The meeting was held in conjunction with the Brazilian Agricultural Research Corporation, or EMBRAPA, and the Brazilian Fat and Oil Processing Industry, FENAGRA. About 80 people attended the meeting from industry, banking, and government. Nine presentations were given and topics presented included technologies in biodiesel production, financial tools and government support, use of fats in pet food production, the importance of the rendering industry in relation to the environment, fat markets, and new uses of fats.
Livestock Profile
Agribusiness (agriculture, livestock, processing, distribution) in Brazil represents 36 percent of the national gross domestic product (GDP), 37 percent of all employment, and 43 percent of the national exports. Grain production was estimated at 98.5 million metric tons in 2005. Agriculture represents 4.5 percent of the total Brazilian GDP per capita and livestock is 6.8 percent.
Brazil has the world’s second largest cattle herd with about 165 million head (FNP Consultoria and AgroInformativos, 2005), or 16.3 percent of the world total (1.02 billion head). The main producing states are those of Mato Grosso do Sul, Mato Grosso, and Goiás (middle-west region), followed by Minas Gerais and Sao Paulo (southeast region), Rio Grande do Sul (south region), and Bahia (northeast).
The swine population was estimated at about 34.5 million head in 2005 (FNP, 2005), with the southern region being the main producer state, accounting for 47.1 percent of the herd (16.5 million head) and 80 percent (1.2 million metric tons) of the national pork production. In 2005, 81.8 percent went to internal consumption and 19.7 percent to exportation.
Brazil currently has the third largest swine herd in the world, with approximately 81.7 percent raised in 100-hectare farms. It is also estimated that there are around 30,000 establishments producing swine using intensive industrial production methods. The increase of the swine industry has been linked to several environmental impacts and biogas production from animal waste management systems, which is increasing rapidly. In 2006, the potential of biogas utilization emerged again with economical and environmental proposals related to the opportunities of clean development mechanism (CDM) projects in the south, southeast, and middle-west regions of Brazil.
One of the companies that develop CDM projects in Brazil involves a stock of 300,000 animals, which together equates to the removal of three million metric tons of methane per year. Each ton of methane would correspond to U.S. $5.63 in the international market. The larger biodigester was installed in the Bom Despacho farm in Minas Gerais state. That farm produces 12,500 cubic meters of biogas per day, enough to generate 100 kilowatts per hour.
It is estimated that there are a total of 2.5 million sows in Brazil (FNP, 2005), a decrease of 11 percent since 1996, although the total swine herd has increased 18 percent in this period. Also, studies indicate that the pork meat production could increase 18 percent by 2010.
Broiler production in 2005 was estimated at nearly 9.1 million metric tons, up eight percent from the production level in 2004. Nearly 97 percent of the poultry meat produced in Brazil is broiler meat, with the balance consisting mainly of turkey production. According to trade sources, about 55 percent of the estimated broiler meat production in 2005 consisted of broiler parts and 45 percent of whole broilers. Ten Brazilian poultry processors account for 55 percent of total broiler slaughter and 85 percent of broiler exports, reflecting an increasing consolidation in the sector. These same companies are also leaders in pork production and exports in Brazil, which allows for economies of scale and greater use of lower-cost feeds based on volume purchases.
Brazil’s Rendering Industry
The rendering industry in Brazil consists of 326 registered plants (according to the Department of Livestock Agriculture and Provision), and among them meat packers and recyclers comprise the largest segment.
Sincobesp (Union of Animal By-product Recyclers) was established in 1996 and started its activities with only six associates. Today it comprises of 35 members in all Brazil. Sincobesp represents the interests of the sector dedicated to processing by-products from animal origin, the community, and other representative institutions in similar sectors. Its objective is to disseminate information (legal, techniques, marketing, etc.) related to the sector and to promote the image of the industry and its products. Sincobesp is affiliated with the Federation of the Industries of the State of Sao Paulo, or FIESP, and is part of the Wheat and Soy Chamber of Commerce.
By the end of 2006, Brazil’s rendering industry had reached a volume close to five million metric tons valued at over one billion U.S. dollars. During 2006, significant increases in cattle, poultry, and swine by-products were generated as the result of commercial and new sanitary regulations imposed within the different sectors of livestock in Brazil.
Feed production for animals – the main usage of rendered by-products – has grown 3.5 percent (48.7 million metric tons). At the same time, exports increased, especially for poultry by-products. Nevertheless, profits have decreased as the exchange rate rises. In 2007, Brazil is expected to produce 52 million metric tons of feed and require 2.5 million metric tons of meals. Over the next 10 years it is anticipated that the industry will grow 20 percent.
It is anticipated that the Brazilian rendering industry will implement a code of practice and a “quality seal” in the very near future. The rendering industry in Brazil is aware that animal meals of bad quality can damage the industry and as such has created a second organization known as the National Association of By-product Industries of Animal Origin, or ANISOA.
Of the annual production of little more than two million metric tons of rendered by-products, about 1.1 million metric tons is being used by the poultry industry, 650,000 to one million metric tons goes into the swine industry, and the rest into the pet industry, mainly dogs and cats. On average, the agro-feed industry is using about eight percent of the animal meals within the formulation of their feeds.
On the other hand, EMBRAPA, founded in 1973, consists of a network of 37 research centers, three service centers, and 11 central divisions; there are 8,619 employees, of which 2,221 are researchers, 45 percent with master’s degrees and 53 percent with doctoral degrees. EMBRAPA coordinates the National Agricultural Research System, which includes most public and private entities involved in agricultural research in the country.
EMBRAPA, with support from the Ministry of Agriculture, is currently supporting studies on the transformation of fat residues from the rendering industry into biodiesel. Similarly to the United States, the proposal is to use fat to generate fuel intended for use in the heating of systems of both the feed and the rendering industries.
While currently the use of biodiesel is optional, by January 2008, all diesel sold in Brazil will have to contain two percent biodiesel. The percentage will go up to five percent in 2013. At a two percent mixture, the annual demand will be about 218 million gallons of biodiesel. Today, Brazilian production of biodiesel is only 5.4 million gallons. This year, one of the largest meat packers, Bertin, will begin to use tallow for biodiesel production. It is estimated that they will provide 14 percent of the biodiesel demand in Brazil, or about 29 million gallons per year.
Brazil’s Future
The consolidation and growth of the Brazilian rendering industry will depend on the care that is taken in regards to product quality and on the adoption of rigid controls throughout the complete production chain and process. The Brazilian biodiesel industry will become increasingly competitive in international markets, with continuing increases in production capability and constant improvement in product quality.
Long term, Brazil is facing many challenges including company integration and association membership. Likewise, they will need to comply with norms established by the U.S. Department of Agriculture, which monitors sanitary, best manufacturing practices (BMP), and hazard analysis and critical control point conditions in plants. As of today, only 40 percent of the plants overseen by the Ministry of Agriculture can comply with just 70 percent of the requisites established by BMP.
Tech Topics - June 2007 Render