148 Economic Assessment of Beef Cattle Backgrounding in Brazil at Pre and During the Covid-19 Pandemic

Abstract

Abstract The production costs of beef cattle grazing backgrounding systems between 2018/2019 (pre) and 2020/2021 (during) pandemic were evaluated. A comprehensive mathematical model for the cost of production was used according to the Economic Theory. Costs were collected and allocated into Fixed Cost (FC), Variable Cost (VC), and Total Cost (TC). In addition, analyses were performed concerning total income and profitability. A survey was carried out in 2018 with a rancher in the state of Minas Gerais (Brazil) to define major technical indicators of production. The spot prices used in our analysis were collected in 2018/19 and 2020/21. The base-animal used for such growing phase assessment represented the Nelore breed (Bos indicus), intact males and females, weaned at approximately 7-10 mo, and averaging 195 ± 15 kg of live shrunk BW (body weight), which remained in a grazing system for 12 mo. The average selling weight was 360 ± 15 kg shrunk BW. Animals (n = 34) were separated into three lots according to the ranch of origin and sex. Mineral supplementation was provided for 150 d during the greatest forage supply, while protein supplementation was offered for 210 d during the least forage supply for all animals. After comprehensively accounting for inputs, the cost index was compared between the two periods. The total cost for the 2018/19 production-period was US$ 1.13kg of BW, while an increase of approximately 53% (US$ 1.70kg of BW) was observed for 2020/21. The FC represented in the year 20/21 was 2.66 % less than 2018/19, which represented 22.9% of all costs combined. The VC represented 66.3% of the total cost in 2018/19, in which cattle purchase cost and feed cost represented 58.8% and 7.1%, respectively. For 2020/21, the VC increased to 70.7% of the total cost, in which cattle purchase cost and feed cost represented 62% and 8.5%, respectively. Regardless of the period, the most representative items analyzed were the cattle purchase price and feed costs. There was a 68.9% increase in gross income, followed by a raise in profit from US$ 0.26/kg BW in 2018/19 to US$ 2.9/kg of BW in 2020/21. The factors that influenced profitability the most were the purchase and sale price of animals. The shorter feeder cattle supply during the pandemic induced greater overall costs, although also positively affecting the final sale price of long-yearlings, which generated widened margins. The current cost calculation model showed to be helpful while allowing testing scenarios, possibilities, and helping producers to manage risk in such cattle enterprises.