Where’s the beef? According to a new report from Rabobank, meeting growing global demand for protein in the future means more of the world’s beef supply will come from Brazil.

Already the world’s second-largest beef producer and largest exporter, Brazil’s beef industry remains “relatively inefficient by global standards, with below-average productivity and yield parameters” the report says. However as the country’s grain production continues to increase in the future, Rabobank expects a shift to a more intensified beef production chain and overall growth in the beef sector.

“Increased availability of feed grain will allow the beef industry to gradually improve both productivity and quality, thereby improving cost-efficiency and gradually achieving higher volumes, better quality, more consistent products delivered from Brazilian feedlots,” the report states.  

Why Brazil? The report says the country has an “unmatched position” with regard to expansion of corn and soybean production. However, infrastructure to deliver grain to export ports has not kept pace, making it prohibitive to export grain, especially corn, for many inland farmers. Instead, it is more cost-effective to use more of the inland-produced corn in domestic feed rations for the country’s cattle, hogs and chickens.

Historically, the beef industry in Brazil has benefited from the abundance of grazing land, but as competition from grain production intensifies going forward, Rabobank expects major changes in beef cattle management and nutrition, and says “intensification is the name of the game for the future development of the Brazilian beef industry.”

The report estimates that one-time feeding capacity in Brazilian feedlots will reach 4.5 million head by 2023 (up from today’s one-time capacity of 2 million head). In comparison, the United States has a total feedlot capacity of 16.8 million in feedlots with 1,000 and more head as of January 1, 2014.

Assuming a cattle turn ratio of two turns per year on average, the report says Brazil will slaughter approximately 9 million head of lot-fed cattle by 2023, resulting in more than double the amount of lot-fed beef produced today.

Achieving this growth in Brazil won’t come without cost. Rabobank estimates the cost of expanding feeding capacity to be as much as $500 million (U.S. dollars) and will require an additional 15.1 million tons of corn and 4 million tons of soybeans.

In addition to merely growing numbers, the report says there is a need for “dual-purpose cattle” – those that perform well in tropic climates but also possess enhanced feedlot performance and beef quality traits. Rabobank says this transition is already underway. “The latest data indicated that Angus (Black and Red) semen sales were already higher than Nellore’s: 42.8 percent and 35.6 percent of the total, respectively.” The result will be larger quantities of high-quality and tasty meat, the report says.

The report concludes that while the prospects for growth in the Brazilian beef feedlot sector are good and the market is ready to take off, significant investment is needed for that growth to be realized.