Brazil: the country of unlimited growth in beef production?

Transcrição

1 Brazil: the country of unlimited growth in beef production? Sergio De Zen, PhD Professor at University of São Paulo (USP) Research at Center for Advanced Studies on Apllied Economics (Cepea/Esalq/USP)

2 Challenges to increase production Land and production factors increase productivity; Industry capacity; Infrastructure; Sustainability; 2

3 How Brazillian farms work??? 3

4 How Brazillian farms work???

5 Typical Farm in Tangará da Serra/MT Land Use Area (Hectares) Agriculture Cotton 400 Rice 0 Conventional Cultivation Corn 0 Direct Seeding Corn 0 Late Harvest Corn (milho safrinha) 150 Conventional Cultivation Soybean 300 Direct seeding Soybean Cattle Source: Cepea/Esalq/USP

6 Return R$ Retorno - R$ Efficiency Frontier Tangará da Serra/MT , , , , , , ,00 B , ,00-2,07E+10 2,67E+10 3,35E+10 4,11E+10 4,95E+10 5,88E+10 7,45E+10 9,01E+10 9,31E+10 Risco Risk

7 Land and Farms 7

8 Beef and Milk Typical Farms Cepea ( ) Category Beef Milk 8

9 25,6% 9

10 Evolution of the Land Area Planted with Soy/hectares Brazil: 25,1 million hectares Central West ( ) increase of 19,74% of the area planted with soy; This increase come from the conversion of pasture land North Northeast Southeast South Central West

11 The Increase in Land Price ( ) 626% Mato Grosso do Sul State ( ) 43% 325% 2008/11-100% 432% 800% 367% 483% % ~450% Source: Cepea/CNA *Nominal values

12 Opportunity cost São Paulo State Cattle Beef x Sugar Cane R$2.000,00 R$1.750,00 R$1.500,00 R$1.250,00 R$1.000,00 R$938,73 R$750,00 R$500,00 R$ 296,60 R$250,00 R$- Valor de Arrend. Médio (cana-de-açúcar) Valor de Arrend. Médio (pecuária) Valor de Arrend. Maior (pecuária) Valor de Arrend. Maior (cana-de-açúcar) 12

13 Livestock Reaction: Stocking Rate Increase (Animal Unit (450 kg)/hectare) / ; Even productivity has increased so far, there is still gap for further improvement in properties 21% 140% 120% 100% 80% 60% 40% 20% 43% 24% 0% 1,0 UA/há 1,5 UA/há 2,0 UA/há Herd (heads) Slaughtered (heads) 44% 13

14 Sustainability 14

15 0,62 UA/ha 1,61 UA/ha Technical Comparative Nova Andradina- MS - Beef Finishing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Area Comparative 1800,00 ha 540,00 ha 1260,00 ha 480 ha 480 ha 120 ha 120 ha P - Initial Grassland cultivated area (intensified) Grassland cultivated area (stand) Reserve area Improvement area PI 1,80 UA/ha 1,60 UA/ha 1,40 UA/ha 1,20 UA/ha 1,00 UA/ha 0,80 UA/ha 0,60 UA/ha 0,40 UA/ha 0,20 UA/ha 0,00 UA/ha Average Stocking Rate in Grazing Area P - Initial P - Initial PI PI 0 Produced/ha of pasture P - Initial PI Arrobas produced.@ produced/grassland area = 15 kg of Carcass Weight

16 Economic Comparative Nova Andradina- MS - Beef Finishing Rentability Return per Real (R$) Invested R$ ,00 R$ ,00 R$0,60 R$0,54 R$0,45 R$ ,00 R$0,40 R$0,33 R$ ,00 R$ ,00 R$0,20 R$0,11 R$0,05 R$ ,00 R$- P - Initial PI R$ ,00 R$(0,20) R$ - P - Initial Remunerataion and Opportunity Depreciation OEC PI R$(0,40) R$(0,60) R$(0,44) Total Revenue Revenue/OEC Revenue/OTC Revenue/TC 16

