World Bank Seminar: Linking Livestock, the Environment and Public Health SWINE PRODUCTION IN BRAZIL

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1 World Bank Seminar: Linking Livestock, the Environment and Public Health SWINE PRODUCTION IN BRAZIL Daniel R. Gross February 16, /10/2006 1

2 Livestock, Environment and Public Health As developed countries "green" themselves, they are often exporting the the environmentally and socially damaging part of agricultural and industrial processes to developing countries. 04/10/2006 2

3 Brazil s Comparative advantages in Livestock Sector Large and expandable grain production (soy, maize); Large areas available for pasture and feed production Large internal markets Sophisticated industrial (meat packing) sector 04/10/2006 3

4 Some Benefits of Brazilian Livestock Production Local Benefits Export Growth: earns foreign exchange Employment generation in rural zones Supports thousands of small swine and poultry producers Supports industrial employment Adds Value to Primary Agricultural Commodities 04/10/2006 4

5 Livestock Production: Externalities Increased conversion of forest to pasture; Amazon deforestation Water and Soil Pollution from animal wastes Global Warming: Release of greenhouse gases from animal wastes Grain production pushes up land costs and possibly domestic food costs 04/10/2006 5

6 Swine Production in Southern Brazil 40% of Brazilian Swine Production in Southern Brazil Integrators play major Role Most production by small producers (< 1000 animals) Concentration of production around integrator factories Growth concentrated in the export sector Large integrated production facilities being built outside region. 04/10/2006 6

7 Integrated Production Integrators Contract producers to reproduce or fatten hogs Have considerable market power and access to export markets Can meet quality standards demanded by foreign markets Filling the gap left by production in Europe and the US where stronger environmental regulation prevails. 04/10/2006 7

8 Pork Products 04/10/2006 8

9 Integrated Producers Receive inputs (genetically selected piglets, feed, medications, TA) Compensated by increase in animal weight Tradeoff: potentially higher returns for secure income streams Integrated Producers decapitalized and can t afford on-farm upgrades 04/10/2006 9

10 Trends in Production, Regulation and Consumption Integration concentrates production in smaller areas Integration leads to intensive pollution foci in river basins Increasing Regulatory Pressures State Environmental Agencies Financial System Public Pressure due to water pollution, malodorous facilities, insect proliferation Globalization and the quest for certification Consumer pressure, especially abroad Public Attorneys (Ministerial Public) Empowered Increased use of consent decrees (TACs) 04/10/

11 Typical Production Facility 04/10/

12 Swine Waste 98% Water Stored in lagoons adjacent to stalls Often diluted by rainwater and water used for cleaning stalls Swine wastes used as fertilizer to restore N-P-K but high nutrient to volume ratio limits radius of application 04/10/

13 Swine Waste As Fertilizer 04/10/

14 Environmental Risks of Swine Waste Wastes contain environmental pollutants Fecal coliforms Heavy Metals Nitrate and other Nutrients Wastes drain into waterways and the soil Leakage and runoff into surface water Eutrophication Loss of Portability Proliferation of Insect Pests Anaerobic digestion in lagoons generates methane (greenhouse gas 20X > CO 2 ) High water volume limits the economic radius of waste as fertilizer to 2 km around source 04/10/

15 Environmental Risks from Use of Swine Waste as Fertilizer 04/10/

16 Environmental Licensing in Brazil Based on Federal Statute States must meet or exceed federal standards Decentralized: States develop their own regulations Most Licenses issued by States Licenses issued after EIA and Public Audience 04/10/

17 Brazilian Licensing Regulations Pollution controls are enterprise-based Licensing often involves diffuse issues (health, water quality, biodiversity, etc.) that may raise costs and lower effectiveness Controls focus on emissions, not ambient standards Field visits and follow-up often lacking 04/10/

18 Brazil: Second National Environmental Project (NEP II) Decentralized Project aimed at Improving Environmental Quality APL Approved in 2000 (TTL Renan Poveda, LCSESN) Components A. Environmental Assets Priorities selected by Participating States B. Institutional Development 1. Water Quality Monitoring 2. Environmental Licensing Conditional Transfers to States that meet qualifications at one of three levels based on level of compliance with qualifications. 04/10/

19 NEP II Actions regarding Swine Production in Southern Brazil Implemented by State Environmental Agencies Selected river basins Involvement of Producer Associations and Integrators Survey of Basins Selective Water Quality Monitoring On-Farm Technology Improvements on Selected Properties 04/10/

20 NEP Investments in Southern States Water Quality Monitoring Equipment and Installation of Monitoring Networks Surveys of Selected Basins Pilot Projects with local Producers to reduce on-farm pollution including installation of water meters, rebuilding waste lagoons, covering waste lines, more efficient drinking fountains, etc. Programs of Environmental Education Strengthening of State licensing systems 04/10/

21 Coordination Mechanisms Institutional Arrangements varied by State In all 3, the following institutions participated: State environmental agency and attached laboratory State agricultural research and extension agency Local universities Private Sector Producer Associations Major Integrators In some states National Agricultural Research Enterprise (EMBRAPA) National Environmental Agency 04/10/

22 Projeto SAD Decision Model for Swine Production Parallel Activity Supported by Bank-Netherlands Water Partnership Decision tool for environmental licensing Based on dynamic modeling of soils, rainfall, locational data of hog producers using GIS technology A tool for Environmental Monitoring at the Basin Level. Revised Regulations customized for each state Training program for State Licensing Officials 04/10/

23 Contributions of NEP II and SAD Studies and experiments towards an ambient based licensing procedure Monitorable indicators New Approaches to Licensing Productive Chains RS Basin License SC Testing of on-farm pollution reduction 04/10/

24 On-Farm Modifications Low cost Closed channels Mechanical cleaning of pens or pressure washers Hydrometers Improved Drinking Fountains Deep Bedding Affordable? Effective pollution reduction? Who will bear the investment cost? 04/10/

25 Biodigestors (the Answer?) Overcoming Resistance Investment Costs? Operational Costs (including labor)? Can adopters recoup investment costs from carbon credits? Use methane as fuel or flare it? Benefit/Cost. 04/10/

26 Economic Analysis (Currently Underway) Questions: Are there any effective on-farm adjustments? What incremental costs are necessary to implement pollution reduction under 3 scenarios? On-farm reduction of waste volume Deep bedding or other composting techniques Biodigestors Are there any scale effects? What is the optimum between environmental protection and competitiveness of Brazilian products on export markets? What are the proper roles of the producers, integrators and the public sectors? 04/10/

27 Lessons Learned so Far.... Producers will not necessarily collaborate spontaneously Local economies depend on livestock production both at the production and industrial phase Increased regulation seen as a threat Regulatory Pressure helps spark action NEP II is seeking solutions to the question of postlicense monitoring Pressure on Integrators is passed down to the producer Need better understanding of Producer behavior and economics There are different solutions: one size does not fit all 04/10/

28 Thank You! Any Questions? 04/10/