Brazilian pig meat production: past, present and future

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Luciano Roppa conference at TOPIGS WORLD PORK EVENT, Berlin (Germany), November 15th, 2012.

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Brazilian pig meat production: past, present and future

  1. 1. “Brazilian pork “Brazilian pork production” production” Luciano Roppa Luciano RoppaTopigs World Pork Event, Berlin, November 2012
  2. 2. Overview1. PAST: Facts that characterized the Brazilian pig production in the last 10 years2. PRESENT: Current situation, 20123. FUTURE: Major trends in the Brazilian pig production, in the next 10 years
  3. 3. 1. Production increased more than World averageBrazilian swine production growth: 18 % in the last 10 years 2012: 3,45 million ton (2% growth)Driven by:A - 19 % internal consumption increase 190 million people 85% of the production is consumedinternally 15 kg/person/yearB - 12 % exports increase 15% of the production is exported Ukraine, Russia, Hong Kong, Argentina 2012: 0,56 million T (5% increase) Source: ABIPECS, 2012
  4. 4. 2. Production concentrated in less producers Swine production evolution in Santa Catarina state, 1985 to 2011 1985 2011 DifferenceSwine producers, thousand 54,2 12,0 4,5 x lessSwine number/producer, heads 59 516 8,7 x moreTotal herd, million heads 3,2 6,2 + 93%Pig meat production, thousand T 229,3 825,0 + 260 %Source: Luciano Roppa, 2012 50.000 swine producers 10 main producers(58% of the market): Source: Roppa Consulting, 2012
  5. 5. 3. Less Independent producers, more Integrations, moving to Center region …Brazilian swine producers Geographic distributionIntegratedIndependent swine producersIndependent Cooperatives 5,6% 14 % 34 % 5,0% 6,0% 13,7% 61 % 3,3% 5,0% 17,0% 61,4% 25,1 19,3% Source: ROPPA Consulting, 2012 Source: ABIPECS and Embrapa, 2012
  6. 6. 4. Efficiency increased … Brazil: Swine efficiency evolution, 2000 to 2012 (average of 400.000 sows evaluated) 2000 2005 2012Piglets born alive/sow/year 25,95 26,37 28,55Weaned/sow/year 23,62 23,91 26,17Total Herd feed conversion 3,01 2,89 2,67Source: Agriness, 2012 “Brazilian best farm 2011-2012” Piglets born alive/sow: 14,22 Piglets weaned/sow 13,77 Farrowing/sow/year: 2,465 Piglets weaned/sow/year: 33,95
  7. 7. 5. Production costs increased … Use of grains to produce biofuels + climatic problems(losses of 115 million T in the USA, 25 million T in Brazil, Argentina & Paraguay and 10 million T in Russia & Ukraine) World’s grain and meat price evolution, 2000 to 2012 (FAO, 2002-04=index 100) CEREALS: 160% Volatility = Selection MEAT: 70%
  8. 8. 6. Consumers demand increased ... Meat production requirements increased, driven by consumer sensitivity and regulations.Food safetyHealth & WellnessAnimal welfareEnvironmentSustainabilityTraceability
  9. 9. Overview1. PAST: Facts that characterized the Brazilian pig production in the last 10 years2. PRESENT: Current situation, 20123. FUTURE: Major trends in the Brazilian pig production, in the next 10 years
  10. 10. Brazilian pig production, today. 2011-2012 CommentsTotal herd, heads 39 M Growing 0,8 % per year- Intensive (85%) 33,1 M Growing- Backyard (15%) 5,8 M DecreasingPig meat production 3,3 MMT Growing 2,0 % per yearExports 0,53 MMT Growing 2,3 % per yearInternal consumption 2,8 MMT Growing 1,6 % per yearPer capita consumption 15,1 kg/year Target: 18 kg by 2022Feed consumption 15,4 MMT Growing 2,5 % per yearSows number, million 2,4 1,64 intensive (increasing), 0,76 backyard (decreasing)Production cost, kg alive U$ 1,18 to 1,33 Actual (November 2012)Swine producers 50.000 DecreasingCarcass slaughter weight 85 kg IncreasingHeads slaughtered/year 39 million IncreasingSource: Roppa Consulting, 2012
  11. 11. Brazilian production costs increase, 2012 U$ 660/ton + 90%Soybean price evolution, Reais/Ton U$ 235/ton + 40% Corn price evolution, Reais/Ton Source: Roppa Consulting, 2012
  12. 12. Brazilian pig producers profits and losses Production Costs x Price to Pig producers (Sao Paulo, 2011 to 2012) Farm with 300 sows, 24 pigs/sow/year Production costs, R$/kg Average: U$ 1,34 Average: Price to pig producer, R$/kg U$ 1,31 Summary: 11 months of losses and 11 of profitsBRAZIL 2011 2012 2013Pig meat production, million T 3,384 3,450 3,390 - 1,7%Source: Roppa Consulting, 2012
  13. 13. What to expect for the near future: Evolution of facts ... July 2012 ...2013 We are here now …
