BRAZILIAN BEEF-CATTLE

PRODUCTION AND ITS

GLOBAL CHALLENGES
M AR F R I G ’ S S T R AT E G I C P O S I T I O N I N G
R E G AR D I N G C H AI N S U S T AI N AB I L I T Y
 GLOSSARY

Agribusiness: concept developed by Davis Goldberg (1957)

in Harvard University, it represents the total amount, in each
currency, of all operations involving: production and distribution
of inputs and capital goods for agriculture; production
operations in agricultural establishments; and storage,
processing and distribution of agricultural products and the
items produced with them like food, beverages, fibers,
renewable energy, wood, paper and cellulose to the consumer.

Agribusiness system model: based on the concept of

agribusiness, Goldberg (1968) built the model based in sector
analysis and highlighted the inter-sectorial connections as well as
institutional and organizational ones involving laws, associations,
cooperatives, research institutions and universities.

Beef-cattle system: it is the beef-cattle agribusiness

comprehended by the whole supply chain, consumers, culture,
social behaviour, the government and policies, laws, and
institutions (national and international), organizations like
ABIEC, ABPA, Embrapa.

Beef- cattle production systems: it’s the group of production

agents, all suppliers that can be organized in plural types of
systems to attend the demand for cattle.

Industry: sector

Slaughterhouse: companies responsible to process meat

production; processing.

¹ Managing partner and senior researcher at Agroicone

² Senior researcher and consultant
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 CONTEXT

The Climate Change 2021: The Physical Science Basis Summary for Policy
Makers published by the Intergovernmental Panel on Climate Change present a
clear message that anthropogenic green-house gas emissions concentrations
are causing extreme weather events worldwide and that the temperature
increase can reach 1.5 C between 2030 and 2040. This evidence puts weight to
the global challenge to reduce 45% emissions up to 2030, based on 2010 levels,
as a trigger to achieve the Paris Agreement goals.

The 26th Conference of the Parties (COP26) of the United Nations Framework
Convention on Climate Change (UNFCCC) taking place in Glasgow between
October 31st and November 12th of 2021 have the ambition to finalize the book
of rules of the carbon markets and the challenge to foster climate finance to
assemble at least US$ 100 billion per year as outstanding issues to be agreed.

Moreover, COP26 is a paramount moment to push forward climate action aiming

to climate neutrality. The definition of targets to balance emissions and removals
are critical and a sine qua non condition to put the world on a route to limit
temperature increase to 1.5 C above pre-industrial levels. Companies all
around the world are taking the lead to improve business towards a climate
transition.

As a leading company at the Beef-cattle system in Brazil, Marfrig has an

important role to play to transform livestock production based on good
practices, pasture recovery and maintenance, adopting innovation and allowing
to produce meat while reduces carbon.

Having these challenges in mind, this paper aims to explore the challenges
faced by Brazilian beef-cattle system, especially related to key environmental
and social issues that are at the core of the Sustainable Development Goals of
the United Nations Agenda 2030.

The first part will present economic data regarding the evolution of beef-cattle
system in Brazil and its economic importance for the country.

The second part will present the environmental and social aspects of beef-cattle
system and its concerns related to deforestation, the Forest Code
implementation and greenhouse gas - GHG emissions. Social aspects are
placed as cultural aspects of consumption in Brazil and also the exclusion and
difficulties faced by small-holders and family producers in this system.

Looking from the food system perspective, the third topic of the paper, it brings
to the debate beef-cattle system on Food System Summit (FSS). This topic
places a glance of the discussion and how Brazil positioned and committed with
coalitions for improvements. Based on Brazilian pathways, a simple analysis of
how beef-cattle system is related to those pathways is presented. Also, presents
tendencies of food consumption from the demand side.
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The fourth topic gives a more conceptual discussion about coordination on
this system and its importance. Slaughterhouses are placed as the
coordinators. The quality programs developed by them were just a first picture
about the leading role they represent. The historical evolution of environmental
issues in the Amazon linking the system to deforestation and their actions are
other example of system coordination.

The last topic presents the case of Marfrig on dealing with the challenges
placed since 2009 concerning the relation of their beef-cattle system and
environment. As a leading company, Marfrig has been establishing strategies to
measure and monitor the environment as an asset of its products and the
company to be coordinated and valuated by systems and markets.

2. BEEF-CATTLE PRODUCTION IN BRAZIL

This topic aims to provide a picture of Brazilian beef-cattle industry and its
economic and social-cultural importance, bringing a historical perspective
about the sector and evolution using qualitative and data analysis. Moreover,
presents an analysis of Brazilian beef-cattle markets – internal and external
and provides a picture of internal consumption per capita. The last section of
this first topic brings opportunities observed along the chain – especially on
production and international trade.

2.1 Beef-cattle Economics: General Aspects

• Beef-cattle system is considered one of the most complexes around the world on
daily basis. Cultural aspects, the internal relationship between agents,
international market, NGOs’ positions, regional aspects, processes, technology
level, and genetics diverge from country to country. Despite different aspects, it is
one of the oldest agricultural sectors and most valued when it comes to consumer
preferences and vitamins contained (complex B12, especially).

• Understanding of structure and governance forms of main agents involved in the

system is a key factor for development. In Brazil, beef-cattle production systems
can be considered flexible and diverse. The historical economic perspective of
this system brings the development of an activity based on land expansion and
asset valorisation due to inflation, the use of traditional systems (land use, capital
and employment) leading to low productivity and poor safety food system until the
end of 1990s. Technological improvements on nutrition, sanitary aspects and
genetics have been replacing this traditional system to efficient and sustainable
ones (Wedekin et al., 2017).

• These several technologies on nutrition, genetics, sanitary and monitoring and

controlling processes can also be considered as a pool of characteristics that
shape different products to markets and consumers, that, when coordinated, bring
optimized structures to the system (Lemos & Zylbersztajn, 2018).

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 BRAZILIAN
AGRIBUSINESS - GDP

Brazilian Agribusiness GDP is done through a methodology that considers all

the activities involved along the chain, before and after production system.
The Brazilian Institute of Geography and Statistics (in Portuguese IBGE) only
considers and measures what is done inside production system (aggregated value
in farm). However, this methodology undervalues coordination between agents and,
also, their work on improving the whole system.

Agribusiness GDP has grown 564,8% between 1996 and 2020 (Figure 2.1).
Nominal value came from almost 300 million in 1996 to 2 trillion, in the national
currency, Brazilian reais (R$ or BRL). Agribusiness GDP has two shades, one of
agriculture and other of livestock aggregated values. The period analysed showed
an evolution of 835,6% in livestock sector’s GDP, it represented 22% of
Agribusiness GDP and since 2015 sustain a 30% share. As part of the livestock
sector, beef sector represented 10% of Brazilian total GDP in 2020, according to
the Brazilian Exporters Processors Association (in Portuguese, ABIEC).

Figure 2.1 - Brazilian Agribusiness GDP and

Livestock Sector GDP (Million and %)

2.500.000 35%

30%
2.000.000
25%

1.500.000
20%

15%
1.000.000

10%
500.000
5%

- 0%

Brazilian Agribusiness Brazilian Livestock % GDP Livestock Production

Source: CEPEA (2021)/CNA (2021)

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Agribusiness in Brazil is a very important sector.
It represents around 30%-33% of Brazilian Total GDP and it´s the
most exposed sector to international competition (PWC, 2013).

From 1996 to 2020, a great development can be observed, especially on inputs’

agents and (in farm) production (Table 2.1). The first explains an increasing of
technologies on the field. However, when compared to production and its growth,
it could be better explored. Production growth can be explained part by prices,
exports (market) and the continued growth on cattle herd.

Table 2.1 – Brazil: Livestock sector GDP (R$ million)

Main Agents 1996 2006 2016 2020

Inputs 1,616 6,997 20,716 26,816
Production 7,541 21,859 104,633 169,954
Processors 17,649 25,401 79,970 113,408
Services 37,568 47,721 197,678 292,120
Total 64,374 101,979 402,995 602,298

Source: CEPEA (2021)/CNA (2021)

If ignored the results from 2020 and base the analysis between 1996
and 2016 only, in two decades processors tripled their GDP.

BEEF-CATTLE CHAIN QUANTIFIED

Since Plano Real, the economic plan that modified economic structure in Brazil
and stabilized the currency, in 1994, business environment in beef industry
has been changing. Cattle in the past was a synonymy of an asset to be
transacted and hold value, liquid value for those who owned it. The economic
change brought this activity to reality of agribusiness and the constant search for
efficiency to survive.

According to ABIEC, in 2020 there were 165.2 million hectares dedicated to

cattle production in an occupation of 1.14 cattle/hectare, since the total
amount of animals were quantified in 187.55 million (Figure 2.2).

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Figure 2.2 - Production quantification (2020)

Cattle Imports Cattle Herd Cattle Exports

42 live 187.55 million 328,874 live

Average Weight Animals Slaughtered Feedlots (15.67%)

248.67 Kg/carcass 41.5 million 6.48 million

Exports Beef Production Domestic Market (73.93%)

2.69 million CWE 10.32 million CWE 7.63 million CWE

Source: ABIEC (2021)

Note: CWE - Carcass Weight Equivalent is the weight of meat cuts and meat products converted to an equivalent weight of a dressed
carcass. Includes bone, fat, tendons, ligaments, and inedible trimmings (whereas product weight may or may not).

The picture of 2020 reflects a growth in exports supported by currency

devaluation and the high level of international demand due to substitutes’
crises, pandemic, and new markets.

Although the market had appetite for the protein and the devaluation of Real boosted
exports, it’s important to highlight those new markets came through the years, due to
constant improvements that lead to efficiency and better quality. Technology,
innovation, and technical assistance are the key factors for this turnaround in this
industry, even it’s not completely reformulated. Figure 2.3 signalize those
improvements historically reflected on the animal time life before being slaughtered.

Figure 2.3 Brazil - Percentage of animals

slaughtered after 36 months (males only)
53.8%

49.2%

47.3%
45.9%

41.7%

38.3%
36.4%

30.4%

27.6%

26.4%

22.4%

19.5%

15.0%

10.8%
10.3%

10.9%
10.4%

9.5%
10.1%

8.9%
7.5%

8.8%
7.0%

6.7%

97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: ABIEC (2021)

Brazilian beef-cattle system was boosted after 2000s by technologies and innovations that is
shaping the system to a more efficient one. International trade also boosted development due
to the standards required in exports, mainly sanitary. Since then, Brazil reached a credible
sanitary status internationally, mainly for foot and mouth disease (Lima, 2005).

