Uruguay beef supply chain

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The beef industry in Uruguay Buenos Aires May
2008
Lautaro Pérez Rocha lautaro_at_adinet.com.uy
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CONTENTS

• Importance of the beef sector for Uruguay
• The beef supply chain livestock production and
  processing industry
• Challenges and opportunities

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1- Importance of the beef sector for Uruguay
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Uruguay's Shield
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Beef sector importance in Uruguay

• Economic, geographic and socio-cultural
• 6 of the GNP
• 20 of total product exports
• 87 of the land dedicated to livestock
• 3,8 cattle heads / inhabitant
• 7th world beef exporter (6 of world trade)
• 3rd world mutton and lamb exporter

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7 exp.
USDA 2007
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The beef sector now

• Still the most important...
• Political and economic stability
• Investment and growth
• But...
• Intensification and competition with other
  production systems

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The beef industry is going through an historical
transformation, metamorphosis
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2- The beef supply chain livestock production
and processing industry
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Agricultural Gross Production

• The ag-sector is booming
• Record levels

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Beef supply chain (2007)
45.000 farms
15,4 million ha
11,6 million cattle
PROCESSING INDUSTRY
35 PLANTS
2,2 million slaughter
511 .000 cwe tons
511.000 cwe tons
Domestic 25
Exports 75
128 000
383.000
Cwe tons
Cwe tons.
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Production systems

• Pasture raising systems
• 16 Improved or implanted pastures
• 84 natural pastures
• Extensive, open sky
• Growth promotants and hormones prohibited by law
  since 1989.
• Animal protein in feed prohibited by law since
  1996

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Livestock Production Highlights

• Stable cattle and ovine stock
• Strong increases in productivity, particularly in
  the fattening sector
• Heavier and younger animals
• High Investment / Gross Production Ratio
• Implanted and Improved Pastures
• Cow-calf sector still lagging

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Uruguay cattle and sheep stock evolution,
1980-2007
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Uruguay cattle slaughter, 1980-2007
Source INAC, 2007
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Uruguay Beef Production, 1966-2008 (tons cwe)
5 growth 2001-2006,
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Sanitary status

• Free of FMD with vaccination
• One of the 4 countries categorized as BSE free
  (minimum risk) by the OIE, 2006
• E Coli 0157H7 not detected in beef

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Increase in pastures and annual forages
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• Cow calf sector
• The calf stock increased because of more cows
  and heifers being served younger
• Calves weaned per breeding cow served ratio
  still low (65)
• Finishing / Fattening sector
• Younger and heavier animals

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Uruguay Steer Nominal Price, 1985-2008 (USD / kg
live)
FMD
Source INAC
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Steer Prices selected countries, May 2008
30
70
Note prices are for export steers
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Processing plants

• 35 Slaughterhouses, 17 approved US EU.
• 8 plants with more 150.000 heads/ year
• Capacity investments since 2003
• Aggressive process of acquisitions since 2006
• 8 plants owned by foreign investors (more than
  60)
• 28 Slaughter by one Brazilian group in 4 plants

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Traceability

• Lot Traceability, DICOSE System, 1973.
• Objective curtail smuggling and help with the
  eradication of FMD.
• Farmers are given a code consisting of a region
  number, a police station number, and a farm
  number.
• Every movement must be recorded and the animal
  accompanied by its paperwork.
• Accepted by the UE in 1998.

• Individual Identification, 2006.
• Declared of National Priority by law, 100
  mandatory for 2010
• Financed by the government
• Visual ear tag and RFID (12 digits)
• Farmers must communicate every movement
• Official operator or transport operator register
  the transaction and send data to MGAP

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Ear tag National Identification System
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Traceability

• Electronic data information system for the
  Processing Industry
• Operative in 36 plants
• Animal data gathered at disassembly lines sent to
  INAC
• Will allow to track meat to individual animals in
  2010.

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The government role?

• Deregulation during the 90s
• Allowed to export live cattle
• Elimination of regulating stocks for domestic
  market.
• Allowed to export raw hides.
• Aggressive and solid sanitary and market access
  policies
• Regulations for enhancing process traceability,
  animal welfare, food safety, data and information
  systems.
• Minimum interference in market rules

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Uruguay export value and markets, 1980-2008
2008 1st quarter
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Export Income per cwe ton, 2003-2008
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Challenges and opportunities
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Profit Margin / ha 2006/07
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World meat prices far behind the upward trend in
other commodity prices
Source FAO Regional Office for Asia and the
Pacific, Nancy Morgan, May 2008
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Average Land Prices in Uruguay, 2000-2007
18 annual growth
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Drivers of change Uruguay Livestock farming

• Increased emphasis on traceability and food
  safety
• Increased consolidation of farms and ranches
• Value based marketing programs
• New paradigm in the ag sector
• Competition among different food chains,
  particularly for land uses
• Geographic redistribution of livestock farming
• Investment, intensification, search for higher
  productivity
• The role of Brazil as the new world protein
  supplier
• Increased and varied international demand

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Thank you
FROM FARM TO THE CONSUMER