August 2, 2011

70% of the Cattle Hungry in Northeastern Mato Grosso

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Cattle ranchers in northeastern Mato Grosso can't catch a break. The dry season in 2010 was so long that 20% of their pasture grass died. Their problems were compounded this rainy season when excessive rains drowned out their efforts to reestablish the pastures. The region was so saturated with water earlier this year that cattle lost weight due to flooded pastures. The region is now back into the dry season and estimates are that 70% of the cattle are hungry and losing weight once again due to a lack of forage.

To make a bad situation even worse, 66% of the meat packing plants in the region are owned by one company, thus resulting in lower cattle prices due to a lack of competition. In the northeastern region of the state there are 6 million head of cattle yet there are only two beef processors. As a result, ranchers are often forced to transport their cattle in nearby states, but if they do, they have to pay a 7% interstate tax.

As a result, ranchers are asking the state government to at least reduce the interstate tax from 7% to 3.5% so they can sell their hungry cattle for higher prices that are being offered by local processors. The is a president for lowering the tax. During the period of April to September in 2009, the tax was lowered to 3.5% and the result was a 1,000% increase in Mato Grosso cattle being sold to processors in neighboring states.