South America Calling

Brazil's cattle industry is looking at tighter margins over the next couple of years, likely leading to further concentration of ranching in large hi-tech farms, according to Agroconsult, a local farm consultancy.

While top-end ranchers are investing in technology, mid-level cattle farms appear to be selling off herds, said Mauricio Nogueira, cattle specialist at the consultancy.

"That just leads to consolidation," he told journalists in Sao Paulo.

The trend will push productivity higher but could create social problems, he said at the launch of the Rally da Pecuaria tour of 11 producing states over the next two months to gauge the state of Brazilian ranching.

One of the most popular mantras about Brazilian farming is that it is the only major agricultural exporter with land to expand onto. Ministers regularly boldly declare that Brazil has 100 million acres of degraded farmland that can be turned over to soybean and corn production.

However, the reality is a little different. In truth, a lot of that pasture was left for a good reason. Much of it is poor land, poorly situated and should never have been cleared in the first place, noted Andre Pessoa, director of Agroconsult.

In fact, data indicate that a significant portion of the expansion of grain farming over recent years was on decent quality pasture and in fact high-end ranchers are disputing land directly with grain farmers.

According to Agroconsult, around 12% of ranchers produce over 270 kilograms of beef per hectare each year, the level at which they can compete for land with soybean and corn growers.

This pressure is driving this group to be ever more efficient, increasing production and increasingly leaving the average rancher behind -- the average yield across Brazil is just 35 kilograms of beef per hectare.

Indeed, a significant jump in beef efficiency could reduce pasture acres dramatically, causing social issues in the interior of the country, said Pessoa.

(CZ)

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