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2.2. BEEF-CATTLE MARKETS

Although Figure 2.4 below shows that domestic market holds 73% of
production share in beef industry, it’s relevant to analyse international trade
participation and consumption per capita reduction along the years. In 2015,
market structure was 81% of production destinated to domestic market
and 19% to foreign markets. In 2020, international trade represented 26.07%,
in which: 83% was commercialized in natura to 119 countries; China had
50.63% of total share, followed by Hong Kong - 11.68%, Egypt - 6.86%,
Chile – 5.25% and others 25.39% (ABIEC, 2021).
Figure 2.4 –
Brazilian exports from 2000-2020 (US$ billion x million tons)

2.500 9.000
8.000
2.000 7.000
6.000
1.500
5.000
4.000
1.000
3.000
500 2.000
1.000
- -
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020
Volume (ton) Value (Million US$)

Source: ABIEC (2021)

Industrialized meat represents only 10.23% of Brazilian beef exports, especially

to developed countries. The United States represents 35.45% of total,
followed by European Union – 33.37%, Egypt – 3.31%, Canada – 2.58%
and others – 25.28%. Even, it can be noticed a great movement in exports,
the largest quantity occurred between 2000 and 2008 (Figure 2.4).

The first great increase occurred due the WTO Agreement on Application of
Sanitary and Phytosanitary Measures (SPS). After that, Brazil supplied 20% of
the world demand (ABIEC, 2021). Data of beef supply around the world from
2018 to 2020 shows that Brazil already corresponds to 24%, and by 2030
it will represent 30% of world exports (USDA, 2021).
On the other hand, domestic market always represented the largest
share of Brazilian beef production volume. The consumption of beef
comes from a cultural aspect. Since colonial times, beef-cattle protein is a
basic meal on Brazilian home tables. Even though, it’s not the largest total
volume consumed, being behind United States, China, and European Union
(USDA, 2021). In kg per capita , Brazil has similar consumption as the United
States (around 37 kg/per capita/year in 2020), but much lower than Argentina
(52 kg/per capita/year) and Uruguay (45 kg/per capita/year).

³ Estimated using USDA (2021) for meat domestic consumption and population estimates. 8
Technological advances made possible superior standards, processes, and
products. In the last decade, several brands and programs were developed by
slaughterhouses to improve quality to attend international market, at a first
objective, and found a hunger appetite in domestic one. Those programs were
mechanisms of coordination between cattle production and slaughterhouses and
have been playing a great role on inducing to technological updates, technical
assistance and sustainable systems of production based in science.

2.3. OPPORTUNITIES –
IMPROVING PRODUCTION AND OPENING NEW MARKETS

There are several opportunities in the agribusiness of beef cattle systems for
improvement, increase international trade and feeding domestic market. The key
for development is based on sustainability. USDA projections for 2030 shows the
growth on domestic market and consumption (15%), also the increasing exports
(49%) from 2020 to 2030 (Figure 2.5).

Figure 2.5 – Forecast of Brazilian Slaughter (1.000 heads),

production, exports, and consumption (1.000 metric tonnes) 2018-2030

14000 48000

12000 46000

10000
44000
8000
42000
6000
40000
4000

38000
2000

0 36000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Production Exports Consumption Slaughter

Source: USDA (2021)

The forecast brings light to incremental production on 24% due a 17%

increasing in heads slaughtered and 6% gain of carcass weight and
will correspond to a 15.7% of total beef produced around the world.

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Although the perspectives are pleasant at a first glance, it demands push
improvements on processes and technology adoption by all agents. On
production side, constant gains on efficiency will lead the activity and provide
better quality to market, transparency, and repositioning production in consumers’
minds. Inputs’ companies, research institutes, universities, technical assistance,
agricultural policies oriented to beef-cattle production are key for changing,
looking for global institutions and their challenges.

Quality improvements and building reputation on international market are constant

challenges for associations and organizations in this industry. The efforts to
expand and open new markets have had positive signs. But diversification must
be a target to avoid disturbances related to dependence. There are opportunities
to pursue especially in Asia and Africa, where most of the countries are
developing or least developed (Figure 2.6).

Figure 2.6 – Continent’s consumption and production x Brazil

35%

30% 32%

25%
24%
20%
20%
19%
15%
15% 15%
13% 13%
10% 11% 11% 11%
10%
5%
5%
1%
0%
Asia North Latin Oceania Europe Africa Brazil
America America

Production Consumption

Source: OCDE (Outlook 2019-2028)

There are no missing opportunities for Brazilian livestock, in line with

projections and Brazil’s capacity to catch up on producing more. The main
challenge now is doing that on a sustainable basis, which brings a new
specification when it comes to production process by all agents, environmental
and social responsibilities, among other indicators. Being sustainable in all
dimensions is mandatory for the survival of food systems, not only beef-cattle one.

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3. SOCIO-ENVIRONMENTAL
CHALLENGES IN BEEF-CATTLE SYSTEM

The third topic emphasizes social and environmental aspects of cattle raising
and beef sector in Brazil. It brings the main discussion around the world related
to livestock production, deforestation, and consumption, mainly in the Legal
Amazon, and discussions regarding the Cerrado biome.

Despite of the technical and technological advances in beef-cattle systems and

its dynamics in Brazil, many critics have been placed to production and
consumption due to the relation with deforestation and climate change. Also, it is
considered an inefficient agribusiness due to the amount of land dedicated,
degradation process that can cause, consumption of water and proportion of
population fed.

Sustainability presents itself with three main axes – economic, environment

and social. The economic aspect of this system could be observed through the
evolution of technical aspects, as well as international market expansion, as
explored in the previous section.

3.1 SUSTAINABILITY AND TRIPLE BOTTOM

LINE– ENVIRONMENTAL, ECONOMIC, AND SOCIAL
ASPECTS
In the discussion about sustainability, the Sustainable Development Goals (SDG) must
have to guide the understanding of real picture and necessary improvements to be
adapted. Beef-cattle system in Brazil, like other food systems, has a key role to play
when it comes to nutritious food and food security (SDG 2 and 3). Bovine meat is a very
rich source of vitamins important to human body and its development, especially the
complex B. Some of them are not necessarily founded in other types of proteins, animal
or planted based ones, like B12 (Comerford et al., 2021).
However, when it comes to environmental
and social aspects, this system does not lack Figure 3.1 –
criticism. The basis for a rational debate on
Sustainable
the main environmental and social challenges
of the livestock sector in Brazil must be
Development Goals
settled in reliable data that consider the
patterns of livestock production today (2020),
a brief comparison with the past (2000s) and
projections for the future (2030), considering
always the links with SDG 8 – decent work
and economic growth, overviewed on the last
topic about the importance for Brazilian
economy; and SDG 12 responsible
Source: FAO
consumption and production, one of the basis
for the approach of this topic.
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 SOCIAL AND CULTURAL ASPECT OF
BEEF-CATTLE SYSTEM
The culture of bovine meat 1970, bovine meat detained the
consumption in Brazil comes from majority share, 67% of total meat
colonial times. It’s part of the basic consumption, pork 24% and chicken
meal in domestic market (Wedekin et 9%. Brazilians were capable to buy
al., 2017). However, prices and 7.9 kg of bovine meat for each 1 kg
income are the leading aspects that of chicken. In 2016, bovine meat
determines consumption, especially consumption represented 38%, pork
in developing countries and least 14% and chicken 48%, and each 1
developed ones. As it could be kg of bovine meat could buy 1.3 kg of
observed in the previous topic, the chicken (Wedekin et al., 2017).
devaluation of domestic currency
opened opportunities to exports Chicken system incorporated
associated with the lack of supply technological advances and cost
increase in several countries around reduced dramatically. Availability
the world. increased and consumption raised
over the time, but it doesn’t mean
Innovation and technology impact that preferences changed for
directly on prices if they lead to Brazilians. Going deep on domestic
efficient modes of production and its preferences for protein consumption,
rising. Brazilian protein Figure 3.2 reveals that the population
agribusinesses are examples of is disposed to spend more,
changing consumption patterns due approximately 1/3 plus, to buy bovine
prices and technological advances. In meat compared to chicken meat.

Figure 3.2 – Brazilian comparison between beef and chicken

consumption (Kg/per capita/year) and spent (per capita/year)

60 600
per capita consumption/year

50 500
Spent per capita/year

40 400

30 300

20 200

10 100

0 0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Beef domestic consumption per capita Chicken domestic consumption per capita
Spent on beef meat/per capita/year Spent on chicken meat/per capita/year

Source: USDA (2021), IBGE (2021) and SEAB (2021). Elaborated by Agroicone

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These simple analysis reveals the relation of consumer behaviour and income,
their preferences shaped by culture that can be linked directly to SDG 3 about
wellbeing, but must address the discussion on SDG 12 of responsible
consumption, which is related to have balanced meals including most diverse
types of food available. Knowledge about nutrition, availability and access are key
to provide good solutions of consumption balance without neglecting cultural
differences.

The bovine meat consumption behaviour in Asia, especially in China, ended up

boosting exports like shown on previous topic – Figure 2.6. There are imbalances
of production and consumption in the continent and the increasing of income of
the last years allied to African Swine Fever that annihilated swine cattle, ended up
for demanding bovine meat from Brazil. It’s important to highlight that income
increases can also lead to behaviour changes.

REGIONAL GROWTH, LABOUR,

AND INCOME GENERATION

Agribusiness was a working force on Brazilian production expansion, nonetheless

it was based on hunger combat (SDG 1) through giving access to safe food in
affordable prices (SDG 2) as stated by Wedekin (2021) about the tropical
agriculture revolution. Two analyses were conducted to explain the benefits of
agribusiness expansion on Brazilian Cerrado. The first one was the Human
Development Index by Municipality (IDHM) of 1,102 municipalities that are on
Cerrado biome, which was 0.386 in 1991 and went to 0.671 in 2010. It was an
increase of 73.8% in places where agribusiness is the main economic activity. In
other words, agribusiness and its development bring well-being, healthy and
generates work and development to a region where started to be developed, in
accordance with SDG 2, 3 and 8.

The second analysis was based on food costs share on domestic consumption
expanses, categorized by minimum salary between 1974-1975 to 2017-2018
(Table 3.1)..

