III. Emerging Social, Environmental, Health and Welfare Issues on the Brazilian Livestock Sector

3.1 Social equity and health - effect of changes on small-scale producers

As to the profile of the Brazilian rural zone, some data can be mentioned which can be analyzed under the small producers' perspective. The last Agricultural Census in Brazil was carried through in 1996 and the following tables show some of the results. We notice that between the 40s and the mid-90s, there was an increase in the total number of farms (Table 3.1).

Table 3.1 Number of farms. Brazil - Census of Agriculture. IBGE^[127]. 1940-1996

Source: Census of Agriculture, IBGE.

The highest amounts of properties are concentrated in categories sized up to 100 hectares, and most especially less than 10 hectares. In percentage, the participation of the properties of up to 10 hectares increased from 34.4% to 49.4%, whereas the ones from 10 to 100 hectares decreased from 51.2% to 39.4% (Table 3.2). There was an increase in the number of properties with more than 100 hectares, although their overall participation has decreased.

This information must be analyzed considering the area of the properties of these size categories, presented in Tables 3.3 and 3.4. In the analyzed period, the area of the farms in the country also increased. The farms of 100 up to 1000 are the ones occupying larger areas. In 1995, the total area taken by farms of up to 100 hectares was only about 21.7% of the national total farming area, although it corresponded to 88.9% of the amount of farms.

Table 3.2 Percentage participation of agricultural properties size. Brazil. Census of Agriculture. IBGE. 1940-1996.

Source: Census of Agriculture, IBGE.

Table 3.3 Area of the farms in Brazil (ha). Census of Agriculture. IBGE. 1940-1995.

Source: Census of Agriculture, IBGE.

Although, in absolute numbers, all categories had an increase in the occupied area in the period between 1940 and 1995, in percentile terms, the properties of over 1000 hectares decreased their participation in the total occupied area.

An important observation is about the distinct behavior of these data when the southern, mid-western, northeastern, northern and southeastern states are compared.

Table 3.4 Area of the farms in Brazil (ha) - Census of Agriculture, IBGE, 1940-1995.

Source: Census of Agriculture, IBGE

In Table 3.5, we can also see significant differences concerning the evolution of the Economically Active Population (EAP) between the behavior in Brazil and in the State of Sao Paulo. In both the cases, there was a reduction in the number of people employed by agricultural activities and an increase of the number of people employed by non-agricultural activities, which could be absorbing the people who are displaced from agricultural activities by the new technologies.

Table 3.5 Evolution of the EAP in rural areas, in the country and in the State of Sao Paulo according to occupation conditions (1.000 people)

Source: National Household Sample Survey

However, both movements were more intense in the state of Sao Paulo than in the rest of Brazil. In this case, the decrease in the number of people employed by agricultural activities was 33%, compared to 6% in the rest of the nation. The increase in the number of people employed by non-agricultural activities was 60%, against 33% in the whole of Brazil. This is due to differences both in the land structure of the state of Sao Paulo as to its actual stage of technological and industrial development.

Table 3.6 also presents data on Brazil's EAP per region, for 1991 and 2000. When we compare the participation of the rural population in the total EAP, we notice that there was a reduction, though in absolute numbers, the agricultural EAP remains about 13 million people.

Table 3.6 Economically Active Population (EAP). People over 10 years old.

Source: IBGE (www.sidra.ibge.gov.br/bda)

Some activities have been responsible for increasing non-agricultural rural job opportunities such as:

• Activities directly derivate from the production of agricultural goods and services or indirectly from its commerce, transformation and transport, such as the consumption of non-agricultural input used in these latter processes;

• Activities derivate from the final consumption of the rural population;

• Activities associated to the surplus of available labor in the rural sector, also called "refuge sector". It includes both works done in the place of the agricultural establishment and complementary, salaried and seasonal works of the family members with paid occupations outside their productive units, be them agricultural or not.

• Activities connected to the non-agricultural final demand of the urban population. It involves crafts making, rural tourism, etc.

• Public services in rural areas.

The branches responsible for the largest growth of the non-agricultural rural work (in no.of people) are: services, transformation industry, commerce of goods, the social branch, and the civil construction industry.

