A
fter a period of high profits
earnedbythebeefmarketupto
2015, in 2016 the sector was af-
fected by a challenging scenar-
io, characterized by negligible
profits or even losses endured by the supply
chain, due to soaringproductioncosts, deteri-
orationof the operationalmargins and loss of
income. This movement affected cattle farm-
ers and industries and shut downmeat pack-
ingcompaniesallovertheCountry.
Recession and unemployment reached
national consumers, whobegan to seek alter-
natives to beef, mainly pork and chicken cuts,
with more affordable prices. This panorama,
along with falling exports, increased the do-
mestic stock and the supply pressure, trans-
lating into real losses to the purchasing pow-
er of the cattle farmers, who, depending on
thesource,variesfrom1,5%to4.5%ayear.In-
flation gave the wrong impression of higher
prices. National consumption should remain
similar to 2015 and 2016, at 33 kilograms per
personayear,againstaconsumptionthathad
reached40kilogramsinthisdecade.
The production of beef has been rising
throughout the Country, but at a slower pace
compared to previous years. From 2003 to
2015, there was an increase of 57%, equiva-
lent to 19 million head. The Brazilian Confed-
eration of Agriculture and Livestock (CNA) es-
timates that the production of meat in 2016
is up 3% from 2015. The Brazilian herd is be-
lieved to comprise 215.2 million head, num-
berthatissupposedtogoupin2017.
The market is equally supposed to heat
up a little, due to the increasing offer of bull-
ocks, resulting from the retention of the
breeding stocks, and fatted cattle – reflect-
ing the rather slower market in late 2016,
and good pasturelands and forage, besides
cheaper feed, thanks to a better crop and
lower cornandsoybeanprices. On theother
hand, the soaring number of cattle for sale
should keep prices down, compared to past
seasons, and beef at prices similar to 2016.
In light of this situation, cattle farmers – and
industries – are facing the challenge of be-
comingmore efficient, in spite of higher pro-
ductioncosts.
Economicrecessionadverselyaffectedthemarket
ofmeatandexportsin2016,butthescenario
pointstoamorepromisingglobalmarketin2017
Beef farmers should keep a close watch on
production costs if income is to be generated
Movingand
herdingcattle
BeefCattle
GLOBAL
The export market in 2016 receded in
comparison to 2015, which had already
registered a decline: fresh and processed
beef shipments abroad dropped in volume
and revenue. According to the Ministry of
Development, Industry and Foreign Trade
(MDIC) shipments amounted to 1.35 mil-
lion tons, 1% less than the 1.35million tons
in 2015. Revenue was down 8%, from US$
5.795 billion to US$ 5.34 billion with ex-
change rate fluctuations and a drop in av-
erage prices in the global market.
Notwithstanding the good news in 2016,
like the conquest of the United States mar-
ket, the resumption of purchases by Sau-
di Arabia and the rising imports by China,
the exchange rate oscillations and the eco-
nomic problems that affected such import-
ersasRussia,Venezuela,IranandEgyptneg-
atively affected Brazilian sales abroad. Even
so, the Country firmly held on to its position
as leading global supplier of quality beef. In
volume, India is the top exporter, but there
is no direct competition, as the latter is fo-
cused on differentmarkets and prices.
For 2017, there is expectation for the
conquest of new markets, for the return
of old clients and more aggressive action
by Brazilian companies, taking advantage
of the favorable exchange rate. The vorac-
ity of the Chinese buyers and the eligibili-
ty of almost a score of new industrial plants
for shipments to Asia hint at a good perfor-
mance of the shipments abroad. China, in-
cluding Hong Kong, was Brazil’s leading
beef client in 2016, concentrating 33.3% of
Brazilian sales.
Despitethedirectionofsomeanalysesin
late 2016 towards the recovery of the mar-
ket, on the grounds of a resumption of Bra-
zil’s economic growth, which has been dis-
carded by economists after the early days in
2017, factors like an exchange rate with the
dollar close to R$ 3.50, soaring international
demand and some domestic indicators her-
ald expectations for a good year for the sec-
tor of beef, withmore sustainable farmgate
prices and throughout the supply chain.
Inor Ag. Assmann
56