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Table 3.1. – Brazil: share of food costs on consumption
expenses of family budget, by minimum-salary (MS) per month,
in the period of 1974-1975 to 2017-2018 (% of total expenses)

Period Total Up to >2 to <3 >3 to <10 >10 to >15

2 MS MS MS <15 MS MS
1974-1975 33.9
1987-1988 25.3 44.1 41.3 34.6 28.7 21.3
1995-1996 23.4 35.2 37.1 30.2 24.2 20.4
2002-2003 20.8 34.5 31.9 24.8 19.4 15.1
2008-2009 19.8 29.6 27.0 21.7 17.3 13.8
2017-2018 17.5 23.8 21.3 18.2 15.6 12.6
Reduction (percentual points) -16.4 -20.3 -20.0 -16.4 -13.2 -8.7

Source: POF-IBGE/ elaborated by Wedekin (2021)

Data turns clear the reduction of food expenses on family budget along time in Brazil,
emphasizing that innovation efforts brought well-being (SDG 3) and sustainable
consumption and production (SDG 12) to a country that was in its 1960s dependent
on food imports. Food expanses on family budget share reduced from 44.1% to
23.8% in low-income social classes, evidencing the importance of agriculture
advances.

Bonelli (2001) brings similar results through a different methodology to check

agribusiness in economic and social impact. The author analysed data between 1975
and 1996 to check the dynamics of agribusiness and its impact on states’ GDP and
Human Development Index (in Portuguese – IDH) and its evolution. Results made
clear that innovation and agribusiness improvement in Brazil brought social inclusion
and economic growth.

Authors looked at the demographic dynamics associated to urbanization that brought

new insights. On new cropping and pasture areas, demographic growth was superior
even when national rural population was not growing. This leads to a conclusion that
agribusiness growth led to urbanization development though services and
establishment of local business to support regional demand. In terms of impacts,
authors affirm that 1% of agribusiness income growth led to 1.07% in income in other
non-agribusiness activities.

General analysis of agribusiness expansion and growth in Brazil shows its

relationship with urbanization, development of support services that leads to
employment of work force not directly in agribusiness, but generating income and
well-being characterized by Human Development Index.

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 In terms of direct and indirect impacts of agribusinesses’ sectors, Costa, Guilhoto
and Imori (2013) using national input-output matrix of 2006 (updated to 2010
values) showed that a “shock” of R$ 1 million on final demand of processed
agricultural products (as bovine slaughter) brings impacts on the Brazilian
economy, separated by direct and indirect impacts and income effect (Table 3.2).
For each R$ 1 million additional final demand on bovine slaughter generates 111
employments in the economy, increases Gross Product Value by R$ 5.4 million
and national GDP by R$ 2.4 million.

Table 3.2 – Brazil: Direct and indirect

impacts and income effect resulting from a
“shock” of R$ 1 million* on total demand of
bovine slaughter

Variable Direct and Income Total impact

Indirect Impact Effect

Employment (numbers) 62 49 111

Gross Product Value (thousand R$) 3,084 2,359 5,443
Gross Domestic Product – GDP (thousand 1,167 1,267 2,434
R$)

R$ 1 million on total demand represents only 0.0041% of bovine slaughter Value of

Production in 2006 (in 2010 values).Source: adapted from Costa, Guilhoto, Imori
(2013)

According to the authors, most of the impacts on this shock occurs on agricultural
sector (primary production), then on own sector of the shock (bovine slaughter),
but also impacts other economy’s sectors, mainly GDP and remuneration of
services’ sectors and imports of agricultural inputs’ sector.

When it comes to beef-cattle system, ABIEC (2020) estimates that 4.5 million jobs
supply the entire supply chain in Brazil. Just considering farms and
slaughterhouses, operations had 3.3 million jobs in 2019 and generated R$65
billion in salaries (11% of beef-cattle GDP).

Even innovation employment on farms brings the idea of lack of human capital or
establishment of the population in rural areas, this thesis can’t be entirely applied.
Innovation and development enforce to rural areas the need to new capabilities
and human development to manage business in perspectives that leads to
efficiency, boosting educational systems (SDG 4) to support development. Also,
levels up employment in services, human capacitation, technical assistance, and
supply industries that creates an environment of evolution.

15
THE IMPORTANCE OF SMALLHOLDERS ON
CATTLE PRODUCTION IN BRAZIL

According to Garcia et al. (2021), the 2017 Agricultural Census presented its
results based on Law No. 11.326 / 2006, therefore, in family and non-family
farmer. The results revealed that Brazil has around 5.07 million agricultural
producers, occupying 351 million hectares. Of these, family members were 3.90
million (76.8%), occupying 80.9 million hectares (23.0%), while 74% of it has
livestock production and pasture is the main land use, with 39 million ha.

Considering total sales of cattle herd surveyed by IBGE Agricultural Census

2017, family farmers had 17% share in total (considering farms with more than
50 heads), while sales for other cattle ranchers for the purpose of fattening and
reproduction represented 23.4% of the total animals sold. This reveals the
importance of family farmers in the beef-cattle system in Brazil, with lower direct
relationship with slaughterhouses.

The same authors also affirm that, in addition to its productive importance, family
farming is also responsible for the occupation of more than 10 million people,
representing 67% of the people employed in farms (15.1 million); of this, 8.8
million are related to the producer, that is, a family member, and family farming is
still home to 32% of the total employed people without family ties with the
producer, directly related to SDG 8 about decent work and SDG 10 about
reducing inequalities.

These numbers alone reveal the importance of family farming for the Brazilian
society and, also, for cattle production. However, family farming has several
challenges, due to complexity and heterogeneity found in family production: poor
socio-economic indicators, land distribution, size of farms, access to technology
and insertion to markets (Garcia et al., 2021).

Other important indicators that result on low productivity, low income and,
consequently, environmental degradation, is the fact that, in 2017, 87% of family
farmers did not use limestone to correct the soil, essential input for at least
maintaining pasture support capacity; 82% did not receive any technical
assistance; only 14% accessed rural credit (IBGE Agricultural Census, 2017).

This calls attention to the necessity of innovation and technological inclusion to

support constant growth of efficiency in their properties and construct
coordinated supply relations to slaughterhouses with economic incentives and
quality standards, otherwise it will continue discouraging smallholders and their
successors to continue their activities and/or deepen environmental degradation.

16
Another sensible social feature that can be discussed is the inclusion of informal
cattle producers. Those are all cattle ranchers that have some pendency with land
use formalization of property rights and informal relationships with other
producers. This situation can create barriers to traceability and informal slaughter
or slaughter that couldn’t be related to any type of sanitary system. Sustainable
production doesn’t bring only environmental issues, it also includes governance
about land use and land property rights. These rights are important for control and
monitoring from government and private sides, also are essential for the access to
credit in banks and developing projects.

Informality along the system has been addressed by monitoring and

projecting plans of inclusion of these agents. If Brazil has informal relations
in beef-cattle system, full traceability won’t be possible and this opens doors to
opportunist behaviour with complex consequences, deforestation is just one of
them. Majorly it settles population on vulnerable sanitary status.

ENVIRONMENTAL ASPECT:
NATIVE VEGETATION PROTECTION LAW

The Native Vegetation Protection Law (Law n. 12,651/2012 , known as “Forest

Code”) reflects a key policy instrument aiming to promote restoration of
natural vegetation, curb illegal deforestation and regulate with a great
degree of enforcement permitted conversion or legal deforestation.

The 2012 Forest Code have several amendments and regulations relate to the
obligations to keep and restore Permanent Preservation Areas (so called APPs) and
Legal Reserve areas (so called LR) . The Code created a compliance process
considering producers who deforested before and after July 2008, with specific rules
for each. Producers must restore APPs and LR areas planting native species,
promote natural revegetation if possible and, in the case of LR, compensate in
remaining natural vegetation areas that would be legally eligible for deforestation in
the same biome and state (compensation in different states would need to take
place in priority areas and follow strict criteria).

In this regard, the compensation may become a kind of payment for environmental
services, in which the owner will be paid to conserve the natural vegetation.
Although the regulation related to the Environmental Reserve Quotas (Cota de
Reserva Ambiental – CRAs) is not yet approved, there are different schemes aiming
to build compensation markets in many states and promising to become an
essential tool for environmental compensation and market incentive in the future.

The first step required by the new law is to enroll the rural property in the
Environmental Rural Registry (Cadastro Ambiental Rural - CAR), an electronic
registration website platform (SiCAR) that will comprise information about
Permanent Preservation Areas (APP), Legal Reserves (LR) and if there is a
vegetation deficit.

4 Available at: http://www.planalto.gov.br/ccivil_03/_ato2011-2014/2012/lei/l12651.htm

5 The APPs are spaces to be preserved both in rural and urban areas and its criteria vary according to the width of the river and
water bodies, steep slopes, hilltops, and mangroves. On the other hand, the LR means a native vegetation area of 80% in the
Amazon (50% in some cases), 35% in Cerrado areas in the North and 20% in other areas that must kept in rural properties. 17
Hence, for the first time in history the country will have a reliable and clear source
of information describing the real scenario of natural vegetation protected by
farms and the debt of APPs and LRs that will need to be restored, pass-through
revegetation or be compensated in other natural areas (this last only in the case
of LR cleared areas before July 22nd, 2008). However, rural properties need to be
enrolled in the CAR.

CAR also can be used as a tool for landscape planning, for farm planning and for
transparency regarding environmental compliance of Brazilian farms. The
usefulness of the CAR in the future given the possibility to pass clear and reliable
information about land use situation may become an important instrument for
producers, industry, retailers, and consumers. Additionally, starting from 2019,
producers without CAR are not eligible for public credit in banks. In Brazil, banks
and government represent 90% of credit to agribusiness (Agricultural Census,
2017).

As the second step, the law creates the Environmental Compliance Program
(Programa de Regularização Ambiental – PRA) defining specific rules to be
followed for those producers that will need to comply with the APPs and/or LRs
areas. Thus, restoration is the goal for compliance, and natural restoration
(revegetation) where is possible; the LRs areas could also be compensated and
50% of the LR debt could be planted with exotic species for economic exploitation
if some requirements are followed.

In most states, the PRA is far from operational. The PRA has only been effectively
implemented in six states, with a fully operational system, signed commitment agreements,
and plans for compliance being executed and monitored in APPs and Legal Forest
Reserves. Of the states that had not yet effectively implemented the program last year, only
Acre has advanced in 2020. As for the number of commitment agreements signed and in
execution in the states, numbers range from 100 to 200 in Acre, Pará, and Rondônia; more
than 500 commitment terms were signed in Mato Grosso alone. (CPI, 2020, p. 4)

It must be highlighted that the compliance agenda is a long-term policy, predicted

to last up to 20 years after each producer accede to the compliance
process. In light with the CAR process in the states, the approval of PRAs to
base the compliance process and the start of restoration will promote a new
dynamic on land use, mainly reducing pasture areas (Harfuch et al., 2016a).