Over the last few years, the State has made efforts to keep individuals in rural areas and to stimulate the ones interested in continuing there. This is the case of the programs of land reform. Another transformation that has been operated in the agricultural areas is related to the land reform programs, whose performance in the last years can be evidenced by the data below (Table 3.7), from the Ministry of Land Development. According to the survey, there has been an increase in the number of families benefited by the land settlement, but there has also been a great reduction in the land invasions in this period.

Table 3.7 Families settled by the land reform programs of the government, from 1995 to September 10, 2002. Brazil

Source: Land Reform Balance Sheet. September/2002. INCRA (2003)
(*) Refers to credits liberated to beneficiaries.

Other government programs have also aimed at stimulating small producers and agricultural workers, such as the official agricultural loans at lower interest rates than those charged by the market. Moreover, there are programs which are more specifically aimed at fighting poverty in rural areas.

The Land and Land Reform Fund - Land Bank, created by Complementary Law nº 93 of February 4, 1998 and regulated by Decree no. 3475 of May 19, 2000, is a program for the execution of policies of income distribution and poverty combat, being the Ministry of Land Development - MLD (2003) in charge of land reform. The innovation in this policy is that beneficiaries, organized in organizations or cooperatives, have the effective power to select the land, negotiate prices and decide on the productive use of the land. Operations are decentralized once the states are in charge of them. The Land Bank compensates rural workers who confirmedly have at least five years of experience in rural activities, preferably employees, partners, land invaders, land leasers and farmers whose land area does not exceed the dimensions of a family property (Paragraph II, article 4 of law no. 4504) and is confirmedly not enough to generate enough income for the living of the family. The application for loans must be sent to the City Council of Rural Development - CCRD - or, if it does not exist, to the State Agency. Another factor which must be pointed out is that the State Agency, directly or through partners, must follow up and give technical support to the beneficiaries with the objective of guaranteeing the sustainability of the rural enterprise (MLD, 2003).

The Agricultural Credit and Agricultural Poverty Combat Project is an initiative of the Ministry of Agricultural Development in partnership with the World Bank and CONTAG (National Confederation of the Agricultural Workers), where the agricultural workers are stimulated to organize themselves in communitarian associations. It has as objective to guarantee the access to the land the 50 thousand agricultural workers in the regions of the Southeast, South and, mainly the Northeast. It advances in the decentralization, a time that attributes more power to the State and Municipal Advice of Sustainable Agricultural Development and opening more space for the organized social movements.

The National Program of Education in Land Reform (PRONERA) is directed to the education of rural workers in Land Reform settlement projects. The general objective is to make the education in land reform settlement stronger, stimulating, proposing, creating, developing and coordinating educational projects, using methodologies aimed at the country with the objective of contributing to the Sustainable Rural Development.

The private sector has contributed and some initiatives came up. SEBRAE (Brazilian Service of Support to Micro and Small Companies) and the National Rural Learning Service - SENAR, in several states, among others, have developed programs in the area of agribusiness management, rural tourism, among others. Sebrae is a service that provides technical support to the development of the small company activity, which, through programs and projects aims at the strengthening of micro and small companies, providing a sustainable evolution. Sebrae is predominantly administrated by private initiative, which also operates in accordance with the public sector. It is a civil non-profit society, which has, over the last years, directed many national and state programs to the agribusiness sector.

Particularly in SENAR's case, programs aiming at literacy and professional education in the country are priorities. For example, the "Health Promotion in the Country" program, from Sao Paulo's SENAR searches for medium and long term results, but the changes in the rates of life quality, related to changes of behavior of the rural population, were already noticed. An example is the city of Itarare, one of the poorest in the state of Sao Paulo, where the program was initiated in 1996. In that year, the children's death rate was 80 out of 1000 inhabitants - a rate comparable to India's. Last year, this rate decreased by 50%, that is, 40 out of 1000.

In Brazil, agricultural policies are principally based on short-term instruments. The main one, annually re-launched through the Harvest Plans is the rural credit. The budget for official rural credit presented curious variations between 1970 and 2000, with resources availability elevation and reduction phases. This clearly shows the difference in the amount of resources of rural credit in the mid-70s and 80s, and, more recently, the 90s, when these resources were scarce.

Economic policies orientation changes and changes in the way the state participated in the economy had a fundamental role in this fall in loans to the agricultural sector.

Besides the still modest resources available, it is important to point out that the bureaucratic obstacles and imposed demands to rural producers when they apply for official rural credit as to guarantees have decreased and made it considerably more difficult to have access to credit.

