Abstract
Founded in 2016, the Mato Grosso Meat Institute is an autonomous social service formed by representatives of the farm production sector, of the industry, of society and of the state government to promote the meat produced in the state of Mato Grosso, one of the most important states for Brazilian agriculture and livestock production. Despite several promising projects in the pipeline on the topics of information sharing, sustainable insertion of smallholders and other, IMAC still has not reached a protagonist role in Mato Grosso beef chain. With several changes and trends emerging in consumer food behavior, its president (Caio Penido), is still looking for the best strategies to improve Mato Grosso’s competitive advantage and align all the agents involved to fulfill IMAC’s “vision for the chain”.
The Teaching Note to this Case Study is available on request via e-mail to ifamr@ifama.org
1. Introduction
Founded in 2016, the Mato Grosso Meat Institute (whose acronym in Portuguese is “IMAC”) is an autonomous social service formed by representatives of the production sector, the industry, society, and the state government to promote the meat produced in the state of Mato Grosso in Brazil. Through a platform for the verification of the meat origins and the promotion of research and marketing strategies, IMAC aims to stimulate the consumption of meat produced in Mato Grosso in the whole world by assuring the legality of the production process for consumers and the sustainable development of the entire supply chain of meat.
Caio Penido is the president of IMAC and is in a dilemma because the main objective of the organization is to promote and enhance the demand for the beef produced in Mato Grosso, however, IMAC is not the owner of this meat. So how can the institute become an orchestrator of the whole production chain to deliver high-quality and sustainable products while promoting the Mato Grosso brand and meat to the world?
2. About the state of Mato Grosso
Mato Grosso is one of the most important states for Brazilian agriculture and livestock production and the scenario for the beef chain is not different as can be seen in Table 1.
Brazilian herds, slaughters and beef production by state in 2020
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
Source: ABIEC (2021a).The production of cattle in Brazil is located mainly in the Midwest region. The Mato Grosso cattle herd is the largest in the country, and corresponds to 15% of the Brazilian total, followed by the states of Goiás, Minas Gerais, and Pará (all with about 10%). In addition, Mato Grosso has the largest beef production in the country (18% of the total). Goiás, despite having the 2nd largest herd, is only in the 4th position (10% of the volume) among the largest beef producers.
Besides the important production, Mato Grosso has an expressive participation in the beef exports of the country, representing over 18% of the value of beef exports in the 2017-2020 period and the comparison with other states can be seen in Figure 1.
Brazilian exports by during the 2017-2020 period. Source: IMEA (2021).
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
This relevance to the international market comes not only from the cattle farmers but also from the presence of well-organized meatpacking companies throughout Mato Grosso. In the map presented in Figure 2, one can see that from the 27 plants with international standards and export licenses, 20 are from three big multinational companies (2 from Marfrig, 4 from Minerva and 14 from JBS). This is also an indicator that the processes and performance of these companies have a (at least) reasonable level of quality.
Beef plants location in the state of Mato Grosso. Source: ABIEC (2021b).
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
The location of the plants permits not only that most farms in the state have options when selling and delivering their animals but also makes it viable for Mato Grosso to process animals coming from other states, thus participating on chain levels that aggregate more value to the product than the livestock production.
3. IMAC projects and initiatives
When the institute was created, five years ago, an organization from Uruguay was the benchmark. INAC (Uruguay National Meat Institute) was having a lot of success in the neighboring country by installing independent scales in the country slaughterhouses. These scales being audited by a third-party agent was fundamental for improving the relationship between cattle farmers and meat producers. By having a similar context in Mato Grosso, the IMAC was founded with the primary goal of implementing the scales in the slaughterhouses of the state (SEIIC project). During the following years, the institute started to develop itself and grew in its scope, conducting nowadays several important and interesting projects for the development of the beef chain in Mato Grosso, such as:
3.1 Electronic Information System for Meat Industries (SEIIC)
The project is focused on bringing transparency to the relations between the industry and farmers, in addition to incorporating aspects related to carcass quality and production performance.
The Electronic Information System for Meat Industries (SEIIC) is a platform that aims to generate data on beef carcasses processed by the meatpacking industry, considering classification criteria (existing and new) and the origin of slaughtered animals.
