If you're talking cattle or beef, please don't use the words Argentina and Brazil in the same sentence. While it's natural to think of the two neighboring South American countries in the same light, they couldn't be more different — and are certainly headed in different directions.
In February, a group of 20 participants in the 2010 Beef Study Tour to South America saw the differences firsthand.
“I expected ranching in the two countries to be a lot more similar to each other,” says rancher and auctioneer Rex Arb, Lyndon, KS. “It didn't take long to see that Brazil and Argentina have two totally different cattle industries.”
Begin with Argentina
Argentina's 50 million head of beef cattle are 85% English breeds — Angus and Hereford — and are raised in a temperate climate. Thus, the Cactus Feeders feedlot at Villa Mercedes in the state of San Luis reminds Arb of a typical U.S. feedlot setting.
“A very clean feedlot, very efficient and really good-looking cattle,” Arb comments. “I thought I was in western Kansas — certainly not Argentina.”
It's that loss of identity of which most Argentine ranchers are not terribly proud.
Arb was among those surprised to learn that Argentina is rapidly moving from its signature grass-fed beef system to corn finishing, and vast areas of the world-famous Pampas region transition from grass to more profitable agricultural crops.
Rodrigo Troncoso, general manager of the Argentina Feedlot Chamber, explains that 45% of the national cattle slaughter now spends some time in one of the country's 2,100 registered feedlots. It's quite a switch from a decade ago when 90% of the cattle in Argentina were strictly grass finished.
“There's no turning back,” Troncoso says. “Five years from now, 80% of Argentina's cattle are going to be finished in feedlots.”
It's all part of a national policy cluster intended to keep beef prices low in the country with the largest per-capita beef consumption.
Troncoso explains that government compensation payments are made to registered feedlots to increase production and to make up for lower prices resulting from cattle price controls and an export moratorium. He says the average payment (“not a subsidy”) is about US$73/head produced for the local market.
What's most obvious across the Pampas landscape, though, is that there are fewer and fewer cattle to be seen. The cattle that remain are moving to the fringes of the country's breadbasket.
Government-mandated limits on cattle prices were apparent during what otherwise would be a busy day at the country's largest terminal livestock market. The pens at Mercado de Liniers in the outskirts of Buenos Aires are virtually empty these days as cattlemen steer clear of government-monitored markets and opt for the privacy of “direct” sales to meat packers.
Worst crisis in history
Argentine meatpacking icon William Hayes of Buenos Aires (see sidebar) notes that government price controls and beef export policies are pushing his country's beef industry into its worst crisis in history. He says the national cattle herd has dropped by 21 million head since 2007 to a total of 50 million head today.
He says it seems inconceivable that the country that once was the world's leading beef exporter will have to import at least 1,000 tons of beef this year.
“There's going to be a lot of sorting out over the next several months,” Hayes says. “With a few exceptions, we're not going to be exporting beef after this year.”
At Cactus Argentina, the beef outlook is more optimistic. General manager Miguel de Achaval, a Texas A&M University graduate, says the 25,000-head facility fits well into the national aim of producing grain-fed beef for both domestic and export markets.
Achaval says the Argentine beef industry must pay attention to global demands.
“And, the world doesn't demand grass-fed beef, it demands consistency,” he says. “Consistency is achievable with grain finishing; we can fit any market if we manage cattle correctly.”
He adds that the Argentine beef industry is learning how to cope in the marginal production areas. “As a result, producers will need to raise more kilograms per cow and more calves per cow — instead of simply putting more cattle into production,” he says.
Ironically, this all comes at a time when Argentina is fighting U.S. policies prohibiting fresh beef imports from Argentina due to foot-and-mouth disease restrictions. Alternatively, the U.S. is now allowed to export beef to Argentina as BSE-related restrictions are lifted.
North to Brazil
It's a whole other story in Brazil where the country's 190 million head of beef cattle are 85% pure or crossbred Nelore genetics, a tropical-tough zebu breed.
But, don't expect to eat a beef steak from Brazilian cattle like you would at a Montana — or Argentine — steakhouse, says Patti Davis, a commercial and seedstock cattle rancher from Belgrade, MT.
With due respect to her Brazilian hosts, Davis says their beef is simply too tough to eat that way.
“But, when they barbeque it churrasco-style and slice it hot onto your plate, it is great beef,” she says. “I didn't see anyone from our group shying away from it.”
Neither is the world, so it seems. Brazil continues to strengthen its position as the world's top beef exporter, accounting for a whopping 25% of the world's beef trade. And, live cattle exports for slaughter will likely increase by 20% in 2010.
The potential for expansion of Brazil's cattle herd is almost limitless — with an estimated 400 million acres of potential grazing land available — “without cutting down another tree,” as you often hear.
At Fazenda Marilângia near Bela Vista in the state of Mato Grosso do Sul, expansion is in the works.