GHG EMISSIONS AND SUSTAINABLE

PRODUCTION IN BRAZIL

Brazilian GHG emissions’ pattern has shifted in the last years. In 2005
emissions from the land use, land use change and forestry (LULUCF) sector
represented 63.9% of the total emissions in CO2 equivalent (Sirene, 2021).

In 2012, this number shifted to 14.9% due to deforestation reduction, and

the energy and agricultural sector became the most important sector in
terms of emissions, representing 34.7% and 39.7% % each. Data from
2016 shows that LULUCF represented 27% of total emissions in CO2
equivalent, but agricultural sector continued to be the most important one in
terms of emissions, representing 33% (Sirene, 2021). 18
Methane (CH4) accounts for 63.4% and nitrous oxide (N2O) for 32.4% of the
total agricultural emissions. It was a total of 487 million tons of CO2
equivalent registered in 2016, an increase of 2.3% in relation to 2015, and
5.1% related to 2012 (461 million tons of CO2 equivalent) (Sirene, 2021).

Residue burning, emissions from soils, enteric fermentation as the pushing

activity for methane emissions (58%), where enteric fermentation from livestock
represents 86%, followed by 11% of dairy cattle and 3% from enteric fermentation
of other animals, manure, residue burning from sugarcane and rice. The main
emissions of N2O come from agricultural soils due to manure from animals, the
use of synthetic fertilizers and animals in pastures (MCTI, 2020). In the Second
Communication to the UNFCCC (2005), Brazil highlighted a methodological
aspect related to the accounting based on the Global Warming Potential (GWP)
versus the Global Temperature Potential (GTP).

The GTP compares greenhouse gas emissions by means of their contributions to the
change in the average temperature of the Earth surface in a given future time period and
better reflects the real contribution of the various greenhouse gases to climate change. GTP
would, thus, allow for more appropriate mitigation policies. GWP does not appropriately
represent the relative contribution of the different greenhouse gases to climate change. Its
use would overemphasize and erroneously stress the importance of greenhouse gases that
remain in the atmosphere for only short periods of time, such as methane, leading to
erroneous and inappropriate mitigation strategies in the short and long terms and
erroneously driving mitigation priorities. Exaggerated importance has been assigned to
methane emission reduction and to some industrial gases that remain in the atmosphere for
a short period of time, thus shifting the focus away from the need to reduce CO2 emissions
from fossil fuels and to control some of the industrial gases that remain in the atmosphere
for a long period of time.” (MCTI, 2010, p.16).

The importance of the debate about measuring carbon balance with GWP and/or
GTP is not new in the UNFCCC. The Intergovernmental Panel on Climate
Change states “the most appropriate metric and time horizon will depend on
which aspects of climate change are considered most important to a particular
application. No single metric can accurately compare all consequences of
different emissions, and all have limitations and uncertainties" (IPCC, 2013).

Therefore, it is important to situate the debate about the most appropriate

methodology to account for short-lived GHGs. Livestock methane emissions are
highly impacted using GWP considering its emission factor. The report of 2020
that brings data from 2016 emissions highlights this difference: total emissions
using GWP was 567,043 and using GTP 198,043.

The Brazilian iNDC also highlights the importance of capturing the differences of
GWP and GTP methodologies. The Fourth National Communication to the
UNFCCC, that is about to be published, will also consider both methodologies.
However, IPCC affirms that GTP metric is more adequate to be the base for
public policies for GHG mitigation and climate change.

In parallel, it would be important to follow how Paris Agreement will affect land
use, land use change and forestry and the agriculture sectors emissions balance
and accounting. It is reasonable to say that soon Parties will adopt decisions
considering methodologies and rules for detailed carbon accounting, which will
cover pastures and livestock production.
19
In Brazil, it is already possible to notice improvements in methodological
aspects related to GHGs in livestock. Data organization and information for
integrated analyzes at regional levels, the development of new assessment
methods, the methodological standardization, and the creation of databases of
emission factors for evaluation of life cycle accounting for the carbon footprint in
cattle production systems and the Developing applications for production systems to
allow the assessment of greenhouse gas balance and mitigation strategies of
greenhouse gas emissions on farms (Baroni, 2015).

Along with the improvement of methodologies and GHG accounting, it is relevant to

quote that the adoption of low carbon practices can have positive impacts on
livestock production and other agricultural practices, in accordance with SGD 7, 12,
15 to promote clean energy, sustainable production and land conservation.

Brazil adopted the path towards a low carbon agriculture in 2010, as part of the
National Climate Change Policy (Federal Law No 12,187/2009 ), which was enacted
after Brazil committed to Nationally Appropriate Mitigation Actions – NAMAs, during
the COP15 in Copenhagen.

The ABC Plan (Low Carbon Agriculture) is a sector plan for mitigation and
adaptation of climate change, created by the Federal Government and managed by
the Ministry of Agriculture. Among its several goals, there were specifically financial
incentives for the 6 following most relevant actions to be accomplished until 2020 7:
• Recovery of degraded pastures (15 million hectares)
• No till (8 million hectares)
• Biological nitrogen fixation (5,5 million hectares)
• Integrated crop-livestock-forest - iLPF (4 million hectares)
• Planted Forests (3 million hectares)
• Treatment of animal waste (4,4 million m³)

To achieve such goals, it was created a special incentive/credit line, approved by

the federal government (National Monetary Council – CMN) , for financing
sustainable technologies/projects, which offered 4.5 billion Reais in 2014 alone,
with 5% annual interest rates. Through the ABC Plan is expected that a total of
197 billion Reais be used to finance low carbon agriculture projects during the
timeframe 2011 – 2020, achieving up to 163 million tons of CO2e reductions until
2020. Results about the decade 2010-2020 of ABC Plan are expected until COP
26, they were not officially communicated. However, new goals are already part
of Brazilian Operational Plan ABC+ (MAPA, 2021):
• Recovery of degraded pastures (30 million hectares)
• No till (12.58 million hectares)
• Biological nitrogen fixation (5.5 million hectares)
• Integrated crop-livestock-forest - iLPF (10 million hectares)
• Planted Forests (4 million hectares)
• Agroforestry systems (0.10 million hectares)
• Bio inputs (13 million hectares)
• Irrigated systems (3 million hectares)
• Finishing feed termination (5 million animals)
• Treatment of animal waste (208.4 million m³)

6 Regulated by the Federal Decree No 7,390/2010

7 Federal Decree No 7,390/2010, Article 6.
8 CMN Resolution 3,896/2010. 20
The ABC Program was launched as the finance instrument to finance ABC Plan
technologies and Forest Code compliance since 2010. However, despite the
importance of the ABC Program as a GHG mitigation finance program for rural
sector, from the beginning it faced challenges regarding regional
disbursement/credit assessment concerning the time frame. It could be clearly
identified a severe disproportion of disbursement and contracts signed among
regions.

From crop seasons 2013/2014 to 2020/2021, the Center West and Southeast
regions received 4.2 billion Reais and 3.9 billion Reais respectively, while the
North and Northeast, which strongly need more support to develop their
economies and reduce poverty, especially concerning rural population, received
2.3 billion Reais and 2 billion Reais respectively in the same period (SICOR,
2021). Those last regions increased the demand for ABC Program resources
more recently.

ABC+ Operational Plan also relies on the Paris Agreement and the need to create
an enabling environment aimed at promoting pasture recovery and good
agricultural practices when it comes to livestock. The ability to measure GHGs
reductions based on the Plan is also a cross cutting challenge that deserves
attention.

Considering a mitigation potential of 6.78 tCO2eq/ha for pasture recovery and

integrated crop-livestock-forestry system, which includes soil carbon stock
variation, enteric fermentation, manure and nitrogen fertilization these actions
might mitigate about 100 and 25 million tCO2eq, respectively (Observatório ABC,
2013).

Other studies, such as Economic and Social Implications (IES-Brasil, 2014) has
included carbon content of forest in the iLPF system. This would lead an increase
in mitigation potential of 106 tCO2e/ha in 20 years. According to Imaflora,

With the use of areas of degraded pastures currently existing in Brazil and the
adoption of low-carbon practices, by 2030 it will be possible to meet the demand
for agricultural products and reduce by 50% GHG emissions from the
agricultural sector, without carrying out deforestation. Moderate intensification of
livestock production, the use of no-tillage cultivation system and the implementation of
IAFP systems are key to achieving this scenario. (Piatto et al. 2015)

Acknowledging that degraded pasture recovery and livestock intensification are

the key drivers towards productivity gains, it is important to consider carbon
sequestration from better pasture management, pasture recovery and practices
as iLPF as parameters to measure the life cycle of beef production in Brazil.

These figures could be improved if carbon stocks from avoided deforestation due
to increase of stocking rate in these areas (pasture recovery and iLPF allow more
animals in the same area) are considered and related to the conservation and
restoration under the Law on Protection of Native Vegetation (Federal Law No
12,651/2015). These factors will allow accurate GHG balances of agricultural
production.

21
 3.2. CHALLENGES FACED BY
BEEF-CATTLE SYSTEM

Issues such as land use dynamics and policies, exclusion of minorities

(indigenous people, local communities, and small producers), deforestation
trends, engagement of the private sector and actions to address sustainability
goals, GHG emissions and low-carbon agricultural practices, as well as a focus
on continuous improvement are some of the topics presented.

LAND USE DYNAMICS AND DEFORESTATION

The interplay between conservation and production policies are at the forefront of the
agriculture and livestock sustainability. In one side, conservation policies based on the
National System of Protected Areas – SNUC, represents 113 million hectares (Ministry
of Environment). Add to that, indigenous lands represent 118 million hectares.

Moreover, Guidotti et al. (2018) estimated that there are 185 million hectares of native
vegetation protected on farms due to conservation requirements of the Forest
Code (Permanent Preservation Areas – APPs and Legal Reserve areas) and 103 million
hectares of remaining vegetation in private lands not covered by specific conservation
policies.

On the other side, crop and planted forest areas comprise 77 million hectares of
crops (just for the first harvest) and around 167 million hectares of pasturelands,
which respectively represent 9.0% and 19.6%. Given the amount of available
pastureland, the possibility to improve productivity through technology deployment,
the availability of degraded areas to be recovered and the challenge to promote
restoration of native vegetation, land use for agriculture and livestock will pass
through an accommodation process in the next decades. Figure 3.3 represents
land use in Brazil in 2020.

