Brazilian-Beef-Final_Optimized1

DEFORESTATION AND THE BRAZILIAN BEEF VALUE CHAIN
FIGURE 9.
Five years of cattle production: costs of managing pasture versus costs of clearing land
SOURCE: (Costa & Factori, 2011; Desmatamento, 2006; EMBRAPA, 2003)
DEFOREST
(5YRS)
R$ 217,500
FERTILIZE
(5YRS)
R$ 252,720
R$190,000 R$200,000 R$210,000
R$220,000 R$230,000 R$240,000 R$250,000 R$260,000
half (R$ 217,500) is spent on planting. Remaining expenses are for assets such as fences, watering
stations, and machinery, which depreciate over approximately ten years (Costa & Factori, 2011).
After their initial investment in pasture intensification, ranchers must maintain the land, which
requires the additional annual cost of fertilizers (see Figure 9). Deforestation, on the other hand,
can support cattle for at least five years without further investment (Hecht, 1985). At an annual
expense of R$ 50,544, fertilizing the pasture over five years costs R$ 252,720, considerably more
than even the highest one-time cost to deforest 145 new hectares of land(Costa & Factori, 2011).
Ranchers’ declining profitability
Figure 10 sums up the effect these dynamics have had on ranchers’ profitability. The cost of raising
cattle in Amazon states has increased substantially in recent years, in many cases surpassing the
market price for beef (Del Isola, 2014). In the three Amazon states with the highest number of
cattle, the cost of producing one arroba (unit of measure equal to 15 kg) doubled from 2007 to
2013 (Del Isola, 2014). Ranching in Rondonia ˆ has not been profitable for over three years, and it
appears Mato Grosso and Pará may be heading in the same direction.
“Inputs have become increasingly expensive recently, especially costs to improve
productivity. Ranching is not a good business nowadays. So some smaller ranchers
still consider deforestation the best way to expand production without having to
invest in the land.” - Rancher, Pará
17
DATURESEARCH.COM