Monte do Pasto in the Press

Exports of cattle take advantage of economic diplomacy

In the slightly undulating plains of Herdade do Trolho, on the bank of the road linking Cuba to Alvito, thousands of cattle are concentrated in dozens of fattening parks scattered throughout the landscape. In Alentejo, it is normal to see cattle grazing, but what we discovered in this farm of Monte do Pasto Group has nothing to do with tradition -there is a powerful machine to fatten animals. The company, that spent more than ten years at the bankruptcy threshold and sold only 2,000 cattle in 2014, overcame the crisis and last year sold 30,000 heads; after successive failures that generated debts of 53 million euros to the former BES [Bank Espírito Santo], managed last year to bill 25 million and began to pay off debts. In a rare case of recovery, Monte do Pasto has become, in only two years, the largest live cattle fattening factory in the country (representing 10% of the national sector and 1% of European production).

In a sector where Portugal is a poorer country and has remained in a persistent state of survival for a long time, Monte do Pasto is a rare case that livestock technicians, specialists in foreign trade or political leaders in agriculture follow with particular attention. What happened? Clara Moura Guedes, the manager of the company, shrugged her shoulders and said: “We were lucky.” At his side, one of the top advisors Gonçalo Macedo’, completes: “And we knew how to seize it.” Clara Moura Guedes speaks of the opening of the Israeli market to the import of live animals in May 2015. But the transformation of a dying company into an organization capable of exploiting this opportunity calls for other explanations.

Like many companies in the primary sector, Monte do Pasto was born under the sign of greatness. In 1981, an influential farmer from the Beja area, João Urbano, founded the SAPJU (Agro-Livestock Society João Urbano) with the aim of creating a production unit with scale to resist the invasion of foreign meat. There was nothing lacking for this ambition: European funds abounded; nine farms with an area of 3680 hectares would provide space for pasture or for fattening parks; a feed mill would have to verticalize production; and the rental and subsequent purchase of the Beja slaughterhouse would guarantee SAPJU control of the meat circuit from the meadow to the exit to the butchers.

A focus problem

The main problem of the company was its focus. In trying to produce for the domestic market, it came into competition with meat imported from countries like Poland or Romania whose price was unbeatable. “We are not a country with much sensitivity for quality: what counts in the domestic market is fundamentally the price”, notes Clara Moura Guedes. When the manager is invited by the still BES to take care of the wreckage of SAPJU, there was already reason to believe that market dependencehad no way out. A study commissioned from AgroGes still insisted on this path. “It’s a good thing we did not follow it,” the manager says with a smile.

At the beginning of Clara Moura Guedes’ commission what was fundamental was to make the company capable of producing and competing. The time to discuss and approve what to do, however, could not be worse. At the end of July 2014, when Clara Moura Guedes was preparing to take over management, BES exploded. “One day we were able to approve a 14 million loan with the bank to restructure the company; the next Monday there was no bank “, remembers the manager. Only in September, with the Novo Banco, the Cunha Stock team would approve the plan and only in November would the process be ready to start.

Clara Moura Guedes is faced with many problems and one more: “I did not know anything about cows or livestock.” From the dairy industry (being previously the CEO and shareholder of Saloio Cheese), cattle were for her “like anything else”. The hiring of Gonçalo Macedo, an agronomist with experience in livestock management, would fill this need. The rest, she believed, would be achieved with efficient and focused management. It is in this context that fences are reconstructed, machines and animals are acquired, agricultural funds are used in Europe and supply contracts are made with other livestock producers in the region.

Perhaps none of these efforts would result if Monte do Pasto (as it was then called the extinct SAPJU) was not able to seize an open opportunity for economic diplomacy. After almost ten years of negotiations, Portugal and Israel have entered into a trade agreement that opens the door to the export of live animals. Three months after the agreement, in August 2015, Monte do Pasto joins Raporal, a company based in Montijo, for the first export. But immediately Clara Moura Guedes and Gonçalo Macedo packed their bags and flew to Tel Aviv. And they got rid of Raporal. Luckily, they had an unexpected asset: the quality of the animals they produced allowed up to 95% of their meat to be classified as kosher (health status under Hebrew law).

Once the first contracts were signed, it was essential to guarantee volume of production. A boat to Israel transports around 2,400 animals each time, an amount impossible to satisfy by the overwhelming majority of domestic companies. The available space, investments in fattening parks or supply contracts with 20 producers in the region were the answers found for the challenge. The fattening capacity of Monte do Pasto is currently around 12,000 animals simultaneously. Besides this herd, the company still has 1400 breeding cows. With this potential, it was possible to export around 30,000 animals last year to the Middle East.

Manuel Carvalho in Public, February 19, 2017