Figure 3.3 – Land use in Brazil (2020)

Brazil Total Area: 851 Mha

564 Mha 77 Mha

of natural vegetation of agriculture (1st crop)
and planted forests
• 113 Mha of Protected Areas
• 118 Mha of Indigenous Lands
• 185 Mha of natural vegetation on
farms (Permanent Preservation Areas
and Legal Reserves) 44 Mha
• 103 Mha of remaining vegetation on farms of urbanization
• 45 Mha of Other remaning vegetation and Other uses

Source: Agroicone based on IBGE – PAM (2020); Guidotti

et al. (2018); LAPIG (2020); Mapbiomas (2021).
167 Mha
Ministério do Meio Ambiente/CNUC (2020) (excluding APA – Environmental of pastures
Protected Area); Instituto Socioambiental – ISA (2020).
Note: Calculations for all categories considered the best available data in 2020

9 These are estimated data 22

It’s important to highlight that land use changes for agriculture and
livestock in the coming years will come from three sources:
• The amount of pasture area that will be recovered (degraded pasture)
• The area of pasture that will be intensified (using different technologies from pasture plantation
and management, passing using genetics, crop-livestock rotation and integration of crop,
livestock and forest)
• The area that will be released by pasture to other agricultural activities
• Effective implementation of the Forest Code, requiring restoration of native vegetation

The expansion of livestock and agriculture does not depend on deforestation. The
land use changes taking place over pasture will be key to allow a more efficient
land use, considering productivity gaps. From 178 million hectares in 2015 it is
estimated that in 2030 pasture area would comprise 161 million hectares,
releasing 17 million hectares of land for crops, planted forest and restoration
under the Forest Code.

Figure 3.4 – Pasture area and beef production in Brazil

180.000 90
11.371
11.436 11.572 82
160.000 80
Pasture area (1,000 hectares)

12.298
140.000 72 70

120.000 86.956 61 60
54 92.910 95.927
100.000 97.080 50

80.000 40

60.000 30

40.000 79.313 20
68.242 60.592 54.275
20.000 10

0 0
2015 2020(e) 2025(p) 2030(p)

Pasture area - Low Technology Pasture area - Medium Technology

Pasture area - Growing Technology Production of meat/hectare (kg CWE/ha)

Source: Agroicone using the Brazilian Land Use Model - BLUM, adapted from scenarios presented by Centro-Clima (2020)10

The livestock intensification and pasture recovery will also increase cattle herd
productivity, that is projected to achieve, in average, 6 @/hectare in 2030 (from
4.2 @/ha/year in 2020). However, this process would rely on several issues as,
for instance:
• Dissemination of knowledge about cattle herd intensification and its benefits to producers
• Adoption of good agricultural practices
• Perform rotational grazing and pasture management
• Improving access to rural credit enabling the investment of less capitalized producers and
accelerating recovery process

10 Trend scenario developed by Centro Clima and partners for The World Bank initiative “Partnership for Market Readiness (PMR)” and
delivered to Brazilian Ministry of Economy. Land use, forestry and agricultural sectors were simulated using BLUM – Brazilian Land
Use Model, developed by Agroicone. Pasture area by technology (productivity gain per live animal in kg, per hectare and per year): low
- up to 45 kg/ha; medium – higher than 45kg/ha and lower than 90 kg/ha; growing – higher than 90 kg/ha. See Harfuch et al. (2016b). 23
• Contracting technical assistance to implement intensification and provide funding for this type of
assistance
• Encourage producers to make cost and revenue control of their properties and controlling
efficiency of their product and employees
• Encourage producers to invest in capacitation of their team towards technological process and
sustainable practices
• Support producers to comply with the Law on Protection of Native Vegetation
• Improve the use of inputs and genetics

Deforestation in Legal Amazon has been increasing above the expectation on last
five years. The connection done with beef-cattle system was direct due the
increasing number of cattle herds (as well as soybean production), especially in
the Legal Amazon (Figure 3.5). However, it can be also observed the systematic
growth and developing system in times where deforestation was “in control” and
trying to accomplish the international commitments. Yet, Brazilian voluntary
goal on reducing deforestation in the Amazon (reaching 3,900 km2) was not
achieved, and in 2019 and 2020 it has been increasing again since 2012 and
closed the period with more than 10,000km2 (Figure 3.5).

Figure 3.5 – Brazil: Deforestation and cattle herd in the Legal Amazon

30 100
Cattle Herd

(million metric tons or million animals)

90
Annual Deforestation (thousand km2)

Production in the Legal Amazon

25
80
70
20
60
Soybean
15 Production 50
40
10
30
20
5
10
0 0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020

Annual Deforestation (thousand km2) Cattle Herd (million animals)

Soybean Production (million metric tons)

Sources: PRODES/INPE; PPM-PAM/IBGE. Elaboration: Agroicone.

The lack of deforestation control in recent years called attention around the
world, not only to beef-cattle system, but especially because domestic
institutions and international commitments were not accomplished. This
occurrence calls attention on opportunistic behavior and deploys the ones that
are following rules, laws and defending position to grow sustainably.

24
According to Arias et al. (2017), Brazil has increased agricultural productivity above
other countries, doubling livestock productivity and multiplying by four crops’
productivity. Same authors states that:

“Despite negative environmental claims of the Brazilian agriculture sector, which mainly involves
deforestation and land degradation, the sector has contributed to reduce the pressure on natural
resources over the past decades. Over the last 25 years, production has grown by around 90%,
but thanks to technological innovations introduced – and increasingly taking into account
environmental restrictions – the incorporation of new land was only 32%. This trend should be
accentuated by the diffusion of climate smart agriculture (CSA) technologies and practices”.
(Arias et al., 2017, p. 20)

Additionally, it’s essential to stress that private sector compromises to curb and
control deforestation, the compliance process under the Forest Code, the strict
control over illegal deforestation and the intensification process will be key drivers
affecting land use and, specifically, pastureland dynamics in the coming years.

3.3. LIGHT IN THE DARKNESS –

CAN BEEF-CATTLE SYSTEM BE SUSTAINABLE?

Beef-cattle system has already passed through a revolutionary history. From

traditional to technological one, from a secondary activity to a rental and valuated
one. And from the last fifteen years has been presenting itself as evolutionary in
the sense of traceability and nature positive, fighting against deforestation. Figure
3.6 shows this system in an historical perspective.

25
Figure 3.6 – Historical perspective of beef-
system, deforestation, and traceability

Slaughter-houses
audit MPF
CPP
Greenpeace Cold beef
operation IBAMA
TAC Pará Beef TAC “Carne ao molho TAC MPF audit
Pressure madeira”: Greenpeace backs results os
Zero ABIEC Against pressure under down slaughter
Deforestation Proposal MPF deforestation supermarkets from CPP houses

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

TAC Mato Brazilian Monitoring Supermarkets’ Pressure under Commintments

Grosso Forest Code protocol Deforestation Cerrado with Zero
CAR PRA Commitments Deforestation Deforestation In
Rising in The Amazon
Amazonia
MPF unified
protocol of control

Green Financing
Agenda

Source: Agroicone (2020)

26
Milestones involving the evolution of domestic institutions and reordination of
main agents of the system plays a great role and calls attention for a system
that reacts and defend interests supported by private sector and science.

Although all this evolution, beef-cattle systems face a continuous challenge of

reinventing itself to produce more, with less resources and time and into a low
emission-based production system. Efficiency of total production has
sustainable axes.

From recent official statements, this subject could be addressed as too dramatic
since Brazil represents only 3% of total GHG emissions. However, the country is
among the 10 biggest emitters and, as a Party to the Paris Agreement, has
targets to reduce emissions, considering agriculture and land use as key
sectors.

If beef-cattle system is considered one of the largest agriculture sources of

emissions, it must be addressed the same way ABC Plan was created, based
on science. Stepping on ABC+ is an advance to control and promote changes in
land use, consequently beef-cattle system would pass through structural
changes reflected on yield improvements and lower GHG emissions of the
production systems. The recovery of degraded pasturelands, integrated systems
with agriculture and forest, genetics and intensification are the basis for those
changes.

The main objective is guarantee that beef-cattle emissions were compensated

along the entire production cycle by forest growth, and that livestock production
is based on managed pastures, pasture recovery and integrated systems.
Forestry also improves animal well-being. The analysis was done in the Cerrado
biome, Mato Grosso do Sul state, and will be tested in other biomes to be
equally validated (Embrapa, 2015).

Integrated systems are Brazilian technologies, developed and implemented only

in the country that were recognized recently by UNFCCC as climate change
positive. Koronivia report on improving livestock production stresses the
importance of spreading good practices like integrated systems because
recoupling livestock and croplands result in carbon sequestration, enhance
manure and nutrients management due to the process and spares natural
resources. Other benefits can be placed as more efficient conversion, higher
biodiversity, better animal welfare, reduced waste and dependency on external
inputs and diversified income for farmers (FAO, 2020).

The importance of this milestone is that turns possible and

tangible Embrapa’s initiative to become an attribute of beef-
cattle production that can be coordinated and valuated by other
agents of the system (for example: sghterhouses and
supermarkets), as shown in topic 4.
27
4. THE FUTURE OF FOOD SYSTEMS

According to the FAO, between 720 and 811 million people faced hunger in
2020 and nearly 2.37 billion people did not have access to adequate food in
2020, an increase of 320 million people in just one year. The challenges to
achieve food security and nutrition and to eradicate poverty (SDGs 2 and 1) were
severely impacted by the Covid-19 pandemic, which puts stronger pressures to
the goal of achieving food security to a growing population.

The Food System Summit (FSS) convened by the United Nations in 2021,
generated an important debate about how to improve and transform the different
segments of food systems, from the farm to the fork.

The global challenge towards food security and nutrition needs to consider four
dimensions: availability, access, utilization, and stability (HLPE, 2020).

Availability of nutritious, healthy, and diverse foods depends on several factors,

according to each country’s realities and characteristics. Water supply, availability
of productive land, access to technology and innovation, good agricultural
practices, access to technical assistance and finance, among other factors.

Access to food relies on different aspects, such as availability, socio-economic

conditions and levels of development, social policies aimed at delivering safe food
to vulnerable populations, school feeding programs, urban agriculture programs,
food trade, among others.

Utilization of food, for instance, has relation to how people are using their
resources to ensure their livelihood, including food security. And stability means
all three dimensions stable.

During 2021, the Food System Summit (FSS) process

proposed a global debate on how to improve and transform
food systems, considering 5 action tracks:

Ensure access Shift to sustainable Boost production Promote Build resilience

to safe and consumption “positive with equitable to vulnerabilities,
nutritious food patterns nature” livelihoods shocks, and
for all stresses

Sources: PRODES/INPE; PPM-PAM/IBGE. Elaboration: Agroicone.