For family farmers, the government has created PRONAF. The line of action of PRONAF Rural Credit was established in 1995 by resolution CMN/BACEN no. 2191, of Ago/24/1995, which determined the conditions for the use of credit for financial support for agricultural activities explored through direct employment of the farmer's and his family's labor, establishing the necessary requirements to earn the credit.

Ever since, credit regulations were significantly re-edited. The most significant change was the creation of Pronaf Groups by Resolution no. 2629, of August 10, 1999, defining the credit lines from general regulations from the Rural Credit of the Brazil's Central Bank. Family farmers are classified according to the income levels they can reach with agricultural activities developed in the farm. The classification of family farmers per group allows the adoption of different financial charges - with bonuses and discounts for the ones with the lowest income - aiming at the diversification of the supported activities, such as: small family agroindustries, crafts, and rural tourism. That is, the granting of credit was to meet the demands of family businesses as a whole and only the demands for the exercise of a single activity, as normally done in rural credit.

In 1999, Pronaf was transferred from the Ministry of Agriculture to the Extraordinary Ministry of Land Policies and Family Agriculture. With this change, the program achieved political power for the implementation of its actions. It also got more accessible to family producers from the National Program of Land Reform, extending benefits and integrating public policies destined to rural credit, becoming "Pronaf - Plant Brazil".

The program is widely spread and can be found in 3,792 Brazilian cities.

In terms of social impacts, from the 1980s to 1990s, as the official credit system lost most of its importance, some private sources of credit emerged, including both commodity buyers and input suppliers' credit funded in a significant degree by external sources. Although specific research is needed to correctly evaluate the role of this type of credit, it is believed that it has been providing funds mainly for working expenses for commercial farming purposes.

Figure 3.1 shows the behavior of prices received by farmers as opposed to prices paid by farmers and the general price level. The year of 1994 - when the inflation stopping Real Plan was implemented - is taken as reference. It is clear that farmers have been facing a rather unfavorable trend by any angle their terms of trade are constructed.

Figure 3.1 Prices received and paid by farmers (1994-2001): IPR (price received), IPP (index of prices paid for inputs), IGP (General price Index) and Price of Fertilizers.

Source: Getúlio Vargas Foundation (FGV)

The performance of the agribusiness sector can be also evaluated considering the evolution of the prices paid by consumers for agribusiness goods. Contrary to historical trends, agribusiness prices cannot be said to have been an important factor to increase the cost of living in Brazil after the Real Plan as compared to other economy prices.

The lower classes are the consumers who change their consumption habits according to the income factor. In these classes, meats whose production offer conditions of reducing their cost, and consequently the final price of the product, have great advantage. An example of that is poultry, which has had considerable increase in the per capita consumption.

The strong fall in the relative prices was the main cause of the substitution of red meat by white meat, especially in lower classes. More recently, new consumption trends have been valorizing white meat as a promise of a healthier and more balanced diet. This "health effect" is a very widespread concept in the United States and Europe and has gained a lot of importance in Brazil, representing a source for consumption increase, especially and middle and high classes.

After the Real Plan, there was a general improvement in the consumption of foods, such as meat. Table A.1 in annex 1 shows the annual family meat consumption per capita according to the income class, in metropolitan areas of Brazil. Data for the per capita meat consumption by rural populations were not obtained, but in the metropolitan areas surveyed an increase in the per capita meat consumption between 1987 and 1996 was observed for all income classes.

Production of table eggs has been increasing in recent years, starting from 1997, mostly to match a higher domestic consumption that resulted from the Real Economic Stabilization Plan. It has been sustained by domestic demand from lower income groups, due to the relative lower price of eggs versus other sources of animal protein.

In the dairy sector, it is important to observe the reduction, which is taking place in the total number of Brazilian producers due to a higher competition with imported mild and technological changes (gain in scale). According to data from Leite Brasil/CNA-DECON/CBCL and Embrapa Dairy Cattle from April, 2003, in 2000, there were 123 thousand milk producers, producing 6 million liters which were delivered to the 15 largest industries in the sector. In 2002, the number of producers was 95 thousand who produced around 6 million liters.

Effectively, gains of productivity in the sector are observed, showing gains in scale. The permanence of producers in the sector depends partly on his/her access to credit and his/her sensitization to new technologies. For this reason, in this sector, technical education programs and the availability of credit lines for technological activities (cooling tanks) are essential factors. As to small family-administered farms, which got to stay in business, milk has demonstrated to be an excellent source of income due to its high profitability per hectare.