  14. 14. Brazil: two crops per year (summer crop & winter crop)Brazilian farmers are increasing the area Brazilian Soy production (million Ha)with Soy in the summer crop(harvest in January-February 2013) ...Soybean prices are expectedto normalize in the next Brazilian harvest… but at higher prices than in the past. Profit to produce corn or soy in Brazil, harvest 2012-2013 MATO Production Productivity Actual price Revenue Profit GROSSO cost, U$/ha (kg/ha) (U$/T) (U$/ha) (U$/Ha) CORN 842,00 6.000 172,33 1.034,00 192,00 SOYBEAN 1.054,00 3.000 580,00 1.740,00 686,00 Source: Roppa Consulting, 2012
  15. 15. South America has a mission to compose the global supply of soy ... Soybean world production (million T) 2011/12 2012/13 (%)USA 83,2 77,9 - 8,0 %Brazil 66,3 82,0 23,6 %Argentina 41,5 55,0 32,5 %China 13,5 12,6 - 6,6 %India 11,0 11,4 3,6 %Paraguay 4,5 8,0 77,7 %World 236,4 260,5 10,1 % Brazil, Argentina & Paraguay: 55% of World productionSource: Roppa Consulting, 2012
  16. 16. Brazilian Corn production … The summer harvest will be smaller (45% of the production) ... will only increase in the winter harvest (55% of the production). Brazilian year-end Corn stocks perspective: : 10 million T. Corn world production (million T) 2011/12 2012/13 Variação (%)USA 313,9 271,9 - 15,4%China 192,8 200,0 2,6%EU-27 64,6 61,5 - 6,1%Brazil 69,0 72,9 5,6%Argentina 21,0 28,0 12,0%Mexico 19,0 21,5 2,4%World 872,9 849,0 - 6,2%Source: Roppa Consulting, 2012 L. Roppa Consulting
  17. 17. Overview1. PAST: Facts that characterized the Brazilian pig production in the last 10 years2. PRESENT: Current situation, 20123. FUTURE: Major trends in the Brazilian pig production, in the next 10 years
  18. 18. Production costs will be higher than in the past ....- Produce more (growing population and purchasing power)- Better (food safety, animal well-being and sustainability)- With less resources (less land, water, labor, energy )- With new technologies (research, innovation, new products …)
  19. 19. Pork production will grow ....Global pork production will grow 16 % in the next 10 years ... It will grow 20% in Brazil. Source: Roppa, 2012 - Based on: “OCDE-FAO Agricultural Outlook 2009-11 to 2021” & MAPA, Brazil, 2012
  20. 20. Brazilian pork business towards 2022 Perspectives 2011 to 2022 Production Consumption Exports2011/2012 3,384 2,852 0,5322021/2022 4,067 3,313 0,655Growth, % 20,2 16,1 23,1 Source: Roppa Consulting, 2012 - Based on: MAPA, Brazil, 2012
  21. 21. … but, it will be never like before …Soybeans Monthly Price - US Dollars per Metric Ton 500 370 250Corn Monthly Price - US Dollars per Metric Ton 260 180 100 Source: Roppa Consulting, 2012 - Based on: Index Mundi, Oct. 2012
  22. 22. Efficiency must increase … Brazilian efficiency towards 2015 (Average of 300.000 sows, 390 farms evaluated) 0,35% growthFarrowing/sow/yearPiglets born alive 3,65% growthPiglets mortalityWeaned/sow/year 4,61% growth 4,45% growthSource: Agriness, 2012
  23. 23. PRODUCTION SYSTEMS ... The future belongs to the efficient and the productive. Consolidation will be faster in the next 10 years; Trend towards vertical integration will continue. Today, 25% of the swine industry worldwide is already integrated; Integration is the most successful current model for sustainability: - Controls all the input raw material, - Controls the processes at each stage of production, - Takes advantage of economies of scale. Cooperative CVale, Paraná, Brazil
  24. 24. PRODUCTION SYSTEMS ...Independent producers will have to form alliancesto achieve economies of scale or fill market niches(such as "free of antibiotics", "organic", "local market , etc.).Organizational models for independent pig farmers in Brazil Pig farm, Mato Grosso, Brazil
  25. 25. FACILITIES ... Increasing pressure of “fast food” chains against the use ofcages for sows in gestation The system of housed groups sows during gestation, shouldprevail in the EU-27 and U.S. Different countries and societies may prioritize objectivesdifferently according to the country’s stage of economicdevelopment
  26. 26. ENVIROMENTAL IMPACT …Strong shift emphasis from treating manure as a waste, to recognize it as a resource! Use in land application, due to rising commercial fertilizer pricesIncreasing composting, to reduce odors and make it more economical to transportFacilities will increasingly use alternative sources of energy, such as biodigestors.