11 Available at https://unfccc.int/sites/default/files/resource/IN.SBI2021.i8_SBSTA.i8.2.pdf 28
The connection of each action track with countries realities and challenges, and
the debates that took place at the pre-Summit in July 2021, generated a global
convergence among the need to foster resilient and improved agricultural systems
as a basis to face climate change impacts over food security. Coalitions for
change emerged on the pre-Summit, 5 specific and 2 generals related with
the 5 action tracks: school feeding, zero hunger and nutritious, agroecology and
sustainable systems, aquatic and blue food, and climate resilience. The general
or transversal ones were income and decent work, and food is never wasted.

The Food System Summit, September 2021, accounted with the commitment of
155 State-Members. More than 100 countries sent strategies of their local
priorities to be implemented in the next 10 year. About 2,500 game change
solutions ideas were proposed to be developed along the same period. The 5
action tracks were grouped into 4 (Nourish all people, Boost scaling positive
production with nature, promote equitable livelihoods and empower communities
and Build resilience to vulnerabilities, shocks and stresses) and those 7 coalitions
turned to be 26 linked to these 4 tracks.

Brazil is part of 5 coalitions:

Food is never waste, School feeding, Zero hunger, Global sustainable husbandry
and zero deforestation and zero conversion of FS. All of them have connections
with beef-cattle system, but it´s important to highlight the last 2:

Global sustainable husbandry which the main objective is support

decision-making at all levels for farmers and value chain oriented
national / bioregional development of sustainable livestock systems.

Zero deforestation and zero conversion of food systems has as

objective to bring together a broad group of producer and consumer
countries, companies and national and international civil society
organizations committed to working together to deliver food supply
chains free from deforestation and conversion as part of a new model
of agriculture that optimizes food production, it improves rural
livelihoods and protects and restores the natural environment.

Antonio Guterres in 2021 FSS drew attention to the negative relationship between
food systems and the emission of 1/3 of greenhouse gases and 80% of the
loss of biodiversity in the world. There is a need for solutions that change this
perspective completely and at the same time are able to nurture people. He also
points out that agriculture should be part of the solution for mitigating climate
change and biodiversity loss, and a problem.

29
Coalitions bring ways to achieve this goal. Main
contributions discussed during the FSS can be
summarized in the following points:
• Climate-smart agriculture can address the sector as part of the solution, not a problem.
Technology and innovation adapted to local food systems can allow the reduction of GHG
emissions and build resilience.
• Science and Technology as the base to transform and adapt food systems, jointly with technical
assistance and capacity of producers.
• Reduction of food waste and loss along food systems by improving infrastructure, cold-chain
access, and monitoring.
• School-feeding and breast-feeding coalitions for guaranteed health nutrition since early childhood.
• Protection of smallholders, indigenous people, forms of cultivation and land ownership rights,
engagement in the inclusion of minorities, including women and their empowerment in financial
matters – access to credit, knowledge of techniques and technologies and better income.
• Financial assistance to implement technologies and promote change. Most least developed
countries and developing countries doesn´t have enough budget to include all producers in
sustainable food systems, provide technical assistance and promote income.
• Water access - scarcity and high temperatures, soil degradation leaves entire countries in states
of constant vulnerability and dependence on imports.
• Fair international trade and equal conditions of production in all countries –
reducing subsides and barriers.

These main topics discussed during FSS and debated on national dialogues
gives a notion of the principles that will guide food systems development and
transformation for the next decade (2020-2030). The General Secretariat of the
United Nations stated in its speech that food is not a mere commodity, but a
right. She emphasized the need for government leadership and governance in
their pathways, as well as resources and platform support at the United Nations.

Animal production, especially beef-cattle, is part of many forums that includes

climate change and deforestation, land degradation, water efficiency and
health nutrition. Beef-cattle production and its importance was highlighted by
several countries. Latin American ones detached themselves – Argentina,
Paraguay, Uruguay, and Brazil. In addition to those that suffers from the lack of
animal protein and vitamins.

Photo: Fazenda Capão Redondo, Rodolpho Botelho

30
01 The debate was led to decarbonization of this system though sustainable technologies,
integration with agriculture and forest. Brazilian National Pathways brings balanced
objectives to agribusiness in accordance with work developed by public policies, private
sector, research institutes and NGOs. Continuous and inclusive scientific research and
innovation to promote and improve food systems. In Beef-Cattle system continuous R&D
and innovations are the key for efficient and sustainable production. As important as the
evolution of methodological measures of GHG emissions for these systems globally
recognized.

02 Development of food systems adapted to local circumstances that encourage the reduction
of greenhouse gas emissions and promote resilient agriculture. Linking livestock production
to other systems by biome can be challenging, but a solution for adaptation process on
creating sustainable food systems. Biomes and its characteristics need to be considered
before constructing coordination plans for resilient agriculture and livestock production.

03
Agriculture as a solution for climate change. Livestock as part of an integrated system also
can be a solution for climate change. Developing low carbon agriculture is the best solution
for the entire system.

Promote the generation and use of renewable energy in food systems. Beef-cattle system
04 is connected to biofuel generation though tallow and feed produced as co-product (as corn
ethanol), but also can incentivize and coordinate the adoption of renewable energy along
the chain.

Support smallholders and family farming to promote sustainable livelihoods and food
05 diversification. Husbandry isn’t an exclusive large farm size activity. Smallholders and
family farming are part of this chain, and it can be more information about their supply.
Also, coordination mechanisms can diversify linking aid for land use problems and social
inclusion, as well as technical assistance for promoting integrated systems.

Ensure safe, healthy, and nutritious food for everyone. Beef is one of the richest sources of
06 complex B of vitamins, especially Vitamin B12. Ensuring availability and access to a safe,
healthy amount of meat is desirable of the population to ensure nutrients and well-being.

Combat food waste and loss. Beef is one of the most expensive goods for consumers,
07 avoiding waste and loss implicates in providing safer products for them. Coordination of
process between producers and processors can avoid loss during slaughtering. Training
adequately supermarkets and specialized establishments for proper cutting can also avoid
loss. However, one of the main issues that needs to be improved for avoiding beef waste is
the cold chain logistics. It’s important for proper transportation and storage and ensure safe
and healthy product.

Fair trade. Beef-cattle system is one of the most protected on international trade. Sanitary
08 barriers or tariffs are part of the repertory. Promoting fair trade when system follows
international standards must be placed.

Concerning beef-cattle system, ABC+ Operational Plan, is the main public policy
to incentivize pasture recovery, integrated production systems and efficient
livestock production that allows to reduce emissions.

Another subject related to Beef-cattle system is deforestation, biodiversity loss,

land property-rights and climate change. This agenda has many institutional
aspects like the enforcement of Forest Code in Brazil and the detachment of beef
production as highlighted on topic 2. Brazilian livestock increases undependably
of deforestation (Figure 2.9), but it doesn’t mean that this industry can´t contribute
to all these topics in positive ways by boosting efforts and joining forces with other
systems to provide agriculture as a solution and not a problem.

31
 Looking for this picture and Brazilian National Pathways
to develop Sustainable Food Systems, tendencies are:
• Partnerships of private and public sector for research and development of positive technologies to
beef-cattle production in decarbonized systems.
• Promoting capacity of producers, processors, technical to work with these technologies and
spread to all farm types and sizes.
• Improving communication and information about the system processes from farm to fork and
promoting transparency.
• Appreciation on environmental and social assets and communication to market, not only
production efficiency and economic assets.
• Including small farmers and communities on sustainable beef-cattle production systems,
technologies and technical assistance as well as helping with land property rights and
environmental knowledge leading to biodiversity preservation and conservation on Brazilian
biomes.
• Coordinated actions of the entire system to avoid food loss and waste, as well as resources uses
(land, water and its reuse).
• Boosting international trade and opening new markets, fairly, based on nutritional necessities also.

Trends appreciated on Food Systems Summit and pictured in Brazilian National

Pathways corroborate with research done previously by State of São Paulo Industry
Federation (FIESP) in 2017 about Brazilian food consumers’ behaviour. One of them is
prioritization of cheaper products when national economy faces crisis and income
decreases. This leads to cooking at home with more frequency and choose to prepare
food instead of buying semi-prepared one.

Another aspect is about information and sources that people look for knowledge.
Internet dominated as a main channel, instead of TV, as it was pointed in the first
research in 2010. The topics that were substantially more searched between 2010 and
2017 were: organic food (26 p.p.), sustainability (21 p.p) and carbon emissions (14
p.p.). Food was the third subject most researched on google between 2011 and 2016.
In 2017, it lost one position to finance.

Some contradictions were pointed as 81% of interviewed people confirms to look for
better ways to improve their feed and 71% doesn’t bother to pay more for healthy
products. However, 61% confirms that tasty drives their food choices instead of
healthiness and 52% says that healthy food doesn’t have much taste. The research
also revealed that there is a difference between feeding (healthy food during the week)
and eating food (tasty food during the weekend to enjoy). Beef is in third place as
Brazilians’ favourite food, just after rice and beans (basic daily food in Brazil) and
pasta.

Figure 4.1 transcend the first analysis and brings tendencies of food consumption in
Brazil. This can be idealized as a step ahead or what’s coming for the future of food
system from the demand side. Ageing of population needs, new generations values,
origination and social appeal, convenience and practice are drivers for changing food
consumption and habits. However, income and middle-class growth will drive those
changes’ speed.

32
FIGURE 4.1 – FOOD CONSUMPTION:
DETERMINANTS AND HABIT CHANGES

Finally, when it comes the two pictures (supply and demand sides) to beef-cattle
systems as stated by Malafaia et al., (2021), global advances in the beef supply
chain by 2040 will come from highly technical, professional, and competitive
livestock production, based on technology and quality. For Brazil, the authors
concluded the following megatrends:

“(i) biological advances and waste management; (ii) biotechnological transformation of beef
farming; (iii) less grass and more meat; (iv) profits based on animal welfare; (v) consolidated
livestock with major players; (vi) more natural and quality-demanding slaughterhouses; (vii)
meat with a designation of origin; (viii) digital technology that transforms the entire supply
chain; (ix) availability of quality labor; (x) Brazil as a major exporter of beef and genetics”.
(Malafaia et al., 2021).

5. INDUSTRY’S POSITION TO DEAL WITH

SOCIOENVIRONMENTAL CHALLENGES

This topic emphasizes the big role of the beef processors on coordinating
beef-cattle system and its limits. It brings some concepts of the system
dynamics and coordination and how the processors are reacting to the
challenges concerning socioenvironmental issues and pressures. This topic
aims to be a connector to the next one, bringing a few concepts.