The federal government and some state governments, e.g. the state of Sao Paulo, have tried to promote an increase in the quality of the produced milk. A sector modernization program has been nationally discussed - the National Program for the Improvement in Milk Quality (PNQL) - although the private sector has already been putting some measures into practice.

In the state of São Paulo a finance line (FEAP) was created to help farmers purchase a cooling tank, optimizing the logistic of transport and the storage from farms to industry. This modernization process and new logistics does not exclude small producers. On the contrary, they are a way of allowing his permanence, since quality is guaranteed. The private sector has contributed to this process and the FEAP is transferred to producers through the industry. The industry has financed to purchase of cooling tanks and producers have paid through small amounts discounted in the price paid to the producer.

As to dairy collection it is possible that the cost difference is important not only in tanks of different sizes, but also according to the use of the equipment. Thus, although the technology is available for small producers and, thus, cannot be regarded as an obstacle to their participation in the market, its cost is comparatively higher, subjecting its adoption to the producer's financial capability.

Differently from the bulk collection process, the technological innovation brought by long-life milk is limiting in terms of industrial scale, at least in the short run. In fact, its market has been highly competitive, and the gains in efficiency have been extended to consumers. Evidently, the reduction on Long-life milk prices has also struck the price of raw material, bringing them down.

3.2 Environment - impact of environmental concerns on scaling up

In Brazil, the main environmental issues that worry rural producers are the following: demands for the recomposition of forest areas with native species and the disposal of residues/effluents and, more specifically for meat industries, especially the destination of the effluents.

As to small producers and family farmers, it is important to point out that the forest issue can be limiting. For example, in a state like Sao Paulo, where more than 73% of the properties are less than 100 ha large, the demand to maintain more than 20% of the same forest, the so-called Legal Reservation (or recompose them if they no longer exist) may financially hinder not only the adaptation to the environmental legislation, but also the very continuity of the property.

According to a consultation carried out by the Confederation of Agricultural and Cattle Farming of Brazil (CNA) in the "Conhecer" Project, done with approximately 2,951 rural workers in May 2002, producers follow the environmental legislation not only because they have to, but because they recognize the fundamental importance of the preservation of their properties. Among the farmers interviewed, however, 56% claim to have their income reduced significantly because of this legislation. For this reason, the producer evaluates the needs for a governmental counterpart in other to compensate the fall in his income. The CNA is a legal representative organ for Brazilian agriculture and cattle farmers.

Brazil is one of the countries with the most advanced environmental laws in the world. However, there are several problems with the enforcement of these laws due to the limited number of people involved in the activity and the lack of information a great deal of farmers have about legal environmental demands.

In another CNA's survey with 3,505 agricultural producers in October, 2001, 76% of the farmers surveyed considered the environmental issue as a theme which must be managed with the applications of technical regulations, scientific knowledge and skilled personnel. They recognized the importance of promoting environmental conservation, observing, however, that the procedures must be based on technical knowledge. Only 5% of the producers aproved the current environmental policies conducted by the government. These survey's results are represented in Figure 2, as follows.

Figure 3.2 Result of the survey carried out by CNA/Vox Populi about the alspects the farmer considers the most important in the environmental issue. October/2001

Source: CNA (2003).

Some of the main laws of interest to rural producers are:

• 1964 - Land Act (Law no. 4504): established rights and duties in the land reform area and conditioned all the actions of natural resources conservation".

• 1965 - Law no. 4771: defined the current Forest Code, which recognized the existing forests in the Brazilian territory and other forms of vegetation, such as "properties of common interest to all of the Brazilian population". This law protects the areas around rivers, lakes, springs, dams as well as any area surrounding water courses and establishes the Legal Reservation. It was changed in 1989 and in 1996 by several Provisional Measures. At the moment, a law project for its updating is being discussed in the congress.

• Law no. 6938/81 - National Environmental Policy: instituted the National Environment System (SISNAMA) and created the National Environment Council (CONAMA) with competence to establish rules and criteria for the authorization of environment-striking activities; defined instruments of environmental management (environmental authorization and EIA-RIMA);

• CONAMA Resolution no. 237/97: established activities subject to the environment authorization process, among which are the swine confinements and the swine, dairy, leather, slaughtering activities, among others. This resolution has been complemented by more recent and specific ones, such as irrigation.

