
International Pressure or Domestic Demand?
There’s a general assumption that Brazil is caving under international pressure evidenced by an announcement of new cattle tracking technology to be in use by 2027. The country’s beef production industry has long been associated with deforestation of the Amazon but the global push to combat carbon emissions has brought Brazil’s agricultural practices under additional scrutiny. A government backed tech program aimed at traceability along beef supply chains appears to be a response to hurdles faced by the beef sector in international trade.
Yet, when it comes to international deals, Brazil has built strong relationships with China and other Asian nations. Barriers that could be used to regulate Brazil’s beef industry like deforestation regulations built by the European Union could be a decreasing concern for the country as it expands into eastern markets. There’s an argument to be made for up and coming cattle tracking technology being a response to Brazil’s own domestic demand for beef.
International Environmental Standards
Brazil’s own beef processing company, JBS, urged the country to adopt a government backed system to support traceability in the beef sector. JBS, Marfin, and Minerva beef companies have all increased their own monitoring systems to tackle the deforestation issue and comply with trade regulations abroad by using satellite imaging and block chain technology.
Roughly 3.5 million acres of rainforest were cleared for farming and ranching in 2015. The Brazilian climate is ideal for growing plants and raising animals. The soil is rich and needs few inputs while the biodiversity of the region allows for a wide variety of crops to thrive. Brazil’s agricultural boom, though, has come at the expense of the rainforest itself, causing scientists to argue that the 13% loss of forest in the country has tipped the balance in an important ecosystem for the country. They too have urged the Brazilian government and individual companies to address the deforestation issue.
The European Union has taken a hard stance against deforestation practices. While their bold trade regulations will have an extended phase-in period, they have been a large market for Brazilian beef, as well as other commodities, for a long time. Their regulations appear to be aimed directly at an area of the world that could have a significant influence on agricultural production and global economics.
Brazil, the Agricultural Giant
Brazil has grown into an agricultural giant in the last decade. Between cultivating land for farming and grazing, in part through clearing portions of the Amazon rainforest, and building more secure and reliable transportation systems, the country expanded multiple agricultural industries. Beef herds grew by 35% in Brazil over the last ten years and the nation is now considered the largest beef producer in the world after the United States. Thirty percent of the world’s beef exports come from Brazil and their biggest buyers in recent years have been China and the EU.
According to a Bloomberg report, while Brazil was disappointed with the way the EU issued their deforestation regulations, the new protocols were not the primary driving force behind government supported traceability technology. In fact, Brazil argued that they are rich in their connections with the Middle East, Asia and other South American countries. They are financially equipped to “overcome any embargo or restriction generated under the pretext of the environment,” said their Agricultural Minister. It’s a statement that seems to underscore a concern that if the EU holds their ground on deforestation restrictions, Brazil and other countries will simply find different trade partners. They sit in a commodity power seat.
Brazil’s Consumers Preferences
While we assume it is external pressure that has pushed Brazil to the point of government supported traceability, it’s possible the real push has come from domestic consumer demand. Recent studies show that of the 3.5 million acres of deforested land at least 60% was used to meet the demand from Brazil’s own large cities. Beef consumption grew around the world, but it also grew right at home in Brazil.
The same study revealed that Brazilians care more about the hygiene of the livestock raised for human consumption than they do about environmental impact. The demand for traceability could be coming from consumers who want to know that their food was raised in healthy, sanitary environments and transported humanely from farm to processing. It also promotes fair treatment for farmers in the vicinity of deforested regions. Block chain technology and real time data sharing eliminates any assumptions about where an animal came from and gives farmers the chance to vie for fairer prices.
Brazil has not been fearful when it comes to Agtech. The country is home to over 1,700 tech companies signaling that they understand the role of promoting sustainability alongside efficiency if they hope to maintain export leadership status. Innovation here could boost jobs in the Ag sector, which already contributes to approximately 10% of employment in Brazil.
For Brazil it is a win-win situation. Farmers will receive better prices for cattle and consumers will regain trust in their country’s beef industry. And, of course, it won’t hurt to have this tech in place to keep the doors of trade open with the EU or other nations who deploy fines and tariffs as a means of gaining ground for environmental causes.
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