Based on this knowledge, it will be possible to increase the quality of beef produced in the state of Mato Grosso and offer tools for the small and medium-sized industry to ensure the origin of the animals being acquired. The aim is to carry out the classification of beef produced in Mato Grosso, identify production bottlenecks that impact product quality, create mechanisms to improve production in quantitative and qualitative aspects and encourage sustainable production.
3.2 The Mato Grosso Meat Observatory (OCMT)
The Mato Grosso Meat Observatory (OCMT) is a platform under development to produce studies and strategic reports to support decisions and contribute to the sustainable development and intensification of the livestock production chain in the state.
The following data are aggregated in OCMT at the municipal level: characteristics of farmers and their livestock exploitation; characterization of production and processing capacity; environmental information; data and socioeconomic indicators; characterization of production in pasture areas; zootechnical indicators; information on the beef sale; identification of initiatives in good production and manufacturing practices; and distribution of inputs.
The OCMT has a fundamental role in generating information that will support negotiations with import markets for beef produced in Mato Grosso. It will be the main source of information on the quality of products from the state, in addition to providing data to beef consumers, ensuring that it was produced sustainably and following animal health and welfare protocols.
3.3 Reinsertion and monitoring program
It is a geo-monitoring system that will assist in the environmental regularization of cattle ranching with illegal deforestation, promoting the return to the formal cattle market for farmers who commit to recovering illegally deforested areas.
Farms that have overlapping areas of illegal deforestation verified by the Prodes/Inpe System after the 8th of January of 2008 (Brazilian Forestry Code) must isolate and not use the deforested area without authorization from competent bodies, suspending production activities at the location.
The computerized system will pull the information from the required documents, confirm some data and generate the farmer’s environmental statement, which is the base document for carrying out a property diagnosis on the criterion of illegal deforestation by overlapping with the deforestation area from the online system.
The farmer’s registration in the Reinsertion Program costs R$ 1470.00 (approximately US$ 265) per farm inserted in the platform and guarantees the geo-monitoring process for 5 years. In addition to this amount, the rancher must also pay the civil indemnity fine depending on the period and gravity of the infraction.
The Reinsertion Program involves voluntary participation and it is estimated that approximately 12 000 cattle raisers who are blocked from selling their animals to the meat processing industries will be able to reintegrate into the formal livestock market. This program has the potential to migrate towards the reinsertion of rural producers throughout the state, not being restricted to cattle raisers.
3.4 Other initiatives
Besides many other projects, IMAC also supports (mostly financially and institutionally) other initiatives from state agents such as sanitary programs, campaigns and inspections and pasture recovery programs and has some new projects in the pipeline. In addition, there is an empowerment of the IMAC team by the board, allowing then to freely propose new projects based on the trends and demands observed in the industry.
Finally, IMAC develops several marketing and communications initiatives both nationally and internationally to increase demand and promote Mato Grosso meat. Some examples include:
Events
The institute participates in events related to agribusiness, through lectures, debates, forums and stands. Such as inauguration of plants and important national events. Furthermore, internationally, IMAC has scheduled several lectures to promote technologies, research, products, and development (such as COP-26).
Videos
In order to promote meat from the Mato Grosso region, the institute is responsible for the production and recording of videos of recipes, with guest chefs, using “second” cuts to make every day dishes or for barbecue. In addition, an institutional IMAC video was produced, recorded with the aim of making society reflect on the Mato Grosso beef chain.
Workshops
The institute participates in workshops with sustainability initiatives, and which counts on the participation of large companies recognized by the theme. An initiative of the institute itself, they promoted a workshop combining practical and theoretical activities that seek to prepare butchers and businessmen for the high competitiveness of the market.
4. IMAC scope
The institute is an autonomous social service that gathers the state government, cattle farmers, and the meat industry. The most recent strategic planning process updated their mission and vision statements:
Mission
Expand demand and promote Mato Grosso as a reliable supplier of quality meat, strengthening the chain’s image with research, information and transparency.
Vision
Be a reference and become the primary source of information about Mato Grosso meat, adding value, expanding access to markets and promoting sustainable production in the state.
Values
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Strengthening the chain.