  27. 27. GENETICSMain genetic targets are: Feed conversions of under 2:1 at 130 kg finished weights Complete genome sequence in the next three years. Identify pigs that are genetically less susceptible to disease More accurate models of nutrient requirements for the geneticlines at various productivity levels Genetically-modified swine
  28. 28. MEAT QUALITYMain pork carcasses targets are:- heavier to minimize costs of slaughtering (130 kg)- leaner by minimizing fat production- with increasing muscle:bone ratios via heavier muscling;- with higher quality through breeding Castrolanda (Cooperative), Brazil
  29. 29. NUTRITION What have we learned from this year’s drought? The pig of the future will be an excellent recycler of many non-traditional or waste ingredientsMain nutrition targets are:- ingredient supplies will be paid on exact nutrient specificationsdelivered, vs. todays price per ton- significant reduction of Soybean usage and increasing utilizationof Co-products- Emphasis on sow nutrient needs, particularly nutrients affectinglongevity and survivability in the breeding herd- Formulation by “minimal cost” will be substituted by“matematical models” that predicts development.- “Precision nutrition”, to avoid waste and to decrease feed costs Castrolanda Feed plant, Paraná, Brazil
  30. 30. Precision Feeding Feeding techniques that allow the right amount of feed, with the right composition, to be provided at the right time, to each animalIs based on intensive and integrated use of advances in “animal sciences” and “new technologies of information and communication” Evaluating the nutritional potential of feed ingredients (Wet lab + NIR + NIR ON LINE) Precise determination of nutrient requirements (Mathematical Models) Formulating balanced diets that limit the amount of excess nutrient (precise levels) The concomitant adjustment of nutrient supply to match the requirements of animals fed
  31. 31. FEED EFFICIENCY …Growing demand for nutritional ideas, technologies and additives that improve feed efficiency, due to antibiotic usage restrictions and co-products increase utilization. Organic Mycotoxin Immune Synthetic Enzymes Minerals Binders stimulators Amino Acids Anti Probiotics Prebiotics Acidifiers Essential Oxidants oils
  32. 32. PIG HEALTH Brazil is free of PRSS and African Swine Fewer. Brazil doesn’t have Foot and Mouth disease where intensive pig production islocated. We need to develop Vaccines with more user-friendly delivery systems, asaerosols, in water and feed inclusions We are taking biosecurity to a higher level, controlling and monitoring all air,water, feed, mechanical vectors, insects, rodents, pigs and people.
  33. 33. REPRODUCTIONMain targets in Reproduction are:-Average of 30 pigs sold per sow/year (4 Ton of meat/sow)-Increasing utilization of intrauterine insemination-Trend to use Sexed semen and Embryos transfer- Tools to more accurately indicate estrus and ovulation, ovarianstatus, occurrence of fertilization, establishment of pregnancy,the number of fetuses and time of farowing-New tools to detect hormones at estrus will enable the“Precision artificial insemination”
  34. 34. PEOPLE “Success in this area will overcome all other obstacles” The biggest challenge will be to find highly qualified people to do the high level of work that the industry demands.  Process control will centralize and be staffed with the most intelligent and experienced stockmen available.
  35. 35. Thank you for your attention! Email: Lroppa@uol.com.br Phone: +55.19.8176 14 09 Address: Rua Araca, 567 13.098-379 Campinas Sao Paulo, Brazil

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