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Rapid Intensification of Brazilian Beef Production to Continue

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Rapid Intensification of Brazilian Beef Production to Continue

Rapid Intensification of Brazilian Beef Production to Continue
October 21
10:04 2014

In response to rising global beef demand, Brazil is set to step up the rapid intensification of its beef production sector over the next ten years, enabling the industry to expand into higher-value export markets. According to its latest report ‘Beefing up in Brazil: Feedlots to Drive Industry Growth’, Rabobank expects Brazil’s feedlot capacity to more than double to 4.5 million head, turning out over 9 million head of fed cattle annually, and increasing fed beef production by approximately 2.5 million tonnes per annum by 2023.

“The opportunities for Brazilian beef producers, feeders, processors and exporters appear very bright,” explains Rabobank Analyst Adolfo Fontes. “Expected improvements in productivity and quality in the beef industry will help Brazil increase its presence in high-value export markets such as Europe, Japan and Korea.”

Brazil is already the world’s second-largest beef producer and the largest exporter. However, the industry remains relatively inefficient by global standards, with below-average sector productivity and yield parameters, suggesting significant opportunities exist for improvement.

The outlook for global beef demand in the next decade is promising, as economic and population growth in developing countries leads to a dietary shift towards higher-protein content meals. “Brazil is uniquely placed to fulfil this need, due to the country’s unmatched potential for expanding corn and soybean production—the two most universally-used ingredients for animal rations”, explains Rabobank Analyst Renato Rasmussen.

However, the report anticipates major changes in beef cattle management and nutrition, will be required, with producers firmly gravitating towards more intensive production systems. Growing pressure for environmental sustainability, competition for agricultural land area with grain crops, and the need for scale in order to compensate for high basis and lower margins, are imposing significant efficiency and growth constraints on pasture-bred beef production.

The answer to Brazil’s need to grow beef production is the intensification of the finishing stage through beef cattle feedlots. The report predicts intensification will see overall beef production grow at 3.2 percent CAGR over the next decade. Feedlots—as well as other higher-technology beef production systems—will allow cattle to be slaughtered younger and heavier, resulting in increased yields and productivity, as well as improved product consistency and quality.

Currently, less than 10 percent of Brazilian beef is raised in feedlots. Rabobank estimates that the total investment needed to increase the current feedlot capacity by 2.5 million head is between US$250 million to US$500 million.

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