Wagyu around the World - Brazil

The Wagyu breed of cattle was brought to Brazil in 1992 by Teruo Wakabayashi, President of the Japanese probiotic milk drink company, Yakult, to improve the quality of beef in Brazil. The Wagyu herd expanded in Bragança Paulista, São Paulo, for 10 years until there were sufficient to offer to new producers.

Yakult presently has approximately 350 pure Wagyu cattle on over 200 hectares and is processing 50 head each year. Veterinarian, Rogério Satoru Uenish, manager, explains that Wagyu in Japan are produced on the scale for marbling from 1 to 12, but in Brazil, they usually only score up to grade 10.

The association 'Criadores de Bovinos da Raça Wagyu' (ABCBRW) was created in 1995 during the development of the Wagyu breed by Yakult in Brazil. The headquarters are located in Bragança Paulista, SP, where they take care of the communication, development and classification of Wagyu in Brazil. The production of semen and embryos are also carried out. When Wagyu are born the registration process commences. The calf's DNA is checked against its parents and a provisional ‘Certificado de Registro Provisório’ is issued. Subsequently a technician from the association makes the phenotypic assessment in order to complete the registration with the ‘Certificado de Registro Definitivo’.

Four weighings are made on their farm from birth to 18 months of age to complete performance recording, CDP.

'Programa Carne Wagyu Certificada' (PCWC) is the association’s program for the labeling, identification and/or issue of the official Brazilian certification for Wagyu beef in the domestic market and/or export. There are two distinct seals for either 'Puro' (100% Wagyu) or ‘Cruzamento’ for the minimum accepted breed composition of 50% Wagyu. The maximum number of permanent teeth is 6 teeth for both classes. Females are permitted and males must be castrated.

Beef quality is evaluated for marbling, meat colour, fat colour and firmness and texture. Meat quality is graded from Tipo 1 'ruim' (bad) to 5 'excelente' (excellent). Marbling is awarded a BMS score from 1 for no marbling present absent up to the highest that is 12. The chips for graders are illustrated below in the table. There are seven scores for meat colour (BCS) and seven scores for fat colour (FCS). There is also a visual assessment for Firmness and Texture.

In 2020 the total Wagyu herd was 6,873 after there had been an increase of 11.8% over the previous year. About 700 head are pure 100% Wagyu and the remainder are Wagyu crosses. There are 47 producers and the demand for Wagyu cannot be satisfied in Brazil so there are imports of Wagyu beef from Uruguay and Japan.

Daniel Steinbruch is President of ABCBRW and he produces Wagyu from Kobe Premium, Fazenda Agélica, in Americana (SP). He has spent 11 years raising Wagyu. The herd comprises 3.5 thousand head belonging to 25 breeders. But, according to Steinbruch, there is demand for more Wagyu so he is seeking new partners. He slaughters 10 animals a month on the 240 hectare property. There are plans to increase offtake to 60 each month within three years.
There are five partners in the states of Minas Gerais, Paraná and Mato Grosso. Daniel Steinbruch says that one animal was graded 12 BMS during the previous year and they will start exporting when more are raised to this standard.

George de Toledo Gottheiner, from Estância do Bosque, has properties in Aquidauana (MS) and Boituva (SP), where he produces Wagyu cattle that are crossed with Brangus. He slaughters 10 to 15 animals a week and he sells the produce to restaurants in São Paulo and he also has plans to sell through e-commerce.

Rancher Marco Andras has been working with Wagyu for 15 years on his property at Fazenda Invernada Santa Fé, in Júlio de Castilhos. He raises both pure animals and crossbred Wagyu.
“Before we only produced Angus then we introduced Wagyu. Within three years all the animals on the farm are crossed with Wagyu. Some are half blood, others are two-thirds and some are pure” said Marco who is also the marketing manager of ABCBRW.

Marco Andras exhibits pure Wagyu at Expointer – one of the largest agricultural fairs in Latin America – at Parque Assis Brasil.

Traditionally the Nelore cattle breed is marketed even younger at 18 months. Brazil is the largest breeder of Nelore. They are Bos indicus originally from India that had been introduced by the Aryan people. They were subjected to extreme weather conditions in arid areas. They are hardy cattle that are popular in South America. Brazil has the highest number of Nelore and there are reports of two breedings pairs arriving there originally. Their loose black skin is covered by a white or light gray coat.The USA call them Nellore from the place in India, but in Portuguese there is only one L so they are Nelore in Brazil.

Wagyu adds value from the marbling process but this requires a period of finishing which Nelore do not need. Marco Andras uses a different system from the Japanese to produce his Wagyu. He reduced age of processing to around 24 months after fattening from wheat, sorghum and oats for only 240 days so there is less marbling. "The meat is tasty and acceptable to the Brazilian taste."

Another producer weans the Wagyu calves at eight months of age onto pasture and they weigh 230 kilograms. For 12 months from 18 months of age, they are finished from sorghum silage, soybean meal, corn and wheat. Processing is usually at 750 kilograms.

Beef production in Brazil

Brazil has been rebuilding the size of the beef herd since 2007 and is a stable beef exporter.  With 22% growth in exports in 2013, Brazil retained top position for volume of beef exports globally primarily with sales to Hong Kong, Russia, Venezuela, Egypt and the European Union.

Audits are conducted in Brazil to assess whether beef processors are successful in avoiding the purchase cattle from properties that are located in areas that have illegal deforestation, use slave labor, have invasions of environmentally protected and indigenous lands, or are without environmental or land tenure compliance.