• Law no. 8.171/91 (National Agricultural Policies Law): this law establishes fundaments, define objectives and institutional competence which establish the resources, actions and instruments of the agricultural policy, concerning the agricultural, agroindustrial and planning activities of the fishing and Forest activities.

• Law no. 9.433/1997: rules about the National Policy of Water Resources - donation of water courses as a planning unit of multiple resources, recognition of the economical value of the water and, finally, the decentralized and participative management. Essential instruments to the management in the use of water are: National Water Resources Plan, a document which allows adjustments according to the development; the Granting of the Rights of Use, an instrument of authorization or concession of the use of the water in order to balance availability and demand; Division of the water resources into Classes of Use, in order to inspect the quality of the water; National Water Resources Information System, which provides managers and data users the necessary data to decision making.

• Law of Environmental Crimes no. 9.605/98: rules about administrative and criminal penalties as a consequence of conducts and activities that are harmful to the environment.

The River Basins Committee, whose members are City Halls, non-governmental organizations, industries, farmers, and public offices, is an instrument created by the federal government (now being adopted by state governments) according to which small producers also have access to environmental discussions. Its function is to discuss and make decisions about subjects related to the management of water resources in one or more river basins.

In the state of Santa Catarina, state law no. 9.748, of November 30, 1994, approved the creation of the State Council of Water Resources (CERH) and the Tubarão, Araranguá, Itapocú, Cubatão do Sul and Peixe Rivers Basin Management Board. As to the Peixe River Basin, the implementation of the Environmental Quality Program showed that there was a significant reduction in the pollution caused by swine farming, 32% by solid residuals and 15% by sanitary residuals. By October, 2000, 2543 processes of environmental authorization accounted for 11%.

Currently, the environmental has reflected in the credit and financing policies to the agricultural and urban zones. According to Banco do Nordeste (2003), the Environment Conservation and Control Financing Program - FNE Green, destined to industries, rural and agro-industries (persons and companies), cooperatives and associations, has the objective of promoting the development of productive environment activities and others activities supported for the bank as for the financing of items of conservation and control of the environment.

The swine activity is one among those which, within the agribusiness, has been widely studied concerning the environment, once it generates a large amount of dejection, which become a severe environmental problem, especially when they are directly thrown into nature.

The amount of produced dejection is related to the production system. All systems pollute the environment, but at different levels. The confinement system generally collects and stores the liquid swine dejections for later treatment and to be used in other activities. The SISCAL system keeps a direct relation with the environment, generating effluents in the location. The intensification in the SISCAL system increases the pressure on the natural resources such as soil, vegetal covering and in the contamination of superficial and underground water.

The confinement system is the most used in Brazilian swine farms, increasing from 40% to 61% between 1990 and 2000 (Table 3.8). Thus, the expansion of the confinement system shows that the producer units increased the amount of dejections, for the confined raising system concentrates the animals in the farms.

Table 3.8 Distribution estimative of the swine production system in Brazil.

Source: Gomes et al. (1992) quoted by por Perdomo et al. (2001).

It is important to notice that swine integrators have contracts with a large number of small producers. These contracts include demands as to the adequate handling of the dejections in order to avoid environmental problems. All the integrated farmers have to go through the environmental authorization process. The costs involved in this process end up discounted from the payment of integrated farmers, so it does not have a very significant financial impact limiting the activity.

During the years of 1994 and 1995, the Brazilian States of Santa Catarina and Rio Grande do Sul invested a great amount of resources (about R$100 million), provided by BNDES, for waste treatment, reform and construction of wider facilities.

The environmental laws criminally blames producers for eventual damages caused to the environment, and human and animal health. The dejection treatment program has to meet the specific characteristics of each producer in five stages: collection, storage, treatment, distribution and use of solid and liquid dejections.

In swine farms, dejections are usually used as fertilizers, bringing economical gains to producers. Perdomo et al. (2001) discuss the use of swine residuals without committing the quality of the soil and the environment. In order to do that, planning must be done considering the characteristics of the soil and the environment, requirements of the cultures, declivity, kind, quantity and time of application.

This way the agricultural sector can meet the demands of the environmental law, reducing air and water pollution and preserving human and animal health. However, in order to reduce the level of pollutant of swine dejection, a high investment is necessary to meet the demands of the environmental legislation. Besides, swine farmers cannot include the cost of the investment in the price of their final product. Thus, many producers have difficulties in getting adapting their properties to the ruling environmental law.