Sergio Pinheiro manages the 500-head family ranch for his mother Maria. He's in the process of clearing several tracts of land and planting exotic grass species to increase grazing capacity.
“The government provides many programs to increase production,” Pinherio says. “Everyone tells us that we have to increase.”
But, Pinherio says government assistance programs should not be thought of as “incentives.” More fittingly, he says, the programs help encourage adoption of “requirements” that the government imposes on ranchers.
“For example, we can't allow any cows to drink from a stream or river, so the government helps us build watering systems,” he says. “I'm not sure we're better off that way, but it's the law.”
Pinheiro and other Brazilian ranchers look cautiously at government environmental regulations. In his region, 20% of all private property must be kept in “environmental preserve” — meaning it must be left to nature — and can't be used for any purpose.
In areas closer to the Amazon, the preserve requirement increases to 80%. Additionally, grazing is not allowed within the “high water” areas of any watercourse.
Productivity pressures abound
What strikes Davis the most is the land redistribution doctrines hanging over the heads of Brazilian ranchers.
“If their land doesn't meet government productivity definitions it can be taken away and given to the landless people, or to the Indians,” Davis says.
The productivity pressure comes from powerful socio/political groups like the Landless Workers Movement or Movimento dos Trabalhadores Rurais Sem Terra (MST). The target of the MST is the 3% of the population they say owns 66% of all arable lands.
When asked if the government pays compensation for any expropriated property, Pinheiro shrugs his shoulders. “We don't want to know the answer to that question,” he says.
J.W. Nuckolls, Hulett, WY, says cattle productivity is the other side of the coin for Brazilian ranchers.
“It's hard to fathom that they don't even try to breed their heifers until they're past two years old,” Nuckolls says. “Even then, they don't have a great breed-up rate.”
Nuckolls' observations account for the tendency of zebu-type Bos indicus cattle to mature later sexually than what he sees in his British-type Bos taurus cattle.
Brazilian cattle researcher Ezequiel do Valle, Campo Grande, Mato Grosso do Sul, says a national research priority is to increase the fertility of Nelore cattle.
“This breed is well adapted to survive in tropical climates, but features late maturity, short estrous periods and long postpartum anestrous intervals,” Valle says. “We're working very hard to improve this, but it's an uphill battle.”
But reproductive efficiency is just one productivity challenge.
“Compared to what you see in English-type cattle, we take a big hit in both age of slaughter and dressing percent,” Valle says. Average age of slaughter in Brazil is about 40 months, and average slaughter cattle will dress 53% — compared to around 63% for English breeds.
“But the Nelore breed can't be beat in this environment. Heat tolerance, tick and insect resistance and maternal traits obviously make them the breed of choice for most ranchers in the tropics,” he adds.
Seedstock Nelore operations like Fazenda Prata de Lei, near Campo Grande, are using the latest technologies to spread genetic gains. Artificial insemination and embryo transfer help the Prangini family keep pace with the demand for their cattle genetics.
“I wasn't expecting to see such high-tech seedstock operations like the Pranginis have,” says tour participant John Montgomery, Lenoir City, TN. “They're doing everything in Brazil that we do in the U.S. to increase production.”
Montgomery is also impressed with the outlook Brazilian cattle ranchers have for their industry.
“They're looking ahead and not back,” he says.
Clint Peck is director of Beef Quality Assurance, Montana State University.
Spotlight on William Hayes
William Hayes started working in the gut room of his father's abattoir near Hatherleigh, England, in 1954. Thereafter, the young man progressed through the business — to slaughterman and later buying livestock and wholesaling meat.
Hayes moved from England after the death of his first wife in a car crash in June 1969, going first to Ireland then on to Australia. Finally landing in Argentina, he formed Argentine Beef Packers (ABP) with his brother Bob, who died in 2005.
He's published several books on the global meat trade following his 2001 autobiography “Drunk and Disorderly.” As well as detailing his life and career in the meatpacking business, the book details his fight against alcoholism — which he won 22 years ago.
In January 2009, Hayes sold controlling interest in ABP to a group of Russian meat traders. Hayes is an ex-officio member of the company's board and still buys cows for ABP each morning.
His daughter, Muriel Elizabeth Hayes, is a frequent contributor to BEEF Cow-Calf Weekly.
Here are some of William Hayes' random one-liners:
“Argentina's a cattlemen's paradise ? but the beef industry is slipping through our fingers.”
“Argentines are still living in the glory days of the past ? 50 or 60 years past.”
“There are developed countries, emerging countries and then there's Argentina.”
“Tax evasion is the major national sport in Argentina ? second only to football.”
“If you're doing your job properly, you should have no fear of traceability.”
“The USDA is the John Wayne of the global meat industry.”
On Brazilian meat packer JBS: “They understand their lifeblood is the farmer.”