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On the minds of Brazilian feed producers: from raw materials to sustainability concerns
On the minds of Brazilian feed producers: from raw materials to sustainability concerns
From the volatility of corn and soybean prices and availability, to the concern that the country’s infrastructure and logistics will not hold up to the strain of ever-larger harvests, and the growing pressure to address the carbon footprint of animal production, the Brazilian feed industry is facing several serious short-term and long-term challenges. Today, in a Feedinfo Review exclusive, Ariovaldo Zani, president of Sindirações (the National Union of the Animal Feed Industry) shares his insight into how each of these are experienced by the animal nutrition value chain.
FLUCTUATING AG COMMODITY PRICES
Ariovaldo Zani explains that the state of the feed industry is deeply connected with the supply and prices of the commodity raw materials used in feed.
“When agriculture goes well, of course, grain prices go down, favouring livestock production. We have been suffering for the last two years with the prohibitive levels of corn and soybean meal prices. There was only relief starting a month and a half ago,” says Zani.
Indeed, over the last two years, the corn and soybean crops in the Americas have fluctuated, but in 2022/23, Brazil has a projected soybean harvest of 154.8 million tonnes, which is 23.3% greater than last year, according to Conab (a state company focused on the food supply, one of whose missions is the production of agricultural data). On the other hand, Argentina has suffered with a historical drought that would put its total production at 23.9 million tonnes — the lowest in 24 years per
USDA figures. The US, in the meantime, saw its soybean crop size decline 4% in the last marketing year, coming in at roughly 116 million metric tonnes in 2022/23 (a rebound is estimated for the 2023/24 marketing year).
For corn, Brazil expects to harvest 125.5 million tonnes this year, according to Conab estimates. Coarse grain production in Argentina will also be reduced due to drought, and the US harvested 9% less corn in CY2022 — a total of 348 million tonnes.
DEMAND PRESSURE, GRAIN EXPORTS, AND PROTEIN IMPORTS
Meanwhile, the number of animals in Brazil hungry for that grain just keeps growing. The OECD-FAO Agricultural Outlook 2020-2029 forecasts that Brazilian swine production will have risen 13% by 2029 compared to its average level from 2017-2019, faster than the 9% growth predicted at a global level, and also predicts Brazil’s poultry meat production will have risen 9% by 2029 against the same benchmark.
Of course, it is not just production-side factors that can pressure feed ingredients prices. Zani points out that the growing demand both from the export market and from the energy sector is increasingly being felt in terms of higher grains prices.
“Corn is the most important crop for feed. It used to be that corn was not exported, [but] now over 50 million tonnes are exported, and yet we have corn-based ethanol in the country,” adds Zani.
Moreover, in addition to the high prices for feed ingredients in recent times, Zani explains that Brazilian animal production is also suffering from cheaper imports from neighbouring markets, which are undercutting prices.
“Argentina is a lot more competitive due to a devalued currency exchange rate,” he observes. “We are [net] importers of milk, and import prices are not compensating the costs.”
CROP BOTTLENECKS
On the other hand, even when local crop production is plentiful, challenges can occur in Brazil. This is because, as has been seen multiple times in recent years, Brazilian infrastructure is straining under the weight of harvests which just keep growing, thanks to the expanding frontiers of agricultural production as well as ever higher yields.
Traditionally, Brazilian grain has been exported through the three southern ports of Santos, Paranaguá, and Rio Grande. For some soybean-producing regions such as the state of Mato Grosso, this means trucking their beans over 1,000 miles. Therefore, more northern terminals such as Barcarena, Itacotiara, and Santarem have seen some private investments enabling exports, and access to them has been made easier after the BR-163 road that connects Mato Grosso to these ports was paved.
Even with these investments, Zani and others believe there is a risk that Brazil’s ports will not be capable of keeping up with the massive crop volumes this year, given that the first four months of the year have already shattered records.
“Lack of storage is another problem. Nearly 33% of all this grain cannot be stored due to lack of grain bins. The government is even offering more credit to buy silos. The whole infrastructure will be tested”.
Moreover, even if exports are being made easier, cross-country travel remains quite tricky. This matters for the feed industry, because the places where the feed ingredients are produced and where the animals are raised are not necessarily the same; most of the corn and soybeans are produced in the country’s centre-west, which consumes only 13 million tonnes of feed, while the south consumes 39 million tonnes. A pending railway project would connect both regions, but it is still under review by environmental agencies.
CARBON FOOTPRINT AND OTHER ENVIRONMENTAL IMPACTS
Even amid the acute concerns of getting feed ingredients moved around and animals fed, the industry also has its eyes on longer-term challenges, such as climate change. Indeed, as the president of Sindirações confirmed, there are opportunities for animal nutrition and production to play an important role in halting these threats.
For example, to paraphrase from a 2016 study that was sponsored by Sindirações alongside the International Feed Industry Federation and the feed industry associations of Europe, the US, and Japan, feed additives such as amino acids and phytase can enable a reduction in the nutrient input into livestock production systems without compromising the productivity of the animals. Thus they can reduce the total amount of feed needed — and spare the greenhouse gas emissions required to make that extra feed.
“This means less use of land, less diesel, and fertilizers,” summarized Zani.
Moreover, a more targeted use of feed additives can also mitigate the production of undesirable emissions, including nitrogen and phosphorus discharge, or methane emission from cattle, he notes.
In addition, Zani mentions that Brazil has reached some of the goals of a lower carbon footprint that were previously committed to at the Cop 15 climate conference in Denmark in 2009. “We have complied with the goals of recovering degraded pastures and more feedlots.”
Meanwhile, the agricultural sector is also pushing back against the perception that Brazilian soy and feed production is so terrible for the environment. The president of Sindirações cited a recognition by the Food and Agriculture Organization of the United Nations (FAO) that the carbon footprint of Brazilian agriculture had previously been overestimated, through a failure to take into account regionally important variations in agricultural practices, including the large and growing areas of the country submitted to double-cropping (usually with soy and corn).
According to Zani, this work is connected with an initiative to develop more accurate and higher quality data about land use in Brazil for the purposes of evaluating carbon footprints.
“I cannot deny that carbon emissions are very important, and that animal production and agriculture have a very important impact on the emissions, but these [re-evaluations] are very important facts to be highlighted, too” says Zani.
On the question of antibiotics reduction, the president of Sindirações said that the matter was above all being driven by the European Union, which the Brazilian industry is watching closely. “The use of antibiotics to improve animal performance has already been minimised, and the only use is now for animal health where relevant.”