Brazilian poultry industry is the largest producer of agroindustrial dejections thrown into the environment. The appearance of large poultry companies, which control the raising and transform, in a gigantic scale, several billion birds into food are accountable for the production of highly pollutant effluents.

The substitution of whole chicken for chicken parts have increased the amount of agroindustrial processed by-products. Chicken processing require a large amount of water in the phases of boiling, defeathering, evisceration, washing and cooling of carcasses. Besides, the international legislation demands the use of nothing but drinking water in food industries.

The negative impact may be observed when the by-product of the animal production and processing and launched untreated into the water course. The effluent of the industry, containing carbohydrates, fat and proteins, motivate the fast multiplication of micro organisms to an extent where it may cause the death of fish or other undesirable effects.

The produced effluent in the slaughtering phase is highly pollutant for it contains blood, forcing, thus, a especial care in the removal of dejections produced to avoid food contamination. The total quantity of water used in the industrial process of chicken is estimated in 15 to 50 liters per chicken (Nascimento et al., 2001). The Brazilian legislation (DIPOA's Technical Inspection Regulation of the Ministry of Agriculture and Supply - MAA, 1997) allows the use of 30 l/bird or less (if authorized by DIPOA).

As to milk producers, it is common in Brazil that the water from the washing of milkers are firstly stored for a period of 30 to 45 days after which it may be used in pastures or in cultures which can be used to supply feed for the animal, avoiding environmental problems with the destination of effluents and dejections. In fact, the milk production system in Brazil is fundamentally the pasture system, decreasing the risk of effluents contamination.

3.3 Animal health - impact of animal health concern on scaling up

Expectations were that the existence of agreements with respect to SPS and TBT would avoid sanitary arguments that restricted international trade and encourage the adoption of international patterns developed by international scientific organizations, Codex Alimentarius, OIE and IPPC. However, these agreements allow countries to work with standards that are even more restrictive than those established by international organizations, whenever scientifically justified or when a lower risk level, which is also proved to be non-discriminatory, is established. In the absence of harmonization, the OMC country members have been encouraged to adopt the equivalence principle.

Despite the fact that international agreements assure the equivalence and stimulate the adoption of a unique and harmonized standard, it has been difficult to proceed to the harmonization and acceptance of international patterns, what ends up stimulating the use of very strict ad diverse requirements between importing countries for Brazilian products, including meat products (Miranda, 2001). This has led to a cost increase to obtain products that meet the requirements, and also involves more bureaucracy, increases complexity identifying the countries' rules for different countries of destiny, among others. The framework has favored the use of technical and sanitary requirements that are apparently exceed those justified for assuring human and animal health.

Every Brazilian beef slaughterhouse has to be inspected and the product has to be distributed with a sanitary certificate signed by Ministry of Agriculture. Industries have to implement the Hazard Analysis and Critical Control Point System (HACCP), a set of rules initially proposed by the USA in order to guarantee products preserving human health are being adopted as a requirement to export to that country and others.

In Brazil there are three levels of sanitary inspection services: Federal (SIF) and state and municipal (SIM). However, only establishments with SIF inspection can act in the exports sector.

Annex 1 contains a list of slaughterhouses that are authorized to export to the United States of America and the European Union, according to the list available in the website of the Brazilian Industrialized Meats Exporters Association - ABIEC.

As to technical requirements imposed by importers, Ferraz Filho (1997) identified that the animal slaughtering sector was one of the most affected. The research was applied to a sample of animal slaughtering firms that were controlled by national private capital with experience in exports, considering the sanitary norms as an important barrier for the expansion rate of exports.

Procopio Filho (1994) has also applied this same rationale to data gathered together to the private sector. It could be identified that sanitary and environment preservation requirements were perceived by the sector as a resource to negotiate prices.

In the USA, fresh poultry meat from Brazil is forbidden, and so are their uncooked derivates, under the allegation of contamination by Newcastle disease. Due to allegations of foot-and-mouth disease, Brazil does not export beef or pork to the USA either.

Likewise, the EU and Russia forbid imports of fresh chicken and its uncooked derivates from Brazil for sanitary reasons (Newcastle). The import of fresh pork and uncooked or uncured products are also forbidden by European countries.

