Meat production based on natural pastures
Meat production based on natural pastures
Business Model Description
Implement regenerative livestock value-chain models with cattle raisers to increase net cash flows and reduce GHG emissions.
Expected Impact
The transformation of livestock production models such as regenerative livestock with a direct impact on the reduction of CO2 emissions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Uruguay: Countrywide
Sector Classification
Food and Beverage
Development Need
Uruguay's primary production must be developed in a sustainable manner. Uruguay currently produces food for 30 million people and has the capacity to do so for 20 million more. Meat chain is an example of integration between the agricultural, industrial and service phases in which producers interrelate with the supply of agricultural machinery and technological inputs.
Policy priority
The food sector, and especially agricultural production, plays a relevant role in the design of public policies (7) through the MGAP and the MA (Ministry of the Environment). Especially regarding sustainable production, the Climate Change Office, the Agricultural Plan Office and the Livestock and Climate and Climate-Smart Livestock programs stand out.
Gender inequalities and marginalization issues
The gender gap in employment in rural areas reaches 27.4%, employment rate of rural women is lower than the national female average. For their part, the unemployment levels of women in rural areas are significantly higher than those of their male peers. The participation of women in jobs reaches 20.4% in the primary phase and 30.4% in agribusiness.
Investment opportunities introduction
Markets for CO2-neutral or certified sustainable foods are in increasing demand as consumer preferences change globally. Remaining isolated from this change in the market implies being associated with unsustainable producers and practices in food production.
Key bottlenecks introduction
Sustainable food production is an important driver of development in the sector, however, there are still important conservative features at the level of companies and unions in the sector that offer strong resistance to incorporating innovations or changes in business models and production techniques experimental.
Pipeline Opportunity
Meat production based on natural pastures
Implement regenerative livestock value-chain models with cattle raisers to increase net cash flows and reduce GHG emissions.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
5% - 10%
The sustainable meat market is a driver in the search for value generation in the production of primary base value. Of the 12 million heads of cattle, regenerative farming represents 3% of the total. Assuming a calf cost of USD 400, the maximum market size would be USD 144 million.
Indicative Return
10% - 15%
The case studies of investment funds and bonds that invest in livestock businesses at different stages of the cycle show returns between 7% and 11%.
Investment Timeframe
Medium Term (5–10 years)
A type of production is assumed in the final phase of the livestock cycle (fattening) with a duration of between 12 and 18 months. In a period of 5 to 10 years, several business cycles can be combined, mitigating the risks of years of extreme droughts that punish returns.
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Business Model Unproven
Impact Case
Sustainable Development Need
Livestock is called to lead the productive dynamics and the well-being of the rural population of Uruguay. Livestock production in natural fields occurs in most of the national territory, it is a source of employment and income for rural towns and territories. Extensive cattle ranching is an Uruguayan comparative advantage, efficient in costs and economically profitable.
Gender & Marginalisation
The meat chain is an area where the role of women occupies a secondary level. In the meatpacking industry as well as in the livestock, agriculture and related units sector, the participation of female employment is 23%.
Expected Development Outcome
Incorporate livestock practices that enable the capture of CO2 in the improvement of pastures. Forming a carbon neutral meat chain strategy.
Transform livestock production to a sustainable one through the development of regenerative livestock.
Recovery of native grasslands in natural fields through the fertilizer product of the intensive stocking of cattle distributed in rotating plots.
Livestock establishments are often family production units. The continuity of economic models has direct effects on migratory phenomena from the countryside to the city.
The meat produced on natural pasture has properties and health conditions superior to those produced under confinement conditions.
Gender & Marginalisation
Increase in the participation of women in the refrigeration industry and in primary production. In turn, empower women in management roles and as a transforming factor in associated organizations.
Primary SDGs addressed
12.2.1 Material footprint, material footprint per capita, and material footprint per GDP
The NDC commitment corresponding to CH4/Meat Production is to reduce intensity by 32% compared to 1990. As of 2018, it has been reduced by 28%, having met the goal by 2025 by 88%.
NDC target decrease of 32% by 2025.
9.2.1 Manufacturing value added as a proportion of GDP and per capita
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
Value added measurement of the meat chain. An increase is expected, as a result of improvements in export prices.
The current data corresponds to the value of the production of the Live Cattle and Others sub-item within the Livestock GDP. Data to 2018 = 26,176 million pesos of 2005.
Appreciable increases of the order of 10% - 20%.
There is no clear goal to define the fulfillment of the goal associated with this impact yet.
15.3.1 Proportion of land that is degraded over total land area
The NDC commitment includes two goals: Conservation of Grasslands with a goal of 1,000,000 hectares by 2025 and maintaining the area of Native Forest (849,960 hectares) to 2025.
Grassland Conservation = 652,455 hectares (65% of goal); Native Forest 100% of the goal achieved.
