South America Calling
Alastair Stewart South America Correspondent

Wednesday 04/23/14

Brazil's Ranchers Invest

Brazil is primarily known in agricultural circles as a big producer of soft commodities, such as coffee, sugar, oranges and more recently grains.

But the majority of Brazil's rural backlands are still dominated by low-tech ranging.

That is starting to change, though, with ranchers under pressure to produce more efficiently because of the expansion of grain production.

"Just as in soybean production, ranching is starting not to tolerate inefficiency," said Mauricio Nogueira, meat specialist at Agroconsult, a local farm consultancy.

This drive for efficiency has led to a significant decline in the number of animals slaughtered after 40 months.

In 2004, approximately 24% of all cattle were slaughtered after 40 months. This year, that figure will drop to 6.9%, according to Agroconsult forecasts.

Meanwhile, the percentage of cattle finished in feedlots is also growing. In 2014, an extra 300,000 cattle will be confined, taking the percentage of feedlot cattle to about 10% of the forecast 44.3 million animals slaughtered this year.

"Ranching is changing quicker than most think," said Andre Pessoa, an Agroconsult director.

There is still a long way to go, though. Brazil only has one head of cattle for every two acres of pasture.

Agroconsult will try to gauge the progress farmers are making during its Rally da Pecuaria ranch tour over the next two months. The tour will travel 25,000 miles, visiting nine states that account for 85% of Brazil's beef production.

With local cattle and beef prices on the rise this year, ranchers are better disposed to investing.

According to Agroconsult, cattle slaughter will rise 1.9% to 10.5 million carcasses this year, which is not enough to meet domestic and export demand that will grow over 3%.

It may be that rising prices push people toward chicken meat, but margins will remain good, explains Nogueira.

(AG)

Posted at 2:42PM CDT 04/23/14 by Alastair Stewart
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