The import of fresh pork and uncooked or uncured derivates from Brazil is also forbidden in Japan under the allegation that it is contaminated by nicarbazine. Japan has not accepted regionalization and the import of beef from Brazil either.

Despite the difficulties of the international market, Brazil has advanced in the control and eradication of animal diseases. The states of Santa Catarina and Rio Grande do Sul, in Brazil, has been declared foot-and-mouth-disease free with the vaccination by OIE (Office International des Epizooties) since May 1998. The last outbreaks were reported in December 1993. In August 2000, cases of foot-and-mouth disease were reported in Rio Grande do Sul (Fabiosa, 2001), what harmed the evolution of this sanitary status. Figure 3.3 shows the last incidences of sanitary problems in Brazil until 2001.

The Brazil's sanitary status in the Office International des Epizooties can be seen in Table 3.9.

In Brazil, the Ministry of Agriculture is in charge of the elaboration and coordination of national sanitary control and inspection program. The Office of Sanitary Inspection and Progras - CPS - controls several programs for the control and eradication of animal diseases, among which, the following stand out:

• National Program for the Control of the Rabies and Encephalopathies - PNCRH

• National Sanitary Education Program - PNES

• National Bird Health Program - PNSA

• National Swine Health Program - PNSS

• National Program for the Control and Eradication of the Brucellosis and Tuberculosis - PNCEBT

Table 3.9 Annual animal disease status. BRAZIL/2001. OIE.

Source: OIE (www.oie.int). May 2003.

Figure 3.3 Map of last Brazilian disease problems

In the swine raising sector, there are initiatives involving both the government and the private sector. In the state of Santa Catarina, for example, there is a fund supported by the integrators to help producers and implement measures for eventual problems with diseases that may eventually come up. In the event of a quarantine or the need for the sanitary slaughter of the flocks, the producer is protected, receiving a kind of compensation by the fund. In fact, swine producers contributed to this fund through the integrator. This program can be used for any disease that may happen. This is joint-action by the Department of Agriculture and the integrators. In Mato Grosso do Sul, there is a similar program.

As to poultry, some integrators already request the construction of composters for dead animals as a contractual demand for the farmer. Others have stimulated this investment. Other sanitary issues have been negotiated in the production management by integrators and producers. A limitation which can affect the start of new small producers in the integrated poultry activity is the legal demand for minimum distances between the facilities and water sources, roads, and others, in the state of Santa Catarina (State Decree 14.250/81 and 1985 State Sanitary Code). As small properties may not be able to respect these distances due to the their size, this may hinder the closing of contracts with integrators.

In the state of Santa Catarina, the minimum distance requirement applies to pig sties and swine dejections handling systems in as well, according to State Decree 4.085, of 2002.

In milk production, where there is a large amount of small producers, the technology of veterinarian products has allowed for a cost reduction as in the use of vaccination IBR, for example, which contains in a single dose nine types of active principles. Milk producer investments on animal health are partly stimulated by dairy industries, which pay more for the quality of milk.

3.4 Food safety concerns and effect of changes on small-scale producers

Currently in Brazil, the discussion issue of the cattle raising sector concerning food safety is the implementation of the traceability of flock. At the moment, the System of Identification and Certification of Meat Origins - SISBOV - in Brazil was developed firstly to achieve the European Union's requirements. The maintenance of the exports to the European Union means the entrance of foreign currency to Brazil and more stability in the prices paid to producers. Considering that the internal price of the gross beef bovine has exports as one of its composition elements, the exports volume and its competitiveness is a significant factor in the determination of the beef prices. Keeping exports is important to small producers as well, given the characteristics of cattle raising as a present activity in a large number of farms in Brazil.

Traceability in Brazil became official after Normative Instruction no. 1, put into force by the Ministry of Agriculture on January 10, 2002, instituting SISBOV and beginning the compulsory identification process in the country. The application of this regulation is extended to all the national territory, including bovine raising farms, slaughterhouses and certifiers. Normative Instruction nº. 01 established deadlines for the inclusion of farmers and animals in SISBOV.

The normative instructions instituted by the Department of Agricultural Defense - DAS/MAPA - regulate SISBOV's work. Normative Instruction nº. 21 established the guidelines for the inclusion of certifying entities and Normative Instruction nº. 47 ruled about activities of the credentialed certifiers and the registry of information which must be in the National Database - BND. The objective of the Ministry of Agriculture is to include in this databank all information regarding the Brazilian flock. This will facilitate the control of animal diseases. It will also normalize the cattle chain, combating the informal slaughter system and creating links between producers and slaughterhouses. Besides, it will make all links of the chain reinforce communication (PINEDA, 2002).

