Learning Event No. 3, Session 2: Bungenstab. ARDD2012 Rio.


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Presentation by Davi José Bungenstab at the 2012 Agriculture and Rural Development Day (ARDD) in Rio de Janiero, Learning Event No. 3, Session 2: Mitigating greenhouse gas emissions from beef cattle: Tax incentives for technology adoption in Mato Grosso do Sul, Brazil. http://www.agricultureday.org

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Learning Event No. 3, Session 2: Bungenstab. ARDD2012 Rio.

  1. 1. Mitigating greenhouse gas emissions from beef cattle:Tax incentives for technology adoption in Mato Grosso do Sul, BrazilDavi J. Bungenstab, Researcher - Embrapa Beef CattleBrazil is a major global player in beef exports, and the state of Mato Grosso do Sul has one of thecountry’s largest herds, with over 20 million head. After the 1950s, local beef production systemsunderwent substantial productivity-enhancing changes, including the introduction of the NeloreZebu breed and of Brachiaria spp. grasses by Embrapa as well as the use of mineral supplements. Inthe last two decades, Nelore has been crossbred with European races, and supplementary dry feedhas been introduced for grazing cattle, especially finishing steers and weaning calves. Large geneticimprovement programs and feedlots for finishing cattle are also contributing importantly to betterherd performance.Such improvements not only contribute to local and national economic development but can alsohelp improve natural resource management and thus reduce agriculture’s environmental impact,especially its emissions of greenhouse gases (GHG). Toward this end, the state government of MatoGrosso do Sul in partnership with the Ministry of Agriculture started a program in 1993 to stimulatetechnical progress in cattle ranching. Called “Programa do Novilho Precoce - PNP” (Young SteerProgram), the program allows part of the local state tax (referred to as ICMS) to be refunded in cashto farmers for each animal slaughtered at ages below the state average.As a result, whereas most steers were slaughtered at ages over 48 months in 1993, the average ageis now around 42 months. For animals slaughtered at a maximum age of 18 months, farmers receive67% of the ICMS in cash, while for maximum ages of 24 and 36 months, they receive 50% and 33%,respectively. The most efficient farmers usually receive tax refunds equivalent to the value of onesteer for each 20 slaughtered. The tax incentive has prompted many farmers to improve theirproduction systems, mostly in animal feeding on pastures as well as in genetics and reproductiontechnologies.Over 3,000 ranches are registered in the Novilho Precoce Program. In 2010, the program refundedtaxes for over 320,000 steers. Of those, 28% were under 18 months of age, 45% between 18 and 24months, and 27% between 24 and 36 months. According to Brazil’s most recent GHG inventory, onesteer is responsible for around 1.5 tons of CO2 equivalent per year. The less time an animal stays inpasture, the fewer GHG emissions it causes per unit of beef produced. In 2010 alone, the NovilhoPrecoce Program avoided emissions of 655,000 tons of CO2 equivalent. Taking into accountemissions resulting from the intensification of these improved systems (through increased use offossil fuel-based inputs) – that is, a maximum of 0.5 ton of CO2 equivalent per animal per year – netemission avoidance can be conservatively estimated at 1.0 ton of CO2 equivalent per animal peryear.To sequester the CO2 equivalent emissions avoided by the Novilho Precoce Program in 2010, itwould be necessary to plant 37,000 hectares of Eucalyptus forests in Mato Grosso do Sul, whichcurrently has just 380,000 hectares of commercial forests. Preliminary results from studies atEmbrapa Beef Cattle show that Eucalyptus trees in silvopastoral and agrosilvopastoral systemswould sequester carbon equivalent in an amount comparable to the remaining emissions fromcattle. From these results, it is evident that reducing the slaughtering ages of cattle is critical formaking Brazil’s livestock production more climate friendly and that a well-structured tax incentiveprogram can contribute importantly to this goal.