17 Comparative: Livestock x Agriculture Livestock (Nova Andradina/MS) Production System Beef Finishing Grassland Stand Area 540,0 ha Cost per hectare R$ 905,22 Useful lifetime 30 years Intensified Grassland Area 1260,0 ha Cost per hectare R$ 1.769,93 Useful lifetime 30 years Total Revenue (sale of animals) R$ 1.949,00 Effective Operational Cost (EOC) R$ 1.420,48 Operational Total Cost (OTC) R$ 1.498,66 Total Cost (TC) R$ 1.989,19 Livestock Agriculture Gross Margin (Revenue-EOC) R$ 528,52 R$ 1.912,21 Net Margin (Revenue-OTC) R$ 450,34 R$ 1.525,30 Lucro (Revenue-TC) -R$ 40,19 R$ 507,58 Agriculture (Naviraí/MS) Type of Area Leased Medium Lease Value (R$/ha) R$ 717,00 Soya area Productivity Corn Area 2 Harvest Productivity 800 ha 48 sc/ha 680 ha 80 sc/ha Revenue - Soya R$ 2.868,17 EOC - Soya R$ 1.395,08 OTC - Soya R$ 1.580,23 TC- Soya R$ 2.128,20 Revenue - Corn 2 Harvest R$ 1.699,32 EOC- Corn 2 Harvest R$ 1.260,20 OTC - Corn 2 Harvest R$ 1.461,96 TC - Corn 2 Harvest R$ 1.931,71 TOTAL - REVENUE R$ 4.567,49 TOTAL - EOC R$ 2.655,28 TOTAL - OTC R$ 3.042,19 TOTAL - TC R$ 4.059,91 17

18 Industry 18

19 Million heads Slaughterhouse in Brazil Number of slaughtered animals Number of industries % - Total 26, % - Total % - Total 7% - Total 5,8 2, % - Total % - Total Federal State Municipal Federal State Municipal 19

20 Infrastructure 20

21 Amazonas Maranhão North Northeast Minas Gerais Pará Rio Grande do Sul Bahia Mato Grosso Southeast South Paraná Central West Goiás São Paulo 21

22 Brazilian roads quality -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% North Norte -21,4% -34,6% -31,8% 11,8% 0,4% Nordeste Northeast -10,4% -16,9% -37,6% 27,2% 7,5% Southeast Sudeste -4,0% -14,7% -31,1% 24,0% 26,7% South Sul -3,0% -10,6% -26,8% 37,8% 21,3% Central West Centro-Oeste -6,9% -21,4% -40,1% 24,5% 6,8% Brazil Brasil -8,0% -21,4% -34,4% 26,0% 10,2% 22

23 States Distance between the Farmer and the Slaughterhouse (km) ES 250 GO 400 MG 400 MS 350 MT 350 PR 350 RO 300 RS 350 SP 300 Distance that our cattle need to travel 23

24 The country of unlimited growth in beef production? No! There are potential to grow, but it depends on: Farm Management Better use of the resources; it relies on human capacity; Infrastructure How to drain the production? Energy out of the farm needs investment; Sustainability: produce more with less land. WITH THE SAME AREA, WE COULD PRODUCE TWO TIMES MORE. 24

25 Aves da minha terra O faisão é meu amigão, Ele não teme a situação, Se não tiver água na região, O orvalho é sua solução. A seriema é desconfiada, E quanto se sente ameaçada, Abre as asas enfezada, E enfrenta a meninada. O joão-de-barro é o construtor, E o canário, o aproveitador. A garça, a vida simboliza, O corvo, para a morte aterrissa. O uirapuru, Canta pra chuchu. A arara azul, Embeleza a América do Sul. Onde posso ver tanta variedade? Se não é na minha terra, ó gente! Essa que me traz tamanha felicidade! Renata Schiavon 25 Sustainability is: live together

26 OBRIGADO Grazzie Thank you!!!! Sergio De Zen, PhD Professor at University of São Paulo (USP) Research at Center for Advanced Studies on Apllied Economics (Cepea/Esalq/USP) Av. Centenário, 1080, Piracicaba. SP CEP: