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Wagyu around the World - Brazil

The Wagyu breed of cattle was brought to Brazil in 1992 by Teruo Wakabayashi, President of Wagyu bull on Yakult Farm where Wagyu were first raised in Brazil in 1992the 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.Puro certification seal for Brazil Wagyu association beef

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. Cruzamento certificate for crossed Wagyu beef in BrazilThe 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.Head of Wagyu bull in Brazil

'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.

Marbling score BMS for Brazil Wagyu for marbling Wagyu International

Wagyu striploin BMS 10 at 24 months of age
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, Wagyu finishing Daniel Steinbruch in BrazilFazenda 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.

Champion Wagyu bull at Expointer in Brazil 2017
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. Map of Brazil 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. Nelore bull in BrazilJBS 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

Over the years, JBS S.A. has 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". JBS S.A. meat processor logo

J&F Investimentos, controlling shareholder of the world's and Australia's largest meat processing company JBS, agreed to pay a record-setting 10.3 billion reais (US$5.4 billion) fine for its role in a corruption scandal in Brazil. The settlement follows testimony from J&F's owners Joesley and Wesley Batista that they spent 600 million reais to bribe nearly 1900 politicians in recent years, revelations that deepened Brazil's political crisis. J&F was able to reduce the final fine by 900 million reais from an initial 11.2 billion reais proposed by Brazilian prosecutors. Joesley Batista was at the centre of a corruption investigation into Temer, after secretly recording a conversation in which the President appeared to condone bribing potential witnesses. Other JBS executives in plea-bargain testimony accused Temer of taking nearly $US5 million ($6.7 million) in bribes from the company in recent years. Joesley Batista resigned as chairman of JBS and left the board. His brother Wesley resigned as vice chairman of the JBS board though he retained a board seat and continued as the firm's chief executive officer.

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.

Cargill, National Beef, Tyson, Ranchers Cattlemen Action Legal Fund United Stockgrowers of America, Winn-Dixie Stores Inc., Bi-Lo Holding, and Erbert & Gerbert's Inc are among plaintiffs in a class action antitrust lawsuit in USA alleging that JBS and other processors conspired to suppress competition in the market for case-ready and boxed beef.
Plaintiffs allege that the companies conspired to fix prices of beef processed from fed cattle, beginning as early as January 2015, in part by constraining supply, resulting in increased U.S. beef prices. This is alleged to be in violation of the Sherman Act.
JBS USA has agreed early in 2022 to pay $52.5 million to resolve the class action antitrust lawsuit. This settlement agreement with JBS requires the court's approval and does not affect the claims against the other defendants.

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.

Brazil’s Ministry of Agriculture announced the export control measure in compliance with the sanitary protocol for the detection of BSE between the two countries.

Brazil has never registered a case of classic BSE, however atypical cases occurred in 2012, 2014 and 2019.

Brazil’s Agricultural Defence Secretariat of the Ministry of Agriculture, Livestock and Supply confirmed the occurrence of two separate atypical cases in the states of Minas Gerais and Mato Grosso that were of advanced age.  

China, along with Hong Kong, takes about 60% of Brazil’s beef export shipments. Prices began to rise in Chinese wholesale meat markets soon after the decision to suspend deliveries was announced early in September.

Many had predicted a resumption of trade after a fortnight, based on events that unfolded the last time the country reported a case of BSE back in 2019. Chinese meat trade analysts are concerned about the impact the longer that the suspension stands – particularly as China is approaching important National Day holidays and a high consumption period. “At present, due to the expected supply shortage, imported beef market prices continue to rise,” China’s Meat International Group said. Due to the earlier restrictions on beef exports from Argentina: “Brazil’s suspension on September 4 may cause larger uncertainty to the market supply in the future,” the group said. “So far MIG’s intelligence is that there is not a technical problem, causing the prolonged delay, but more of a problem with China’s willingness to open up.” MIG said.

Five other countries suspended their deliveries after Brazil’s BSE announcement in September. MV Nada berthed at South Vietnam port offloading 14,000 Nelore bulls

Australian beef is becoming more expensive with the rebuilding of the herd so Vietnam imported 14,000 Nelore bulls from Brazil. The two cases of atypical BSE were confirmed in Brazil about one week after the vessel MV Nada had departed enroute to Vietnam. The BSE detections at origin in Brazil prompted Vietnamese authorities to extend the quarantine period by 45 days before the first cattle from Brazil can be processed.
Danny Fakhre, the owner of the MV Nada, reported that the 30 day voyage produced a mortality rate of 30 head across the 14,000 head consignment, or 0.25%, less than would be expected on a farm or feedlot in South America or Australia he said.
Weight loss on the 500kg bulls across the journey averaged below 5 percent, also lower than usual rates.

The landed price to arrive in the the feedlot is estimated to be around US $3.50 per kilogram.

The second shipment is due in December and the permit is for 60,000 head.

China, on 15th December 2021, announced the recommencement of beef trade with Brazil after more than three months, under a new set of conditions including a requirement for slaughter animals to be less than 30 months of age, and all products to be boneless. This is planned to diminish the risk that is associated with BSE.

During March 2022, the Canadian Food Inspection Agency said that it approved the import of pork from the state of Santa Catarina, raw and cooked poultry meat, and pH-matured beef from Brazil.

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.

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