Results have been released from the 2020 audit by the Federal Prosecutors' Office in Pará state, which is in the Amazon region, of transactions between January 2018 and June 2019. Brazilian beef processor Minerva S.A. achieved 100% social and environmental compliance with the rules, while Frigol reached 95.9% compliance. JBS S.A. - Brazilian company based in São Paulo is the largest meat producer in the world with international operations including USA and Australia - achieved 68% compliance. This is an increase to 32% from 8.3% from ‘irregular farms’ in the previous audit.

JBS stated to 'meatingplace' that these results were impacted by a change in the methodology of evaluation by the Federal Prosecutors' Office. There are inaccuracies in the definitions of monitoring and in the reference databases. JBS will invest BRL5 million (US$900,000) to strengthen sustainability in the cattle production chain in Pará.

JBS international

JBS S.A. posted a net loss of US$213 million in 2023, citing several challenging scenarios that included higher costs at its poultry and pork businesses and reduced cattle availability that impacted U.S. beef margins.

Net revenue fell 2.9% for 2023 to $73.1 billion.

Net revenue at the company's poultry, pork and processed foods unit Seara declined 4% to $8.3 billion as increased sales volumes weren't enough to offset lower average prices amid an oversupply of chicken meat in global markets during the first half of the year.

JBS Australia reported a 5% decline for the full year to US$6.2 billion.

JBS USA pork's net revenue fell 8.5% in 2023 to $7.7 billion. The company's Pilgrim's Pride unit also recorded a net revenue slipped at the U.S. based poultry operation by 3.8% to $17.4 billion.

Over the years, JBS S.A. had become known as a meat processor around the world so there was shock when news broke after police raided their premises and BRF S.A. in March 2017, as well as dozens of smaller rivals, in a crackdown on alleged bribery of health officials in Brazil.

The probe was known as "Operation Weak Flesh".

J&F Investimentos, controlling shareholder of the world's and Australia's largest meat processing company JBS, agreed to pay a record-setting US$5.4 billion fine for its role in a corruption scandal in Brazil.

Three years later, in October 2020, the JBS parent company J+F Investimentos agreed to pay a US$256m fine over charges it violated the Foreign Corrupt Practices Act. US$150m had been paid in bribes in Brazil to expand its U.S. operations. In addition, JBS USA and a subsidiary paid more than US$100m in fines to settle price fixing charges.

JBS S.A. reported record revenue and pre-tax profits for its 2021 trading year ended 31 December. Across the company’s beef, pork, chicken and value-added divisions in North and South America, Australia and New Zealand, it recorded net revenue last year at a record R$350.7 billion (US$65 billion), up 29.8% on the previous year. Of that, three quarters were sales in domestic markets. Adjusted pre-tax earnings increased 54% to reach a new record of R$45.7 billion.

Expansion through acquisitions by JBS

Early in 2021 JBS reported that they had spent dollars US350m on acquisitions during the previous year.

Vivera, the third-largest plant-based food company in Europe, was purchased for US$410m in August 2021. The meat replacement products retail in over 25 countries across Europe, with relevant market share in The Netherlands, the United Kingdom, and Germany. The deal includes three manufacturing units and a research and development centre located in The Netherlands.

US senators, Bob Menendez (D-N.J.) and Marco Rubio (R-Fla.), requested a probe of JBS and the owners of its parent company Joesley and Wesley Batista through the Committee on Foreign Industries in the US (CFIUS). This followed JBS SA announcement that they would be seeking approval for acquisitions and expansion after a record cash flow.

In October 2021, through a subsidiary JBS acquired Sunnyvalley Smoked Meats in Manteca, Calif. for US$ 90m.

This follows the purchase of Kerry Consumer Foods in UK and Ireland for about US$ 952m. Huan Aquaculture in Australia was bought for about AU$ 546m in August 2021 when Huan was carrying AU$ 150m in debt.

Two months previously Rivalea, Australia's biggest pork processor was bought for AU$ 175m.

In December 2021, Brazilian state development bank BNDES sold part of its 24.5% stake in JBS SA. The bank had announced that it intends to fully divest its stake in the company.

At the end of 2021, acquisitions had added 7500 staff to JBS’s payroll, taking its global total to more than 250,000. The seven acquisitions had added $1.9 billion revenue.

Atypical BSE

The confirmation of two separate cases of atypical Bovine Spongy Encephalopathy (BSE) on 4th September 2021 in Brazil resulted in the suspension of their beef exports to China.

 

References

Associação Brasileira dos Criadores Wagyu website

BeefPoint.com, 2017. Pecuarista busca parceiros no Brasil para elevar produção de gado wagyu.

Blog do Lorençato 6th September 2011

Brito, Ricardo and Tatiana Bautzer, 2017. Brazil's J&F agrees to $5.4 billion fine for meat-packer JBS' role in corruption scandal. Sydney Morning Herald. 1 June 2017.

Facebook. Kobe Premium

g1, Agro, 2021. Boi japonês wagyu, que tem a carne mais cara do mundo, já recebeu mordomias como beber cerveja e ganhar massagem.

Haynes, Brad and Sergio Spagnuolo, 2017. Brazil police raid BRF and JBS meat plants in bribery probe. Reuters, World News. 17 March, 2017.

Henderson, Greg, 2021. Senators Ask Treasury Secretary To Investigate JBS. Drovers, News. 16 August 2021

Istéodinheiro.com, 2017. FSP: aumenta o rebanho de Wagyu no Brasil, cujo quilo da carne custa até R$ 500.

JBS USA, 2021. JBS-Owned Swift Prepared Foods to Acquire Sunnyvalley Smoked Meats for $90M. Food Manufacturing. 15 October 2021.

Lane, Sylvan, 2020. Owners of meatpacker JBS to pay $280M fine over foreign bribery charges. The Hill, 10 October 2020

Rochas, Anna Flávia, 2021. Audit finds 32% of JBS cattle in Pará state came from "irregular" ranches. 8 October 2021. meatingplace, Industry News.