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Transparency.
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Standardization of production.
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Innovation.
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Vanguard.
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Reliability.
Of its unique characteristic of being created by law and representing both the public and private sectors, IMAC needs to follow some bureaucracies regarding its processes and the scope of its activities and projects (established by the law). Every new project needs to be evaluated before implementation to make sure no legislation is being transgressed.
Basically IMAC can only develop an activity if it complies with (at least) one of these: (1) promote meat from the state of Mato Grosso; (2) define the criteria for typifying “Meat from Mato Grosso”; (3) liaise with public and private entities, national and/or international, for the promotion of Mato Grosso meat; (4) interact with public and private entities, national and/or international, for the development of studies to improve meat, promote Mato Grosso meat, as well as develop research and technologies (…); (5) systematize the operating procedures of the Meat Industry Electronic Information System (SEIIC); (6) promote consumer orientation activities, based on market research; (7) promote product development; (8) to encourage farmers in the traceability of meat, having as basic requirements good practices and hygienic sanitary conditions; and (9) support, promote, and articulate, (…) actions that contribute to improving sanitary, zootechnical and sustainability control in the Mato Grosso animal protein chain.
Due to these possibilities and because of the rotative position of the president, IMAC does not have clear definitions about its scope and focus, changing its attention constantly and making it difficult to have a long-term view and definition of strategies. Consequently, processes are poorly structured and despite of a good internal flow in communications, some activities are not well defined.
In this regard, two more issues affect the undefinition: (1) IMAC is constantly engaging and relating with other private and public institutions and organizations in the state of Mato Grosso that have different scopes and functions in the chain, although it brings an important perspective on systemic challenges and helps the projects of the institute, it makes cloudier what is its actual role and what must be left to others to perform; (2) the other issue that interferes with a better definition of goals and scope is the fact that there are no similar organizations in other Brazilian states and the interaction and benchmark with “best practices” from other regions is absent.
5. Organizational structure and revenues
Despite all the projects and initiatives seen in the last section, IMAC has a real lean organizational structure (Figure 3). At the top of the hierarchy, we have the Board with five chairs being two representatives of Acrimat (Mato Grosso Cattle Raisers Association), two representatives from Sindifrigo (Union of Meatpacking Industries of the State of Mato Grosso) and the president of the board, that is the only representant from the public sector, the State Secretary for Economic Development. This configuration was set to allow an equality of power between the private sector and the government being able to untie any potential dispute. Next in the hierarchy, IMAC has a president nominated by the board, since May of 2020, Caio Penido has occupied this position. It is important to note that all these positions are not remunerated.
The additional challenge to Caio here is how to balance the potential disputes and conflict between buyers and sellers (farmers versus industry) with a pre-competitive agenda, while also considering other aspects than the economic ones and developing Mato Grosso productive regions for maintaining the support from the government.
As can be seen in Figure 3, the institute currently only has four paid employees, three of them being the directors of administrative/finance, operations, and marketing, and one manager who answers to the administrative director. The other positions that are presented in gray in the image are currently not filled by someone but were already approved by the board in the next year’s budget. These positions include more operational staff like coordinators and assistants. Besides that, IMAC has some outsourced people, especially to support the marketing initiatives, namely two publicity agencies, one press office, and one agency to manage the social media.
Organizational Structure of IMAC. Source: provided by IMAC team.
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
Because of this reduced structure, the responsible for the strategic steering of the company (directors) are currently busy doing the operational and routine work. One of the main challenges of IMAC is how to deliver the projects and results that the board expects with this shortage of people working in the organization. On the other hand, since they are very recent, no project was finalized until now, so why should the board approve new jobs in the organizational structure that will significantly increase fixed costs?
Since IMAC was created (five years ago) the annual budget has never been completely executed due to strict financial management. Although money does not seem to be a huge issue for the institute, the fact that it has only one source of funding raises a flag.
For many years, a fund directed to finance animal health programs existed in Mato Grosso, and this money was collected from the meat production industries. The state law that created IMAC also established that these companies could direct the value of R$ 100 per slaughtered animal to finance the projects of IMAC instead of mandatory contributing to this fund (state taxes). Because of that, even though the funding of IMAC comes from the government (that abdicated this revenue), who chooses to do it (or not) is the meat industry.
