1. Globalization, Deforestation, and the Expansion of the Cattle Industry into the Brazilian Amazon John O. Browder (Virginia Tech) Robert T. Walker (Michigan State University) 2007 Annual Meeting of the Association of American Geographers, San Francisco, California

2. Evolution of Cattle Herd in Brazil and Legal Amazon (Source: IBGE) State19902002% Change Brazil147,102185,347+26.0% Legal Amazon 26,25857,388+118.5% -Rondônia1,7198,040+367.7% -Acre4001,817+354.2% -Pará6,18212,190+97.2% % Brazil17.8%30.9%

3. Deforestation in the Brazilian Amazon (square miles per year)

4. Forest Area Cleared (sq km) (Source: INPE) YearAnnual AreaAccumulated Area 1978-198821,130 199013,81034,940 199529,059119,221 200019,836204,356 200518,900317,145 (6.4%)

5. Research Questions The rapid expansion of Brazil’s cattle industry since 1990 is clearly related to that industry’s successful penetration of global beef markets… 1.Has Brazil’s recent extraordinary success in beef exports induced any significant internal restructuring of its cattle industry? 2. How is the Amazon’s cattle sector articulated to Brazil’s national cattle industry, and the global forces driving its expansion? 4. How much new deforestation in Amazônia is now attributed to the expansion of the Amazon’s cattle sector?

6. Major Corridors of Cattle Industry Expansion Note: 1= Central Production Zone (Center-West/Southeast Study Area) 2= Upper Amazon Cattle-shed (Goiana-Mato Grosso-Rondônia BR 364 Corridor) 3= Lower Amazon Cattle-shed (Belém-Brasilia-Transamazon BR 230 Corridor)

7. 1. Foreign Market Penetration Hypothesis Hypothesis 1: The expansion of Brazil’s cattle industry is largely explained by its successful penetration of foreign markets. Test: ANOVA of number of slaughters per year and percent of sales to foreign markets by municipio or by company (survey data, CACEX, Agriculture Ministry)

8. Evolution of Brazilian Beef Exports (all Products), 1990-2003 ( Source: ABIEC) YearMetric Tons (000) US$ (millions) Percent Change 1990249234 1995269445+8.0% 2000455623+69.1% 200310541300+131.6%

9. Amazon Exports “Between 1990 and 2001 the percentage of Europe's processed meat imports that came from Brazil rose from 40 to 74 percent" and by 2003 "for the first time ever, the growth in Brazilian cattle production—80 percent of which was in the Amazon—was largely export driven." (Source: CIFOR)

10. 2: Regional Function Hypotheses 2.1: Foreign Market Articulation Hypothesis: Large producers located in aftosa-free municipios in the Amazon will export directly. 2.2: Domestic Market Substitution Hypothesis: Producers (typically smaller) located in non-certified municipios will replace beef supplies for domestic markets that large producers in the Center-west had previously supplied. Tests: ANOVA tests using processor survey data, key informant interview information, and secondary data from CACEX, SIGSIF.

11. 3. Restructuration Hypotheses 3.1. Consolidation Hypothesis: There will be a higher rate of consolidation of large producers in aftosa-free certified municipios into corporate conglomerates than in non-certified municipios. 3.2. Vertical Integration Hypothesis: There will be a higher rate of “verticalization” in aftosa- free certified municipios as corporate conglomerates seek to lower production costs by integrating more stages of the production chain. Tests: Historical and descriptive statistical analyses of changes in corporate holdings from 1995 to 2000 using corporate key informant information.

12. Number of Beef Processing Plants by Corporate Group and State – Southern Corridor Corporate Group GoiasMato GrossoRondôniaTotal Friboi14510 Quatro Marcos66 Margem3126 Marfrig1214 Arantes224 Others (single plant co.)2015237 Corporate Concentration Rate25.9%50.0%80.0%44.7%

13. 4. Deforestation Selectivity Hypothesis 4.1. The rapid increase in beef exports has resulted in rapid increase in deforestation and pasture formation in key cattle producing areas. Test: ANOVA and spatial analysis of Landsat scenes to determine rate of increase in area deforested and rate of increase in beef exports by municipio (using data from meat processing industry survey) along study corridors.

14. Trends in annual Amazon deforestation, the Amazon cattle herd, Amazon soy production, total soy exports from Brazil to the Europe Union (EU) and China, and the value of the Brazilian Real (in U.S. dollars). Source: Nepstad et all, 2006

15. Policy Factors Supporting Cattle Industry Expansion in Amazônia Macro-economic Policy – Currency Devaluation Trade Policy – Elimination of Agricultural Export Taxes Infrastructure Investment – Road Construction Increasing Land Prices Property Consolidation in Colonization Areas – Household Life Cycle Sanitary Certification of Amazon Cattle Producers Continuing EU Concern About Mad Cow Disease