33
5.2. AGRIBUSINESS SYSTEMS AND DYNAMICS –
THE ROLE OF COORDINATION ALONG A SYSTEM

The origin of “Agribusiness System Analysis” comes from the concept

developed in Harvard University up to the beginning of the sixties as:

The sum of all operations involved in manufacture and distribution of farm

supplies, production operations on the farm, and the storage, processing, and
distribution of farm commodities. (Davis & Goldberg, 1957)

The analysis is rooted on two main elements (Zylbersztajn, 2017):

• Agriculture is treated as an isolated sector, became part of specialized interdependent
system of agents that operate in interconnected industries.
• The value added at the farm level tends to decline through time as a share of the total
value of production, with serious strategic consequences.

Goldberg was the first academic specialist to stress that margins are larger
as the product approaches the final market destiny. The model developed
highlights the inter-sectorial connections. It’s implicit in his studies the
assumption of costless operation of markets and frictionless interactions
among sectors, institutions being absent.
The conceptual model opened a new Looking the entire interaction of
door of possibilities to look agriculture agents along the system and how
towards strategic issues. Several case institutions and non-private
studies were done around the world organizations influence them is a
observing systemic analysis. Beef- challenge for any agribusiness. Less
cattle system analysis and strategy developed ones in technology and
were conducted by Lemos & innovation support, human capabilities
Zylbersztajn (2017). Its importance for and strong and established institutions
the development of the system was can be more challengeable.
the main theoretical finding (Lemos &
Zylbersztajn, 2017) of an industry Beef-cattle system in Brazil faces
were agents behaved against each these challenges due the origins of
other for decades (Wedekin et. al, production and its complexity. There
2017). Also shed light on the different are many variables to be analysed
strategies conducted by the biggest that influences the final product
slaughterhouses in Brazil to be able to delivered to slaughterhouses:
attend different market demands genetics, internal sanitary system
(Lemos & Zylbersztajn, 2017). (inside the farm), feeding system
adopted, production phases
However, the importance of this type developed by the producers and their
of analysis is not only to respond to suppliers, level of information about
market demands or institutional producers and their suppliers. Some
shocks, but it also shapes strategies of those characteristics were listed by
to evolve the entire supply chain due Lemos & Zylbersztajn (2017) in a
coordination efforts. study about quality-perceived
standards on international and
domestic markets.

. 34
Called by specific assets or beef-cattle attributes, they are the one that
shape product strategies and governance structures along the chain
(Lemos & Zylbersztajn, 2017). Through coordination those attributes are
measured, controlled, and valuated along the system creating a financial
and attribute information flux.

5.3. BEEF-CATTLE SLAUGHTERHOUSES –

THE IMPORTANCE OF THEIR COORDINATION TO THIS
SYSTEM AND ITS IMPROVEMENTS

Beef-cattle system are coordinated by slaughterhouses (Lemos & Zylbersztajn,

2017). They are the agents that demand specific assents on their transactions
with producers, translated into animal attributes. Coordination “movement” is
done and shaped by settling requirements, transparent monitoring and control of
results and incentives (economic, status of development and other rewards).

Coordination has several positive results and generate positive externalities

to the entire system. The research conducted by Lemos (2017) with three
main slaughterhouses demonstrated that:

• Coordination was done through quality programs created by slaughterhouses and producers
responded positively to the demands of attributes and economic incentives.
• Technologies were progressively adopted by producers to “be part of the programs and
standards”. Technologies related to genetics, nutrition, and sanity, as well as process to animal
well-being were adopted and standardization of products became a reality.
• Patterns of supply made possible for slaughterhouses to promote brands in domestic market,
linking organization’s strategies to product differentiation.
• Quality patterns and systems especially coordinated (one example is organic beef-meat) could
be observed in domestic market not only done to attend requirements of international market.
• It also could be observed a better relationship between producers and processors and
understanding their interrelation.

Positive externalities can be related to

good results coming from private sector coordination:
• It boosted technologies and low carbon beef-cattle production through integrated systems
programs or recovery of pastures (see Plan ABC and ABC+).
• Improvements on quality patterns lead to open new markets and explore different strategies on
domestic market. Organizations could focus efforts on their targets, not only attend the “mass”.
• Differentiation was possible through information exchange and transparency between all agents.

35
However, transacting tangible attributes and promoting a positive relationship
with producers that lead to an informational and financial flux was part of 15
years of development “plan” and didn’t contemplate bureaucratic attributes as
mandatory (only production to attend the European Union, mainly sanitary
standards). Controls demanded were also valued differently, but they never
represented a major part of beef-cattle system dynamics, being considered
strictly coordinated to attend a specific market.

5.4. MAIN CHALLENGES FACED BY

SLAUGHTERHOUSES TO DEAL WITH SOCIOENVIRONMENTAL ISSUES

When it comes to socioenvironmental aspects and requirements, system

coordination gains another dimension. Challenges presented in previous topics
have great interfaces with public domain, as enforcement of land use, plan and
regulation.

On the other hand, taking responsibility for monitoring suppliers and enforcing
transparency from both sides is a win-win partnership to provide information to
consumers, markets, government, inclusion of stakeholders and promoting
coordination of sustainable standards.

The conceptual debate about the role that slaughterhouses have on sustainable
patterns of production brings to play ethical, sociological and governance
aspects. It can lead to boost efficient and sustainable ways of production that
have positive results on productivity, reducing GHG emissions and deforestation.

But mainly this coordination brings moral to the debate of beef-cattle

consumption and environmental efficiency. The challenge is not about doing or
not, cooperating or not, it’s about the survival of a system if transparency,
information and decarbonization is not promoted as mandatory to humanity well-
being.

Slaughterhouses have a great importance due to their coordination role, but it’s
not their full responsibility of the industry to accomplish socio-environmental
goals. Seeing as a big picture, partnerships between public and private sector to
enforce sustainable requirements must be done to evolve all the agents and
secure Brazilian Beef-cattle industry.

That way organizations, especially slaughterhouses, can strategize in their

market and develop control mechanisms aimed at meeting specific demands.
Transparency and communication should be a public right in this case. Next
topic and final one, brings the case of Marfrig, one of the largest
slaughterhouses around the world. This case calls great attention from
coordination perspective because this organization turned the concepts of
sustainability and environmental protection into tangible assets to be controlled,
measured, monitored, and coordinated through incentives along the system.
36
6. MARFRIG’S SOCIO-
ENVIRONMENTAL STRATEGY

This last topic brings Mafrig’s strategy and positioning about environmental
challenges and its role as a chain coordinator. By an historical perspective, a
narrative will be constructed about the “problem” and “strategical movements”
that the company designed along the years and will culminate in “Marfrig Verde+
Plan”. An entire section should be dedicated and designed about Mafrig Verde+
to explore transparency, rational behind, data about producers connected to the
company and those that are not yet monitored. The last section of this topic
brings the discussion of how to include the excluded, addressing problems and
anticipate new ones.

6.1. MARFRIG’S STRATEGY AND

POSITIONING

Marfrig is the largest hamburger producer around the world and one of the leading
beef companies as well. It holds units in South and North America with a daily
capacity of 31.8 thousand slaughtered cattle, in Brazil this capacity is 16
thousand cattle/day; and a total production capacity of 232 thousand
tonnes of hamburgers per year. The company employ more of 30 thousand
people nationally, distributed in 32 production units processing beef-cattle
products and subproducts as leather for domestic and international markets.

In 2020 the company net revenue was 67.5 billion reais, 35.3% more than
2019. Marfrig is well known by being a leading company in coordination for quality
of its products and its more recently sustainable performance due being pioneer
in several projects on the preservation of the environment and natural resources.

37
MARFRIG POSITION AGAINST
DEFORESTATION
Cattle production has historically been perceived to be at the centre of
perceived as the sector with the deforestation, not a consequence or
greatest impact on Brazilian forest one of the possible causes.
and biodiversity loss. Responding to
the growing environmental concerns Deforestation rates in the Brazilian
internationally and domestically, Amazon have in fact risen since 2012,
Marfrig’s ambition over the last ten and even more significantly since
years has been to incrementally de- 2018 (Figure 2.8), but beef-system
couple its products from deforestation. never stopped off risen even when
deforestation was under control,
Since 2009 and following on efficiency plays a great role and
agreements with Greenpeace and coordination programs are leading
subsequently with the Brazilian figures, as Marfrig Club.
government, Brazil’s major
meatpackers (including Marfrig), have On a historical perspective since 2009
been working on strengthening their Marfrig has developing several
cattle procurement procedures to strategic plans to improve
reduce environmental and social risks sustainability on its coordinated
from their supply chains. Along more system. From the beginning, assumed
than 10 years several partnerships, commitments and stated strategizing
projects have been developed, the actions based on data monitoring,
main objective is to construct a investments on science to develop
sustainable beef-cattle system low carbon or neutral carbon beef.
through private coordination. Figure 6.1 shows an evolution of
plans, actions that translate
Government and private sector efforts companies’ perspective about
have supported an impressive decline sustainability as a strategic and
in Brazilian Amazon deforestation specific asset with high value.
trends throughout many years,
however cattle raising are still

Figure 6.1 – Marfrig´s strategic investments on sustainability

Source: Marfrig (2021)

38
38
 Until 2019 timeline shows clearly actions for controlling the origin of cattle in
the Amazon biome. By 2020 ahead, strategic governance and transparency
plays a major role. Results from investments done on science and coordination
with producers can be observed and a new product “beef carbon neutral” is
launched on market, as well as, green credit, organic beef production
certification by USDA, among others.

Marfrig Club Program incentivizes producers to adopt good livestock practices,

which contributes to sustainable development of farms and guarantees safer
production with less environmental resources. Launched in 2010, it has three
dimensions: animal respect (traceability, animal wellbeing, nutrition, and sanity),
environmental respect (preservation of native vegetation, soil and water, waste
treatment), and social respect (labor laws, housing conditions, health and
incentives). Available at: https://www.marfrig.com.br/en/sustentabilidade/controle-
de-origem/cadeia-produtiva

6.2. MARFRIG VERDE+ PROGRAM

Marfrig Verde+ Plan was launched in July 2020, in partnership

with IDH - The Sustainable Trade Initiative. Its objective is to
ensure that 100% of the company’s production chain is
sustainable and deforestation-free until 2030. In other
words, a system that is positive with nature and climate smart.

Eliminating deforestation throughout the supply chain is quite new in this

industry, not only because other private companies couldn’t achieve it, but
mostly because a great deal depends on the enforcement of the law – Forest
Code and other illegalities in private areas. This brings to questioning the limits
of private coordination on avoiding deforestation.