2.4.1 Proportion of agricultural area under productive and sustainable agriculture
Secondary SDGs addressed
Directly impacted stakeholders
People
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Corporates
Public sector
Outcome Risks
It reduces the effects of climate change, but does not eliminate them, as is the case with droughts.
It has a significant incremental investment level, in fences, pipes and drinking fountains. At the same time, it demands additional training for producers who transform the systems.
Gender inequality and/or marginalization risk: special attention must be paid to the use of women as subjects of credit, but that does not imply a real change in forms of management or remuneration.
Impact Risks
It is necessary to standardize the procedures through certifications in order to be able to direct the efforts to clear impact goals, carry out action plans and follow-up.
The CO2 sequestration metrics for pasture improvement are still under development and are the subject of academic debate. Overcoming the scientific debate will allow progress towards a holistic view of the forms of production in Uruguayan livestock.
Impact Classification
What
Transformation of the productive livestock matrix through a CO2 capture system
Who
The actors involved in the production process, but also in marketing. Livestock producers, rural unions, Union of exporters, the national State.
Risk
The main risks are associated with not achieving the scale necessary to achieve a significant impact.
Impact Thesis
The transformation of livestock production models such as regenerative livestock with a direct impact on the reduction of CO2 emissions.
Enabling Environment
Policy Environment
Uruguay has set ambitious goals in its Nationally Determined Contribution (NDC). Based on priorities established in the National Climate Change Response Policy (SNRCC).
Livestock and Climate Program (MGAP, INIA, UDELAR, FAO).
MGAP- Sustainability and Climate Change Unit.
Financial Environment
Financial incentives:currently there are large investment funds in the country specializing in investments in livestock, without taking into account sustainability conditions. https://conexionganadera.com/
Fiscal incentives: agricultural production has a set of tax exemptions and a special model of legal form. In turn, there is a system of tax exemptions in the country for investments in general with preferential conditions to those located in the interior of the country.
Other incentives: Uruguay has significant support from several technical and academic institutions that together generate innovation and spread best practices in livestock and agriculture in general (INEA, UTU, UTEC, UDELAR, among others).
Regulatory Environment
The set of norms and regulations for livestock production. https://www.gub.uy/ministerio-ganaderia-agricultura-pesca/institucional/normativa?field_tipo_de_norma_target_id=All&year=all&month=all&field_tematica_target_id=848&field_publico_target_id=37
Livestock farms are covered by the investment tax exemption regime. https://www.gub.uy/ministerio-ganaderia-agricultura-pesca/institucional/normativa/resolucion-n-1332021-mgap-beneficio-fiscal-titulares -holdings
Marketplace Participants
Private Sector
Livestock producers;Rural Association of Uruguay.
Government
Ministry of Livestock Agriculture and Fisheries; Ministry of Environment.
Multilaterals
UNDP, UN Environment.
Non-Profit
INIA, UDELAR, UTU, UTEC, INALE.
Public-Private Partnership
INAC, Fucrea, Crea Groups, Federated Agricultural Cooperatives (CAF).
Target Locations
Uruguay: Countrywide
References
- (1) FAO, 2013. Facing climate change through livestock farming.
- (2) FAO and MGAP. 2021. National gender plan in agricultural policies in Uruguay. Montevideo.
- (3) https://pastororacional.org.uy/
- (4) https://conexionganadera.com/nuestros-productos-detalle/
- (5) https://www.tierra.org/resultados-de-la-encuesta-sobre-el-consumo-de-carne/
- (6) https://cgspace.cgiar.org/rest/bitstreams/20cf366f-7a39-494d-93ac-81abc11fc441/retrieve
- (7) https://www.gub.uy/ministry-livestock-agriculture-fishing/social-environmental-sustainability
- (8) https://www.gub.uy/ministerio-livestock-agriculture-fishing/comunicacion/publicaciones/plan-nacional-genero-politicas-agropecuarias
- (9) https://www.gub.uy/ministerio-livestock-agriculture-fishing/comunicacion/noticias/ministros-mattos-pena-abren-conferencia-presentacion-resultados-del-project
- (10) https://conexionganadera.com/;https://www.republicaganadera.com.uy/;https://www.bonoganadero.com.uy/)
- (11) https://www.gub.uy/ministerio-livestock-agriculture-fishing/comunicacion/noticias/ministros-mattos-pena-abren-conferencia-presentacion-resultados-del-project
- (12) https://descargas.mgap.gub.uy/DIEA/Anuarios/Anuario2020/ANUARIO2020.pdf
- (13) https://www.gub.uy/ministerio-ganaderia-agricultura-pesca/comunicacion/noticias/ministros-mattos-pena-abren-conferencia-presentacion-resultados-del-proyecto).
- (1) Development of a sustainable agricultural sector in Latin America; Deloitte; July 2021.
- (2) https://www.gub.uy/ministry-livestock-agriculture-fishing/sustainability-environmental-social)