A percentage of this value per animal also is redirected by IMAC to an institute that promotes and invests in animal health programs throughout the state, and the other part of the money can be redirected with certain flexibility to projects that IMAC is developing. Until now, the meat industry has seen value in the projects conducted by IMAC but what may compromise the sustainability of the organization is the possibility of an industry crisis or some market oscillations that may directly impact the (sole) revenue of the institute.
6. Current context: IMAC’s position at COP-26
In the 2021 UN Climate Change Conference in Glasgow, Scotland, represented by Caio, IMAC discussed several topics and challenges related to the future of cattle and meat production and how Brazil and Mato Grosso plan to address these issues shortly. In this context, most of the questions were related to sustainability and the changes in meat production and consumption.
The topic of sustainability has been in the international spotlight for several years now and because of demands from the new generations of consumers, industries and companies are shifting and changing their approach, business models and supply chains to better encompass these expectations (Nwagbara and Reid, 2013).
In the food business, one important trend is the consumer’s search for knowledge on where the food they are eating came from and how it was produced. Traceability and better use of resources have been two of the focus of investments from meatpacking companies recently, and in Mato Grosso is no different, especially because of the proximity of the state with the Amazon region and the misconceptions that involve beef production in the state: the big 3 companies in Brazil are closely monitoring and improving their indicators in themes like animal welfare, CO2 emission, deforestation and water and soil use for better serving their international clients (FAIRR Index, 2020).
Another related topic is how to promote the inclusion of smallholders in the production chain with the recent concentration process in farms and the rise in the costs of inputs (Cafer and Kin, 2017; Donovan, 2018). There are some interesting paths in the teaching and research programs that are being carried out in the state by other organizations and could benefit from the support of IMAC. Also, financial institutions and governments have noticed that the offer of credit lines for sustainable projects and initiatives could also boost the access to information and technology necessary to shift to more sustainable business models (Newton et al., 2016).
Regarding the consumption of beef, we can observe two different patterns: the first one is a negative pressure on the demand for Mato Grosso meat, as a consequence of the sustainability concern, there has been an increasing number of people with protein-free diets, and this trend is even bigger when we analyze the younger generation of consumers (Aschemann-Witzel et al., 2021). Because of that, many companies are investing in substitutes for meat production as we have seen the development of beef from plant sources and/or even developed in labs in artificial ways (Bashi et al., 2018). Also helping the negative tendency there are several countries that due to COVID-19 or other political strategies are creating and extending trade barriers to strengthen their internal production (Neves et al., 2020).
On the other hand, demographic and economic trends, especially in emerging countries, are pushing the demand for food, fibers and fuels to levels not yet seen before and Brazil, as a country with abundant natural resources, rich soils and appropriate weather for agriculture and livestock production, is expected to have a leading role in feeding the world in the future. As an example, China is expected to grow its imports of beef by almost 32% in the next ten years, even though the country is also expanding its internal production (USDA, 2021).
These two antagonist trends made IMAC’s board members think about how the organization can show the world that sustainable and quality beef production is viable in Mato Grosso and how can they reach the younger generations. More than that, how to develop Mato Grosso’s beef chain to fulfill the demand of consumers in Brazil and worldwide in an efficient way and transform IMAC into a protagonist?
References
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Aschemann-Witzel, J., R.F. Gantriis, P. Fraga and F.J. Perez-Cueto. 2021. Plant-based food and protein trend from a business perspective: markets, consumers, and the challenges and opportunities in the future. Critical Reviews in Food Science and Nutrition 61 (18): 3119–3128.
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Appendix
Top producers and exporters of beef in 2022 (in thousand tons of equivalent carcass). Source: authors based on USDA (2023).
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
Offer and demand projections for beef in Brazil (in thousand tons of equivalent carcass). Source: authors based on MAPA (2021).
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
Beef chain in Brazil. Source: authors based on desk research.
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
SWOT Analysis for IMAC. Source: authors based on interviews with IMAC team and desk research.
Citation: International Food and Agribusiness Management Review 27, 3 (2024) ; 10.22434/ifamr2023.0030
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