The commitment of Brazilian meat packers to the emission targets under consideration

Every day in slaughterhouses in Brazil, tens of thousands of cattle are slaughtered in selected cuts, burgers and ready-made dishes sold at home and around the world.

While the multi-billion dollar trade has made the Latin American nation the world’s largest exporter of beef, the exact origins of the animals are often a mystery.

“There’s a guy that produces veal, one raises it and the other makes it fat,” said Gilberto Tomazoni, chief executive of JBS, the world’s largest meat processor with $ 50 billion in turnover. annual. “Basically, there was a lack of information to monitor our suppliers’ performance.”

The St. Paul headquarters group, which earlier this month suffered a cyber attack on its North American and Australian systems, it has long been accused of links to ecological damage. But it is now embarking on a push for sustainable sustainability as Brazil faces disinvestment threats and the boycott of products on the Amazon rainforest.

At its vast industrial complex in Lins, in the interior of St Paul’s State, JBS promotes initiatives such as the recycling of plastic waste and renewable energy supplied by a power plant powered by sugar cane waste. as proof of their efforts.

Yet, as the country’s top meat packers commit to cutting greenhouse gases, solving the puzzle of where their cattle come from will be vital to efforts to clean up an industry that is one of the driving forces behind deforestation – and a significant contributor to global warming.

JBS has recently set a goal to be net zero by 2040, which will involve reducing its own indirect emissions and then offsetting those that remain.

Its main rivals, Marfrig and Minerva Foods, pursue similar ambitions.

“Given how serious the situation is with deforestation in Brazil, this is quite timely,” said Kiran Aziz, senior analyst at KLP, Norway’s largest pension fund, which excluded JBS from its portfolio in 2018. due to the risk of corruption. “What’s more important is the implementation.”

The trio agreed more than a decade ago to show that they do not buy animals, directly or indirectly, from farms engaged in deforestation in the Amazon. Given its ability to absorb carbon dioxide, the rainforest is a bulwark against climate change.

The Australian red meat and livestock industry also aims to thrive carbon neutrality by the end of the decade, while the largest U.S. meat company, Tyson Foods, was working to reduce greenhouse gas emissions by 30 percent by 2030.

However, most of the largest meat and dairy companies in the world have not made explicit net profit, according to recent reports. research from New York University.

Then destruction of the Brazilian Amazon reaching a maximum of 12 years in 2020, meat bags have been under pressure to prove that promises were not just a washing exercise.

A patch of Amazon rainforest destroyed by fire in 2019

A patch of Amazon rainforest destroyed by fire in 2019 © AFP via Getty Images

Inaction carries a financial risk. The three major Brazilian groups rely on European investors and banks for at least a quarter of their funding, including debt financing and equity investments, according to Chain Reaction Research.

“They face the risk of a backlash from the European institutions, such as the transfer of JBS from Nordea,” said Matthew Piotrowski, director of policy and research at Climate Advisers, referring to the decision of the climate manager ‘assets in Finland to abandon action last year on environmental concerns and other issues.

Maria Lettini, director of the Fairr Initiative, a network of research and investment advice, said: “In general, investors support a lot, but many are skeptical about how to meet those zero net targets.”

Although Brazil’s largest beef processors have managed to monitor direct livestock sales, they will also have to implement full traceability of scattered and sometimes small-scale ranches that feed into production chains and where animals can spend most of their lives together.

While official documentation is required for each stage of animal transit, the documentation is not public and privacy laws prevent the sharing of third-party data. When different breeding phases are not carried out on the same farm, this makes it difficult to trace the provenance beyond the immediate vendor.

“[The] The complexity of livestock production here in Brazil is that we have 2.5m livestock producers, spread over a large area of ​​the country, ”said Paulo Pianez, Marfrig’s director of sustainability.“ For any direct supplier, we can have 10 indirect suppliers “.

Satellite images it is already used as a tool to verify that direct suppliers comply with the rules against deforestation and intrusion into indigenous territories. JBS monitors 60,000 farms in this way in an area 1.5 times the size of Germany and says it excludes any sellers found in violation.

