“Unfortunately, livestock farmers are unable to determine the value of their product…”
Oswaldo Pereira Ribeiro Júnior is the president of the Association of Cattle Ranchers of the State of Mato Grosso – Acrimat and the Emergency Fund for Animal Health, graduated in medicine from the Marília Medical School.
Oswaldo Ribeiro, president of Acrimat
AgriBrasilis – The ranchers do not determine the final prices of cattle. How is this value stipulated?
Oswaldo Ribeiro – Unfortunately, ranchers are unable to determine the value of their products. In any market or industry, when you do your calculations, you have your costs and your profit margin, and in this way you determine your final price. Cattle farming is totally different, as the rancher cannot determine the final price.
The rancher goes to the slaughterhouse and offers the animals. What determines the price is the slaughterhouse and its slaughter scale, in addition to the law of supply and demand. This is a bad situation because you can never schedule your own costs.
If the sale would result in a loss, the farmer still has to sell it. Farmers that have feedlots suffer even more: if you do not have a pasture, you have to deal with the animal right away. The rancher that has a feedlot cannot spend even two or three days with the animal waiting in there. The confined animal is like a ripe fruit, which must be harvested and sold immediately. If the farmer only waits two or three days, they already lose a lot of money, as the cost of keeping the cattle in the feedlot is enormous. Unfortunately, the farmer is held hostage by the slaughterhouses in this case.
Another point worth remembering is that it is not the farmer who determines the final price of the product that goes to the market shelves. We receive many questions about the reason for the increase or decrease in the price of meat in the markets, but this is something we cannot define. The slaughterhouse determines the price per arroba (Brazilian unit for measuring cattle weight – an arroba is 15kg) and then the retailer sets the price as they see fit, according to their needs – sales, higher prices for premium meats, etc.
When we sell the animal, we do not know if the meat will go to China, or if it will go to a premium butcher shop. We just deliver the animal ready to be slaughtered and then they do what they want.
AgriBrasilis – Is this price drop part of the normal livestock market cycle in Brazil?
Oswaldo Ribeiro – The price is also related to the livestock cycle, but the rancher knows this and has always been prepared in this regard.
Especially in this time of great financial and economic uncertainty, of legal uncertainty in the countryside, livestock farmers are afraid to invest, to buy more animals, expand their property, and increase their costs. Therefore, the cattle rancher keeps waiting, and this crisis has lasted almost two years.
Furthermore, arroba prices do not react, they do not increase. We believe that the arroba has finally hit rock bottom and the tendency is for a certain “reflux” to occur. There may be a small increase until the end of the year, at least until January, when the end-of-year festivities usually lead to an increase in meat consumption. We only keep waiting during this national uncertainty, which is creating insecurity for livestock farmers, who need to invest thinking about the long term. Cattle ranchers need to plan, but they are not succeeding.
AgriBrasilis – Why are Brazilian cattle ranchers “asking for help”?
Oswaldo Ribeiro – They are asking for help because they can no longer make plans. Previously, the ranchers relied on the livestock cycle to know, for example, when the price of calves would decrease. In this way, the farmers used to rear their cattle, to think about increasing the herd, and buy female calves (heifers) to use for breeding. Today, livestock farmers cannot do any of this, because they do not know if they will be able to sell their animals. The farmer is now focused on avoiding losses.
Many ranchers are selling the grown animal for the US$ 690 they paid for the calf, which is a huge loss. Therefore, it is impossible to plan for the next one to two years, as you do not know what will happen. The rancher becomes fearful. Legal uncertainties, property invasions, the issue of the Indigenous Timeframe, the insecurity in the case of inputs, the market oscillations… all of this is a huge uncertainty.
Several small livestock farmers, who did not plan carefully and do not have much financial support, are leaving the market. Only large and medium ranchers remain. Cattle farming is a democratic activity, and it also involves small milk or beef farms, that have between 30 and 40 head of cattle and produce for subsistence, for example. They are the ones we are worried about, because they are certainly going out of business.
AgriBrasilis – Why does Acrimat propose reducing fees for slaughtering cows?
Oswaldo Ribeiro – Today, we pay a slaughter fee to the government, called FETHAB (State Transport and Housing Fund). The fee is the same for both the bulls and the cows, but the price of the cow is much lower when its sold for slaughter. The value of the arroba is lower, the cow weighs less than the bull. In other words, the cow’s value is almost 60% lower than the bull’s value, but the tax rate is the same for both. That is not fair.
We have been asking the government since January to correct this. We do not mind paying fees and taxes, as long as they are fair and fit within the budget. Today we have a lot of difficulty because, the lower the arroba value in the case of females, the more the gap increases. The government needs to meet this demand from cattle ranchers.
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