Executive Director's Message

There are more big stories in this Connect than usual; and not as positive as we'd like to see. The revelations about Joesely and Wesley Batista have been covered at length in many publications; for those of you familiar with Brazil and possibly more inured to corruption scandals they may have come as less of a surprise as they did for others. If on the other hand this was all totally unexpected, you may find Alex Cuadros' book, Brazilionaires, interesting background to big business and political patronage in Brazil.

President Trump's announcement with regard to the Paris climate agreement may not seem to have much to do with the beef industry on the surface, but it is significant. The very unfortunate side effect that it may have is to slow momentum for supporting good grazing and soil management. The 4 per 1000 initiative to restore soil carbon came in association with the Paris agreement and represents a great opportunity for producers not only to benefit from more healthy and productive soils and pastures, but also to reduce atmospheric C at the same time; a true win–win, which we can only hope continues in spite of lack of White House support.

India's ban on trade in non–productive cattle for slaughter is perhaps the most extraordinary story we have to report on in this edition. This is a case of religious bigotry taken to extremes, which can have only downsides for the country and their trading partners. It is not an outright ban on slaughter, but seems aimed at drying up supply to abattoirs. You can imagine the consequences of ceasing off–take to slaughter in the world's largest cattle herd and they are dire – think about feed resources, carcass disposal, economic damage to the poorest in India and broken relationships with major trading partners. We can only hope that saner heads prevail in coming weeks, as people realise exactly what it will mean to have a massive increase in the number of unproductive dairy animals in the country.

In addition to the leniency deal announced below, a number of securities class action suits have been filed against JBS, its CEO and the global head of the operations management team. GRSB will be very keen to understand exactly what measures the Governance Committee, which will be led by Tarek Farahat the new chairman replacing Joesley Batista, will be bringing in.
Brazil's J&F Agrees to Pay Record $3.2 Billion Fine in Leniency Deal
Ricardo Brito and Tatiana Bautzer, Reuters | May 31, 2017
J&F Investimentos, controlling shareholder of the world's largest meatpacker JBS SA (JBSS3.SA), agreed to pay a record–setting 10.3 billion real ($3.2 billion) fine for its role in corruption scandals that threaten to topple President Michel Temer.

The settlement meant Brazil's sweeping graft investigations have now led to the world's two biggest leniency fines ever levied, Brazilian prosecutors said.

J&F's penalty surpassed the 8.5 billion reais Brazilian construction firm Odebrecht agreed to pay for its role in the political graft scandal convulsing Latin America's biggest economy.

Plant–Based Burgers Could Take a Bigger Bite from Beef Than You Think
By James Nason, Beef Central | May 19, 2017
Plant–based beef burgers could be about to have a much bigger impact on global beef consumption than many may realise, the 400M Ag Tech Investment conference in Toowoomba was told yesterday.

While many in the beef industry may dismiss this as a threat, Mr Kelly believes this technology will be very disruptive – and not in 20 years time, but within the next five.

To a large extent, cattle already perform this function in terms of consuming grains not fit for human consumption as well as other food by products such as spent distillers grains and citrus pulp, both of which I have fed in the past, as well as buffering the grain market in times of surplus.
Could Cattle Be the Solution to Food Waste?
Amanda Radke, Beef Magazine | May 23, 2017
America is the land of plenty, and we have more than enough food to go around. Unfortunately, with our ability to efficiently produce mass amounts of food, we as consumers often take this food for granted, and as a result, food waste is becoming a more prevalent issue.

To get an idea of how big the food waste problem is, Feeding America estimates that $218 billion worth of food is thrown away each year.

I imagine most producers want a grazing system that will produce reliably and return a good profit. Fortunately, Bryan's tips are aimed at that too, even if the headline doesn't mention it!
5 Tips to Develop a Grazing System in Sync with Nature
Bryan Weech, Beef Magazine | May 25, 2017
Much has been said and written about ranch sustainability. When you boil it down, however, it's largely a matter of working with nature. By 2050, the planet's population is estimated to grow from the current 7 billion to more than 9 billion, while the amount of agricultural land is expected to shrink.

Simply put, this means we'll need to produce more food with less resources in order to feed the world. For the beef industry to continue to be part of the solution, it must develop production systems that are more in line to nature.

Animal Welfare Research Focusing More on Emotional States
John Greig, Grainews | May 15, 2017  
Animal welfare research is becoming about the emotional state of the animal rather than its health, Dr. Ed Pajor says. Animal welfare research is moving beyond identifying what keeps an animal healthy, to focus more on their state of being and their happiness. For years, farmers have justified the way they manage and house animals based on objective measures of their health: disease prevalence, growth rates and feed consumption.

"Consumers are concerned about pain and suffering. They don't understand housing systems, but pain and suffering they get," Pajor said. How has the livestock sector responded to changing consumer questions about what they do?

"There are a whole range of standards," said Pajor, such as the Canadian Feedlot Animal Care Assessment Program and the dairy proAction program.