Sarto et al. (2002) analyzed the Brazilian law, which implemented bovine traceability and in order to analyze the economical impacts of the process to producers ran simulations, in which different flock sizes were considered to demonstrate the impact of scale in the tracing cost per head. The result was that the larger the flock, the cheaper the cost per animal. Cost varied from R$ 9.75/head, for a flock of 50 animals to R$ 2.18/head for a flock of 2000 heads, according to table 10, considering the certifying companies in the market until November 2002. The participation of the identification/tracing system in the total income of the animal sale was also analyzed. Results pointed out that the cost of these animals can represent 1.30% of the income of the slaughter animal.

Having the costs of the Planejar company as reference, since it had the highest number of certified animals in within the SISBOV, the relative participation of the different signatures in the cost of the system was compared. The results considered an average flock of 200 heads and allowed us to see the relevance of the item "technical visitation" in the cost of the system, which reached 40.63% do the total.

The study concluded that additional costs for the implementation of SISBOV represent an obstacle for its introduction. Currently, all the implantation cost of the new system in being paid by the cattle farmer, who is not getting any direct benefits for it, although there has been partnership experiences between the slaughtering sector and cattle raisers in order to divide the costs of the traceability and speed up the process.

Table 3.10 Costs of identification systems per certifier

Source: Elaborado pelos autores.

3.5 Animal welfare and effect of changes in study countries

In Brazil, the technical area has evolved in order to find productive systems which result in better conditions to animals. In 1987, the Intensive System of Swines Raised in the Open Air (Siscal) was introduced in Santa Catarina by agronomist João Augusto Vieira de Oliveira with Embrapa's support. The characteristics of the system are the open air raising of swine and the construction of shelters. Variations such as the number of hogs per shelter, kinds of feed boxes, etc. can be seen in different regions. Researches carried out at the Federal University of Santa Catarina (UFSC), in 1988, confirmed that abnormal behaviors, cannibalism and aggression were a lot lower among swine raised in the open air that those raised in the conventional confinement system. According to the specialist, Siscal also has positive implications in the environment, in the animal's health and in the energetic balance of the flock. "Investments are much lower (even considering the land) and have resulted in the production of an "organic" animal with a high market price" ("Suinocultura Industrial" Magazine, 1999).

Other alternative swine growing system is the so-called Pig Family Housing, (Stolba, 1982). Developed based on swine behavioral patterns on field conditions. It is a system of four sows and one male reproducer sharing the same space or "condominium" Each sow occupies an "apartment", which communicates with others with the male circulating within the "condominium". The piglets live together from the beginning thus avoiding aggression after weaning. Although the system is a type of confinement it favors animal welfare. It takes a high initial investment cost compared to intensive confinement system.

As to the legislation, Brazil has clear and objective laws to defend animals' rights and guarantee a more humane treatment to them. As said before about environmental laws, they are not always followed or known by producers. According to Suinocultura Industrial Magazine (1999), Federal Decree no. 24645, article 3, of July 10, 1934, it is forbidden to keep animals in anti-hygienic places or places where they cannot breath, move, or rest, or that have no light or air; to abandon sick, wounded, mutilated or extenuated animals as well as not provide it all that is necessary, including veterinary assistance; to deny a quick, suffering-free death to every animal whose death is necessary, be it for consumption or not; transporting animals in baskets, cages or vehicles which are inadequate in terms of size and number of heads, or in a vehicle without a metal net protection or similar device which impedes the exposition of any animal member outside the vehicle or cage. Failure in observing these laws will result in two to fifteen days in prison, be the individual the owner of the animal or not.

In the state of São Paulo, there is an explicit law concerning the humane slaughter of animals for consumption. It is Law no. 7.705, of February 19, 1992, complemented by Decree no. 39.972, in 1995. This law regulates the penalties to slaughterhouses of the state.

Table A1. Consumo alimentar familiar per capita anual de carnes, por classes de recebimento familiar, em regiões metropolitanas do Brazil.

Fonte de dados: IBGE. www. Sidra (total de regiões metropolitanas amostradas pela Pesquisa de Orçamentos Familiares: 9).