’t carnivorous. Frigorific residues have never been used here for feeding cattle, however it’s a common practice in the United States, Japan and Europe. For starters, in Brazil cold storage plants are very distant from cattle-raising regions, and it wouldn’t be cost-effective to transport these residues. Here, cold storage plant residues are used for producing dog, cat or fish kibble, which is ok. In addition, in the Brazilian tradition, when an animal dies for unknown reasons, it’s buried or incinerated. In Europe and in the United States, since properties are located closer to the cold storage plants, it’s common practice for someone to come by and purchase dead animals, which are taken to kibble factories. This never existed in Brazil. In Europe, we’re rated as minimum risk for mad cow disease because of the Brazilian cattle-raising culture and economics, which excludes the possibility of using cold storage plant residues. This is one of the features that make the Brazilian cattle-raising activity stand out. There are several growth opportunities; despite great progress, we still have conditions for increasing productivity and using a smaller area. Let’s take the state of Mato Grosso, Brazil’s largest agricultural area, as an example. Recently, I saw a piece of news saying that they were burning the Amazon forest in Mato Grosso. But there’s no need for this, because Mato Grosso uses less than 6% of its territory for agriculture and it’s Brazil’s largest soy producer. We have plenty of space.
BF – What are the percentages of the Brazilian share of bovine meat in the world market?
PM – In a herd with 183 or 185 million heads of cattle, 38 million heads are slaughtered per year. Brazil has 16% of the world’s herd, about 17% of the world’s slaughter share, and produces 15% of the world’s meat, or 7.2 million tons per year. These are 2003 figures. Internal consumption is 35 kilos per capita. It’s about twice as much as Europe’s internal consumption and lower than consumption in the United States, which corresponds to 44-45 kilos per inhabitant per year. We’re the largest world exporters, with 1.3 million carcass-equivalent tons, which represents 18% of world exports. And all of this despite the fact that Brazil only reaches half of the markets. The other half, represented by the United States, Japan, Taiwan, and South Korea, doesn’t buy from Brazil. We only sell a bit of our industrialized meat. Fresh meat, on the other hand, we sell basically to Europe, to the Middle East, and some to South America, Africa and Southeastern Asia. As a matter of fact, Brazil still doesn’t have access to half of the international fresh meat market. When Brazilian meat obtains approval from the United States, Japan, Taiwan, and South Korea, nothing will stop us!
BF – Our advantage is sanitation...
Animal sanitation is the new synonym for protectionism. When a country feels threatened by the competition of a Brazilian product, it expands restrictions and starts saying it won’t accept this or that. I believe that as meat becomes more expensive and difficulties grow among member countries of the Organization for Economic Co-operation and Development (OECD) for the concession of subsidies, Brazilian meat will enter more markets. I don’t have projections, but we’re the world’s biggest bovine meat exporters. I believe that, by the end of this decade, Brazil will be the world’s largest agricultural nation, also in the meat market – bovine, pork and chicken. The world will need Brazil in order to eat, because it’s the only country that has, for example, areas capable of meeting the world’s soy needs. The world is eating an additional six million tons of soy per year. To produce this amount of grains, considering the productivity of three tons per hectare, an additional two million hectares need to be planted per year. What country has this area available? Only Brazil. We’re gradually overcoming sanitation barriers and proving that Brazilian meat has sanitation, quality, and competitive prices. We’re starting to sell not only the so-called green meat, but also hormone-free and leaner meat. Today, consumer countries are concerned about obesity problems, cholesterol rates, etc. They try to purchase leaner meat. The Brazilian meat is naturally leaner because it has a low intermingled fat content. Fat stays mainly in the outer part. It only needs to be removed to provide high-quality, low-fat protein. I think that over the next few years, Brazil will grow more and more as a meat producer. Over the past few years, we’ve had more significant increases in terms of meat share in the Brazilian trade balance. In 1997 we started our large-scale presence in the international meat market. It’s important to remember that, in the 1990’s, we still imported meat from Chernobyl with nuclear contamination risk. In 1997, we exported US$ 400 million. Starting in 1999, 2000, we experienced great growth in exports, thanks to the government’s effort in fighting aphthous fever, in close collaboration with producers, states, rural unions, etc. In 2002 we already exported US$ 1.1 billion; in 2003, US$ 1.5 billion; and this year, we will export at least US$ 1.8 billion, maybe even US$ 2 billion, if prices remain at last year’s levels, after recovery. Currently, we’re concerned not only with selling a quality product, but also a leaner product, and selling it to market niches. Historically, Brazil used to export cooked meat, or corn beef, which has low value because it was a fore meat, then we started exporting carcasses, and then some meat cuts. Now our concern is increasing the sales of cuts, ready for cooking. Packaged, cut, clean, that will go directly to supermarket shelves... This eliminates middlemen and adds more value. This year, the price of Brazilian meat has already increased 36% abroad, in dollar figures.BF – What’s the price range for the carcass for cutting?