However, the growth of broader sustainability programs, he said, could have a greater influence. These are programs created and driven by multiple buyers in the supply chain. They include the Global Roundtable for Sustainable Beef, the Sustainability Consortium and the Sustainable Agriculture Initiative Platform.

NCBA Joins Canadian, Mexican Partners in Presidential Letter: "Don't Jeopardize Our Success Under NAFTA"
BEEF USA | May 18, 2017
The National Cattlemen's Beef Association today joined its cattle–industry partners in Canada and Mexico in sending a joint letter to the leaders of those two nations and to President Trump, urging the three leaders to not "jeopardize the success we have all enjoyed as partners of the North American Free Trade Agreement."

I would be glad if the figure I generally saw for water used to produce a pound of beef was as low 80 litres per kg. We frequently see the more ridiculous figure of 15,500 litres of water per kg quoted, which includes green water (all the rain that fell on pasture) as well as blue and grey water. Since all water is recycled, whatever the figure is, we should think of water being used and returned, not used up. Of course there are scenarios where fossil ground water is being unsustainably extracted, and that should concern those doing it as much as anyone, since clearly their business model is finite.
Musings On How Much Cattle Eat And Drink
Charlie Gracey, Canadian Cattlemen | May 5, 2017
Conventional wisdom holds that beef cattle are wasteful users of grain and in direct competition with humans for finite supplies of food grains and water.

I would offer a more realistic picture of how the bovine, with its marvellous ruminant digestive system, greatly increases and enhances the human food supply by converting plants indigestible by humans into high–quality protein foods from land entirely unsuitable for any purpose other than grazing.

This will certainly be interesting. Being able to make a firm commitment to zero deforestation means having traceability from birth through the life of cattle. This has been a consistent obstacle to proving zero deforestation claims up to now.
L'Oréal, McDonald's Commit to Nix Deforestation from Commodity Supply Chains  
Sustainable Brands | May 30, 2017
Teaming up with non–profit CDP, McDonald's and L'Oréal are taking strides to eliminate deforestation practices from their supply chains. The multinationals are joined by McDonald's Latin American franchise Arcos Dorados, Swiss fragrance and flavor company Firmenich, Brazilian meatpacker JBS, American healthcare company Johnson & Johnson, Brazilian paper producer Klabin and Canadian restaurant group Restaurant Brands International.

Tyson Foods Teams with World Resources Institute on Industry Leading Environmental Goals for its Supply Chain
CSRwire.com | May 22, 2017
As part of its deeper commitment to sustainable food production, Tyson Foods, Inc. today announced a collaboration with the World Resources Institute (WRI) to develop industry leading, science–based greenhouse gas (GHG) and outcome–based water conservation targets for its operations and the company's supply chain.

"Sustainability is about thriving today and doing the right thing to thrive tomorrow," said Justin Whitmore, who was recently hired as the company's first chief sustainability officer.

Elanco Animal Health Works to Bring Products to Small Holder Farmers, Increasing Food Security in East Africa
Guru Focus | May 24, 2017
Elanco Animal Health, a division of Eli Lilly and Company, today announced that it received a grant from the Bill & Melinda Gates Foundation to provide sustainable development solutions to address food insecurity in East African countries. The commitment will work to improve animal health and productivity in dairy herds and poultry flocks for smallholder farms in Kenya, Uganda and Tanzania.

This has the potential to be the largest beef story of the year, depending on how things are handled going forward. Clearly a radical religious ideology is not allowing a few simple truths stand in its way. With the world's largest (ostensibly dairy) herd, it is not surprising that India has also been one of the largest producers of beef in the world for many years.

Just like everywhere else, after the end of a productive milking life, cattle and buffalos are culled to make way for more productive animals. Similarly, since the rise of tractors for agricultural operations, demand for draught oxen has steadily declined, meaning that nearly half of all cattle are surplus and need to be culled.

What the BJP thinks will happen to feed supplies if all of these surplus animals are not culled is unclear, what should be clear though is that it is a disaster in the making – in almost any terms you care to consider. More ruminants to feed with no increase in fodder will lead to a combination of malnutrition in dairy animals and a reduction in milk output, and increased starvation amongst surplus animals.

In environmental terms, this will lead to increases in uncontrolled grazing on common property resources and lead to their deterioration. Naturally impacts per kg of milk produced will rise considerably, as there will no longer be a by–product in the form of meat. Diplomatically, tensions with countries currently buying Indian meat will certainly increase as supplies diminish, and in human nutritional terms, millions of people in Asia will see access to meat dry up.

The knock on effect will naturally be for other producer countries to fill that void, and since we are talking about the cheapest end of the commodity market, the void will be filled by countries paying the least attention to sanitary or sustainability criteria. If we were talking about a small producer like Botswana, these effects would be local, minor and probably unnoticed.

With India however, consistently one of the top three exporters in the world, these effects could be very real if the government persists in following the ill considered course they are currently on.
India's Cattle Ban Could 'Halt' Beef Exports  
Oscar Rousseau, GlobalMeatNews | May 31, 2017
The Indian government's ban on the sale of cattle for slaughter is likely to have dramatic impact on its billion–dollar cattle export trade.