Flowchart showing the cow production process in Brazil

Now the big task is to gain more visibility in the chain. JBS has developed a system based on blockchain to safely and confidentially follow the certification of each head of livestock, so animals from illegally planted lands cannot be “washed” by legitimate ranches that supply the group.

The data are then sent to an industry association for validation and the result is shared with the livestock seller. All direct suppliers in the Amazon must by 2025 sign up to the JBS number book, which will be independently verified, or face exclusion.

Marfrig has identified the origins of 62 percent of all its livestock from the Amazon and 47 percent to the Cerrado savannah biome, including direct and indirect suppliers, and records the information through a blockchain-enabled platform.

For its part, Minerva claims to be the first meat packer to have an extended geospatial monitor outside the Amazon, tracking direct suppliers in areas such as the Cerrado, the Atlantic forest and the Pantanal swamp region.

It is now integrating a traceability tool into its existing system to gather greater information on the risks surrounding indirect suppliers in the Amazon.

Taciano Custódio, director of sustainability at Minerva, said his analysis showed that most of the properties that overlap with manifestations of deforestation in the rainforest were relatively small. If they are cattle ranches, they may supply only a few animals each month.

“Brazil’s exploitation challenge is more than the environment – it’s linked to social development,” he adds. “That’s survival for these guys.”

Shepherds drive cattle raised on a deforested Amazon rainforest area in 2013

Shepherds drive livestock on a deforested Amazon rainforest area in 2013 © Reuters

Yet, even if deforestation should be eliminated by the Brazilian cattle industry, cattle breeding intrinsically yields large amounts of methane, a more powerful greenhouse gas than CO2.

About 70 percent of all agricultural emissions in Brazil come from beef digestion, and from associated activities, according to Imaflora.

“It’s a lot, and if you add that the emissions from deforestation to raise livestock is even greater,” said project coordinator Isabel Garcia Drigo.

Line diagram of B3 cattle futures (Real per 15 kg arroba) showing Brazilian cattle prices rising

Researchers say possible solutions include more intensive farming methods to improve land productivity, accompanying the shortening of livestock life, which tends to be longer than in the United States or Canada. Another focus is animal feed, whether supplemental or different types of herbs, to reduce the methane erupted by animals.

“The costs of changing the model are not trivial,” Drigo said. “Yes, they do [the meatpackers] it puts a considerable amount of money into helping producers reduce their emissions, so yes, it’s possible. ”

JBS has allocated $ 1 billion to decarbonization investments over the next decade and Tomazoni is targeting “regenerative” agricultural projects that combine livestock with cropping and reforestation, helping to sequester carbon. JBS plans to spend $ 100 million in R&D by 2030 to support this type of operation.

The food conglomerate reported net income of R $ 4.6 billion (US $ 860 million) last year.

Minerva has allocated R $ 1.5 billion for emissions reduction and Marfrig R $ 500 million, mainly towards the full visibility of the livestock supply chain by 2030. Last year the companies generated a net income of R $ 697 million is R $ 3.3 billion, respectively.

Despite increased scrutiny, some fear there will be insufficient commercial impetus for carnivores to act quickly.

Despite awareness of the climate emergency, global demand for cattle has remained robust and livestock prices in Brazil have reached record levels. While Minerva shares are slightly lower, the shares of JBS and Marfrig have gained at least a quarter in 2021, surpassing the broader Brazilian market.

Activists criticize the sector’s commitments as too far-fetched. JBS, for example, is committed to ending illegal logging in its Amazon supply chain by 2025, into other Brazilian biomes five years later – and finally zero deforestation to the world by 2035.

Like a seller’s market, producers can try to take their material elsewhere if they don’t like the conditions of a meat packer.

“It’s naive to trust more in the promises of a core industry.” . . it’s an emissions producer, “said Daniela Montalto, a Greenpeace activist.” We’re talking about land grabbers, ranchers who wash illegal livestock in the slaughterhouse supply chain. “

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