The Chinese industries importing Brazilian beef, leather — and deforestation risk

Christina MacFarquhar

The first in a series of articles on deforestation risk in the Brazil-China beef and leather trade. Also available here in Chinese.

Docking in Shanghai

A year ago this week, in January 2018, a shipment of leather arrived at the port of Shanghai, courtesy of Brazil’s biggest cattle processor, JBS. The 34 tonnes of processed cattle hides were destined for use as seat covers and other interior surfaces in China’s automotive industry.

That shipment brought total imports of Brazilian leather into Chinese ports in the first two weeks of 2018 to a total of ten thousand tonnes — an amount equivalent to the skins of hundreds of thousands of cattle.

Meanwhile, back in Brazil, in the same week as JBS was delivering its leather shipment to Shanghai, the company was also preparing to export thousands of tonnes of muscle, aorta, testicles and other cattle parts to China from Brazil.

Deforestation risk in Brazil

Beef and leather shipments from many countries arrive at ports around the world on a daily basis. But the flow of these commodities from Brazil to China is particularly important with regards to tropical forests.

Cattle ranching is the leading driver of deforestation and other native vegetation clearance in Brazil and across other parts of Latin America. Brazil is the world’s greatest exporter of beef by weight and a top exporter of leather. In 2017, its exports accounted for more than 10% of the global beef and leather trade, in terms of both weight and value. For Brazil, these exports are a multi-billion dollar industry.

China (including Hong Kong) is Brazil’s biggest market, importing more than a third of Brazil’s exports of both beef and leather.

Two commodities, one common concern

Beef is considered the main culprit when it comes to deforestation, because meat is seen as the main product of cattle ranching and makes up the majority of the animal’s slaughter value. However, the hide, as a co-product, contributes a significant amount of income, fetching on average about 10% of the cow’s slaughter value.

Brazil exports far more of its leather (over 80%) than its beef (20%), keeping the rest for domestic use. So although China imports a lot more Brazilian beef than leather, it is a more significant market for the leather industry, accounting for as much as a third of Brazil’s production volume. Most Brazilian beef is consumed domestically, with just 7% exported to China.

So companies in China that use imported Brazilian beef and leather are all exposed to deforestation risk in their supply chains. And leather companies in China, rather than being minor players, have a vast collective stake in the Brazilian leather market and could help influence the sustainability of cattle production in vulnerable Brazilian landscapes.

Following the cattle trail

But how can these commodities’ paths be traced, and the relevant businesses be alerted to and encouraged in their potential role in removing deforestation from the great artery of beef and leather trade between Brazil and China? After all, when the shipments of cattle products arrive in Shanghai, Ningbo, Hong Kong or any other Chinese port or airport, they contain no detectable trace of the impact of cattle ranching on the Amazon rainforest and Brazil’s Cerrado savannah.

Several factors need to be considered. First, beef and leather follow different routes. China imports beef to meet rapidly growing domestic demand, so it is the types of food companies involved in processing and selling the meat within China that need to be identified.

For leather a more complex, international network of companies is involved, since many of the leather products made in China are exported to other countries for further manufacturing or retail.

In addition, when it comes to imports into China, all beef and leather are not equal. While a steak from Australia can fetch a premium in a high-end supermarket because it is considered to be of higher quality, Brazilian meat is less highly valued and usually goes through an extra processing stage before being sold to consumers.

Similarly, leather from Brazil is considered to be of lower quality than that from some other countries, partly due to parasites and other factors affecting the raw hides.

Brazilian leather exports are mostly used by companies making car seats (50%) and furniture (21%). The remainder is used to manufacture shoes (20%), bags and clothes. Companies in these industries vary widely in their requirements for leather properties and quality, with lower quality material generally being used in cheaper versions of similar products (such as sofas).

All this determines where Brazilian beef and leather go after they come ashore, and which companies in China use them. So who are these companies? And which among them hold the greatest potential influence to bring about positive change for Brazil’s threatened forest and savannah ecosystems?

Our next blog in the series will explore these questions for key companies operating in China. Watch this space.

This work was made possible thanks to funding from NICFI, as part of CDP’s Power of Procurement project, and DFID.

This blog was amended on 2 April 2019