Many cattle traders have come under repeated attacks from activists fiercely opposed to the beef industry. And with the Indian government taking a firm stance on cattle trade, Matt Dalgleish, a livestock market analyst at Australia–based insight firm Mecardo thinks an exit from the export industry is likely.
Countries in the Persian Gulf as well as South and South East Asia may be glad of this if the India ban really goes into effect.

Mexican Beef Exporters Look to Muslim Markets as US Alternatives
By David Alire Garcia and Theopolis Waters, Reuters | May 12, 2017
Mexico's growing beef industry is targeting Muslim consumers in the Middle East for its prime cuts as it seeks to reduce dependence on buyers in the United States.

That has firms looking to the Middle East, where most meat is imported from non–Muslim countries using animals slaughtered by the halal method prescribed by Islamic law.

Given the history of live export and the problems created by dependence upon it in the North of Australia, it is surprising that there are plans to double to volume to increase live export to China. Given the demand in China, however, and the traceability systems that Australia already has in place, there is certainly great potential for increased exports.

Andrew Forrest's Beef with Gina Rinehart's Cattle Export Plans
Sue Neales, The Weekly Times | May 14, 2017
Australian iron ore billionaire Andrew Forrest has slammed the bold plan of fellow mining magnate and Kidman cattle queen Gina Rinehart to export 800,000 live cattle a year from Australia's north to China for slaughter.

Mr Forrest, who owns five West Australian cattle stations and a herd of 40,000 cattle in his Minderoo Pastoral group, said Mrs Rinehart's idea of turning Australia's top end into a mass "cattle yard" for other nations to source livestock, ship overseas and to convert into high–value meat themselves was a potential "disaster" for Australia, The Australian reports.

Here's another potentially huge transaction, with likely Chinese interest in investing in the Northern Australian beef industry.
$1b Price Tag Likely on Any CPC Sale Deal
Beef Central | May 25, 2017
Consolidated Pastoral Company could realise up to $1 billion in the current beef industry climate, if majority owner, British private equity giant Terra Firma, goes ahead with a sale.

By no means the biggest story out of Brazil, nor the newest, but another reminder, that although Brazil has made great strides in terms of intensification over the past decades, producing more cattle of 20million fewer ha now than in the 1990s, there is still potential for further improvement. While pasture composition and management can have a significant positive impact, silvo pastoral systems can deliver even greater benefits.
Brazil Could Lead Way in 'Sustainable Intesification' of Agriculture, Scientists Say  
Farming UK | May 17, 2017
Brazil, the second largest beef producer in the world, could lead the way in sustainable intensification in agriculture, according to new research published by scientists.

The paper, ‘Sustainable intensification of Brazilian livestock production through optimised pasture restoration' has been published as part of the Agricultural Systems journal.

The group of scientists have outlined plans to optimise Brazilian grazing pastures in order to increase beef productivity while reducing greenhouse gas emissions. The scientists have outlined plans to reduce the environmental footprint of Brazilian beef.

This is a fairly surprising letter, not least because it is to WHO, the World Health Organisation, which as far as I am aware has no remit to comment on food production systems.

Putting that to one side however, we are still left with the impression that somehow more intensive production, and specifically the consumption of meat is worse that alternative systems whereas as we see above, sustainable intensification is actually environmentally beneficial. Given the recent news from India regarding the sale of cattle for slaughter in that country, we may soon see a very graphic illustration of why culling unproductive animals is an important part of sustainable land use in social, health, environmental, economic and nutritional terms.
Factory Farms Put Climate at Risk, Experts Say in Urging World Health Officials to Speak Out  
Georgina Gustin, Inside Climate News | May 23, 2017
Roughly 200 experts in disciplines from nutrition to animal welfare are calling on the World Health Organization to take a more serious look at the impact of industrial livestock production on human health and the climate.

Sara Place, who works on sustainable beef production for the National Cattlemen's Beef Association, said Monday that the letter's points about the impact of the beef industry globally misrepresents the U.S. beef industry, the world's largest producer.

"In the U.S., direct emissions from beef, in terms of methane emissions, was 1.9 percent of U.S. emissions," Place said, citing 2014 numbers from the EPA. "Transportation is 25 percent of our emissions. Numbers that are accurate at the global level don't necessarily apply to the U.S."

Not many people are likely to have been surprised by the US decision to withdraw from the Paris climate, but there are certainly many in the US and around the world who think it represents a ceding of world leadership in this area. Several US states and hundreds of companies are willing to take on that role instead.
Paris Pullout: Defiant US Climate Alliance Emerges in Its Wake 
Peter Grier, Jessica Mendoza & Henry Gass, Christian Science Monitor | June 2, 2017  
President Trump's historic decision to withdraw from the Paris global climate accord has produced an extraordinary reaction from a group of US states, cities, and corporations opposed to the move. They've banded together in a loose coalition that intends to try and meet US greenhouse gas emission targets set by the pact, despite official Washington policy.

Does American leadership always reside in the White House? That's a question to which the US Climate Alliance – which includes the governors of at least four states, dozens of mayors, and more than 100 corporations – may provide at least a partial answer.