PM – It goes from US$ 1,200 to US$ 8,000 per ton. Among the reasons for which we still sell cheap meat are the high subsidies and tax rates charged on our product. We have to sell it cheap so that it reaches the consumer at the price of European meat. Brazilian meat sold in Europe pays about 176% in taxes. Europe has a price homogenization mechanism. If they have meat that costs US$ 8,000 per ton and ours gets there at US$ 2,000 per ton, they charge US$ 6,000 in taxes.
BF – Who’s Brazil’s main competitor in the international market?
PM – Considering the meat supplied by Brazil, there are virtually no competitors. No one offers this lean, green meat. For special cuts, our competition consists of the United States, Australia, Argentina, and, at a lower scale, Uruguay and even South Africa. These are fat meats, for barbecue, that gradually start being replaced by our meat. In China, there are already 400 restaurants that call themselves Brazilian barbecue houses. Of course they can’t be compared to a Brazilian barbecue house yet. But we have a daily TV show in Shanghai that shows Chinese people how to eat barbecue. Older Chinese generations still eat a lot of pork, duck and chicken meat. Younger generations are enjoying bovine meat, which is associated with being in better physical condition and to an improved performance in sports...
BF – And how are we positioned in terms of fruits?
PM – There are two wonderful areas. First, cotton. Brazil imported in 1995, US$ 1 billion in cotton. However, thanks to Embrapa’s seed development effort and to the efforts of planters linked to the Brazilian Association of Cotton Producers (Abrapa, Associação Brasileira dos Produtos de Algodão), today Brazil exports cotton. And another very important sector is that of fruit culture. There was a huge effort in irrigated fruit production in Petrolina and Juazeiro, in the Northeast. The first programs date back to the 1960’s. Today, there are more than 150,000 hectares irrigated, with controlled quality, and Brazil exports fruits to the whole world. Another sector that also developed a lot was the fishing sector, both caught in the sea and raised in tanks in the inland. If you travel on a road in the rural area of Paraná, around the Toledo region, you’ll see every restaurant sells tilapia fillet. This became a traditional dish for rural area restaurants. In Mato Grosso do Sul, it’s the same thing. McDonald’s purchases tilapia fillet to make the McFish. Besides, in the Northeast, there was a great increase in the production of shrimp in captivity. In the state of Rio de Janeiro, scallops are produced, and in Santa Catarina, oysters. Brazilian agriculture hasn’t reached the optimum level yet, but it has already shown the world that the country has technology, quality, sanitation, and now we have challenges. The main challenge is marketing. As soon as Brazil learns how to sell, and today we’re beginning to do that, although there’s still a long way to go, things will change... For adding marketing value to a product involves packaging, brand, quality, preparation to reach the consumer, and all of this entails a higher price, higher income and, of course, more jobs. We have a great effort ahead of us. We have started very recently. Any supermarket sells Evian, Perrier mineral water, and fancy and not-so-fancy restaurants in São Paulo already put one of these on the table. Europeans sell water in Brazil, but they’ve been selling water for centuries and have built an image. And we’ve just started building an image for the Brazilian product, which makes competitors react. And one of the often-aggressive reactions provoked, is saying that we’re doing things by destroying the environment. But we show that we can double, triple Brazilian agricultural production without touching one single bush in the Amazon forest. After all, it wouldn’t be smart to plant in the forest. When the Amazon is devastated, it becomes a desert. But the argument is used because there are unlawful burnings in the Amazon. For this reason, it’s important to make producers aware of the fact that environmental preservation, careful with the use of chemical defensive systems is fundamental not only for providing a higher quality product to Brazilian consumers, but also for acknowledgement by the international market.
BF – What about the water contamination issue?
PM – I believe we have to be more careful not so much in the agricultural area, where producers are becoming increasingly careful, but in the animal raising area, especially hog raising. Santa Catarina, in particular, has made a high investment for preventing water contamination resulting from waste generated by animal production. This is especially important in hog raising. But for us it’s much easier than for European countries, where water contamination issues are more serious. We need to be careful with the undue use of environmental concerns as a new protectionist instrument. (with Carlos Pousa)•
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