Economic Analysis of more Sustainable Cattle Ranching
The expansion of cattle ranching in the Amazon has come under pressure for environmental adaptation and improvement in socio-economic performance. Low implementation of best practices in the field and the lack of robust analyses of production and financial performance are hindering investments in productivity and sustainable management. In addition, there is a lack of targeted rural credit for intensification practices. This study evaluated the impact of intensification from a financial perspective, measuring risks and the role of rural credit in leveraging the adoption of best practices, among other benefits resulting from the intensification of cattle ranching.
Traditionally, cattle ranching has been environmentally and economically inefficient. Currently, cattle ranching occupies 75% of the deforested area in the Amazon and contributes about 40% of CO2 emissions in Brazil, but generated less than 3% of GDP in the last decade. Some producers are already investing in improving productivity. However, isolated investments are insufficient to transform the cattle sector on a regional scale.
The results of the model developed in this study demonstrate that intensification increases Net Present Value (NPV) up to R$ 1,940 per hectare (compared to R$ 463/ha from business as usual cattle ranching), and substantially reduces the risk of losses, from 99% to 15%. These results confirm the economic viability of productive activity and increased competitiveness with other land uses. In addition to the positive impacts on natural resources, there is also the potential to increase production and income without the need for further deforestation.
Link to the full report (only available in Portuguese)