What distinguishes Marfrig’s commitments is the conviction that for achieving

zero deforestation on entire chain, as the company desires, such change needs
to become systemic. In other words, the company should not limit itself to
excluding those ranchers involved in deforestation from its supply chain (partially
due to the issue of leakage mentioned above). The company intends to bring the
non-compliant suppliers on a pathway towards more sustainable production
models.

Marfrig ultimately commits to achieving a deforestation free supply

chain in the Amazon Biome by 2028 and in the Cerrado Biome by 2030.
(Marfrig commitment)

By deepening its traceability systems (monitoring) and strengthening

‘purchase and compliance’ mechanisms (control), the company believes
that for change to happen, it needs to be channelled through a process of
inclusion, continuous improvement, ultimately leading to compliance for
these suppliers. By different tools and innovations, coordination will be
placed again by the company to get “sustainable asset”. 39
In other words, Marfrig is contributing to improve availability and access to
nutritious food (SGD 2) through sustainable ways of production (SDG 12) and
boosting adaptation of beef-cattle system to a zero emission to avoid climate
change (SDG 13). Indirectly can be also related to better use of land and its
conservation (SDG 15) and decent work, economic growth (SGD 8) since the
system is quite important for Brazilian economy. Other relations can be deepened
between SDG and beef-cattle system improvements, but the most important for
the plan to be highlighted are those, based on the three main solutions:

Financial Mechanisms: attract investments for farmers to

implement Forest Code, intensification systems of calves using
integrated systems with crops and forestry, payment for
environmental services and maintenance.

Technical Assistance: support change on farms through nutrition,

genetics, sanity, environmental conformity. It also rellies on implement
“carbon neutral protocol” and “low carbon protocol” on farms.

Monitoring Indirect suppliers: creating a close connection with

suppliers, Marfrig intend to mitigate deforestation risks. The long-term
view of plan implementation is to have 10 years to approach the full
sector following the steps and goals:
• Direct suppliers (until 2025): Expand the purchasing policy and monitoring other biomes,
promote integration livestock systems for all sizes and stages of production.
• Indirect Suppliers (until 2025): Develop mechanisms of control to indirect suppliers under an
inclusive approach supported by a technical assistance network and financial mechanisms,
promote better conditions to small and medium producers to be included.
• Industry approach: Coordinated efforts between producers, slaughterhouses, retailers,
banks, investors and society to promote equality on the market and also avoid risks of
opportunistic and illegal behaviour.

Figure 6.2 – Shows the links between these main goals to obtain
a sustainable beef-cattle system, SDG goals and their steps of
implementation

Source: Marfrig Verde + Plan

40
 As a result, Marfrig plans to eliminate all illegal deforestation by 2025, and
eliminate all legal deforestation among indirect suppliers in the Amazon Biome
by 2028, and in the Cerrado Biome by 2030. (Marfrig Commitments)

6.3. THE CHALLENGE –

INCLUDING THE EXCLUDED

Since 2009, Marfrig has accomplishing the monitoring of direct suppliers in

the Amazon biome for the following socio-environmental indicators as
mandatory from Federal Public Prosecutors (Imaflora, 2020):
• Rural Environmental Register - CAR
• Farms’ perimeters without overlaying Conservation Units and Indigenous Lands
• Zero illegal deforestation in the farm since August 1st, 2008
• Zero deforestation (legal or illegal) in the farm since October 5th, 2009
• No slavery alike work in the farm
• Environmental embargoed areas, by federal agencies (and a few state agencies)
• Environmental licencing register in a few states
• Farmer needs to present the GTA – Animal Transit Guide for the slaughterhouse

When the producer does not comply with at least one of those requirements,
Marfrig cannot by cattle from her/his farm. So, the producer is excluded as a
(direct) supplier of the slaughterhouse.

Excluding farmers involved in deforestation from its suppliers’ base would only put
an end to the problem for the company's supply system, as those farmers will
have more incentives to continue deforesting or doing some illegal activity.
Systemic and effective change demands inclusion mechanisms of these farmers.

Marfrig Club, an acquisition program launched in 2010, fostered the relationship

between cattle producers and the company. The club is used as a platform to
support knowledge sharing and promote incentives-based schemes for improving
environmental and social practices. Nowadays, Marfrig has 100% of direct
suppliers from the Amazon biome registered in Marfrig Club by the end of 2020.

The inclusion-based approach is the expansion of the company’s zero

deforestation procedures to indirect suppliers obtained through the establishment
of a network that targets small and medium producers to provide technical
assistance and finance mechanisms for the implementation of the farm level
changes, as already explained.

Inclusion of small and medium farmers will be connected to the improvements of

several SDG bringing to reality the balance to social, economic, and
environmental axes of sustainability. They also allow Marfrig to improve supplier’s
ability to comply to its policies. The inclusion is not only about direct suppliers (1),
but mostly about the indirect ones (2), which the company doesn’t hold any
relationship. 41
 Marfrig buy its cattle for slaughtering from approximately 5,525
direct Amazon Biome suppliers in 2019 (including the state of
Mato Grosso, Para, and Rondônia). For these direct suppliers, the
company’s vision is to establish new forms of relationships that
support a more organized chain, through the development of a
commercial integration model. This group doesn’t seem to be
Marfrig greatest worry, especially because they won a solid base
of farms that represent their 80% slaughtered on the biome
interested in advance that Verde+ Plan proposes.

Based on its RFI tool, which requires information of indirect

suppliers from the producers that sell cattle to Marfrig (direct
suppliers), the company estimated that it currently has potentially
25,000 indirect suppliers in the Amazon Biome without any
relationship established. This is a serious risk for the company and
entire industry itself. Marfrig's intention is to track the origin of
livestock at farm level and throughout the various production levels
(from breeding to the slaughterhouse), in the Amazon and the
Cerrado (i.e. ‘Origin control’).

According to Marfrig, in the Legal Amazon, in 2020, 17,830 farms were monitored
(area of 30.3 million hectares), in which 3,603 farms (20.2%) were blocked, and
could not sell cattle to Marfrig. In 2021, with solutions and actions as technical
support for documentation, multitemporal geospatial technical analyses and forest
restoration program, 1,139 farms were reinserted to the Marfrig supply chain,
representing 193,660 animals slaughtered (or 15% of yearly slaughtered animals
in the Legal Amazon).

The re-insertion of those producers brings not only more suppliers to the
company, but specially reinforces their compliance with socio-
environmental criteria, reduces informalities on selling those cattle in the
market and, also, removes these producers from illegality.

42
Using evidence on socio-environmental variables associated with cattle production
and land use, the company is using risk maps to strengthen the monitoring system,
guide and tailor solutions by region to the commercial conditions set forward to
suppliers. If indirect suppliers address legal and/or illegal deforestation, and social
aspects in the Amazon and the Cerrado biomes, acquisition policies get improved.
The final intention is achieving “Origin Control” in both biomes up to 2030 aligned
with technical assistance and financial instruments to make possible that small and
medium farmers afford transformation in their production systems.

The greatest challenge of including the excluded is what will provide a

turnaround to the company strategy and market position. On the industry
level, it’s expected that similar action plans are holder to take care of the
same issues.

On the other hand, this battle is not a one side approach, it needs to have support
of several stakeholders to be a win-win process. Plenty of them are already aligned
and allied to Marfrig’s cause, as partners in the following initiatives: Monitoring
Protocol of Cattle Suppliers, Reinsertion and Monitoring Program in Mato Grosso
state, PCI – Produce, Conserve and Include Institute in Mato Grosso, Sustainable
Calves Production Program, Conecta monitoring tool (block chain pilot application),
beef production protocols (as low carbon beef, carbon-neutral beef). Other partners
are working on risk mitigation maps, improving Marfrig Club Protocol and socio-
environmental monitoring system.

The stablished governance is an example of how coordination and incentives can

bring positive socio-environmental externalities for all stakeholders and
transformational changes for the industry.

7. FINAL REMARKS

Beef-cattle is a relevant supply system to Brazil and, also, other nations involved. In
terms of net contribution to GDP and workforce, develops the SDGs 2, 8 and 12.

On the demand side, it is in the cultural root of Brazilian agribusiness and consumer
behaviour. Beef is a protein rich in vitamins to human development, especially B12,
important for growth, health improvement and well-being.

Historically, beef-cattle production was the main activity developed in the countryside,
with a role to occupy the territory. Along time, Brazilian beef improved its sanitary
system, which was essential to be a major exporter.

The urgency of climate change actions brought challenges for food systems globally.
Brazilian beef-cattle system is seen as a source of environmental degradation, linked
to GHG emissions and deforestation.
43
Public policies provide pathways for low carbon agricultural production. ABC Plan
(from 2010 to 2020) and ABC+ (2020 to 2030) strengthen mitigation and adaptation
technologies and practices. However, total implementation is far from the actual
picture.

Since 2009, Brazilian beef-cattle system implemented zero deforestation

commitments in the Amazon biome, using geospatial monitoring tools. Up to 2019, the
main action from the industry was excluding farms and producers non-compliant with
socio-environmental attributes.

Slaughterhouses are the main coordinator or leading companies on orchestrating

change in this system since quality standards to sustainability compliance. The case
of Marfrig illustrates this change, through creating control and compliance
mechanisms, as well as incentives for sustainable beef-cattle production.

The company launched Marfrig Verde+ with the commitment of zero deforestation and
including the producers’ excluded from the supply chain, planning to achieve those
goals in the next 10 years. This is a positive example of how to transform a food
system in a sustainable pathway, with positive impacts in the entire industry.

First because it will support smallholders and medium producers non-compliant with
sustainability attributes, bringing them to the formal supply chain and eliminating
illegalities. Second, it will provide knowledge, technical assistance, and combat
deforestation. Third, it will bring legitimacy and transparency to all stakeholders,
including consumers.

Finally, with positive incentives and coordination, it’s possible to have a sustainable
beef-cattle system to supply a growing population around the world by assuring that
this one is built based on social and technological inclusion and environmental
compliance. As a result, the industry does not need to face exclusion from food
systems, as has been defended by many agents.

44
8. REFERENCES

. ABIEC - Brazilian Beef Exporters Association. Beef Report: Profile of Brazilian

Livestock 2021. ABIEC, 2021. Available at: http://abiec.com.br/en/publicacoes/beef-
report-2021-2/

. Agroicone. 2018. Agricultura sustentável e alimentação no Brasil. In: Para além do

celeiro: Brasil e o futuro da alimentação saudável e sustentável. Painel 2:
Alimentação em 4 dimensões. Rio de Janeiro, Instituto Clima e Sociedade, October
23rd, 2018 (not published).

. Agroicone. 2021. Agribusiness in the Amazon: Challenges and Perspectives. Global

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