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ECONOMY | 22-06-2021 17:35

Argentina's government announces partial re-opening of beef exports

Gradual reopening of beef exports approved but under a new quota system, with number of cuts reserved for the domestic market.

The government confirmed Tuesday that it will allow a partial and gradual reopening of beef exports under a quota system, with a number of cuts reserved for the domestic market at low prices.

Argentina, the world's fifth-largest beef exporter and a key supplier to China and Israel, halted exports for a month in mid-May as part of a move to tamp down surging prices. Yet revenues from the sector are vital to the country's economy and its need for dollars.

Following the 30-day suspension, government will now allow sales overseas to be re-opened, but only gradually. 

"Exports are being re-established, but only up to 50 percent of last year's average [monthly] exports," Productive Development Minister Matías Kulfas announced at a press conference, flanked by Agriculture, Livestock & Fisheries Minister Luis Basterra.

Beef exports totalled some 897,500 tons in 2020, working out to around US$2.7 billion, according to the Institute for the Promotion of Argentine Beef (Instituto de la Promoción de la Carne Vacuna Argentina, IPCVA).

"The 50-percent quota is valid until August 31 and depending on the results we obtain, we will see how we continue," said Kulfas.

The quota excludes a number of special cuts, including those that make up the so-called ‘Hilton quota’ destined for Europe.

The export of 11 beef products, including seven cuts, will also be prohibited until the end of the year, to guarantee their supply for the domestic market. This includes tira de asado, vacío, matambre, bola de lomo, paleta and tapa de asado.

Cattle producers reacted coolly to the move, with representatives saying they were against government intervention.

"We disagree with opening exports only 50 percent," said Carlos Achetoni, the president of the Argentine Agrarian Federation (Federación Agraria Argentina, FAA).

Carlos Iannizzotto, president of the Coninagro chamber group, said producers were in "total disagreement with the decree that establishes a 50 percent limit. We believe that it is not the solution and a bad sign for the sector, especially for small producers."

 

Domestic priorities

The measures could see “between 20,000 and 30,000 additional tons” per month destined for the local market, “which we hope will have a positive impact on prices," said Kulfas.

"The absolute priority here is that there is no lack of meat on the Argentine table. We believe that this will help stabilise prices," said the minister, underlining that the price of "meat has doubled [in recent months compared to] that of average food."

"We are prioritising the table of Argentines and the pockets of households affected by the pandemic," Kulfas assured. The official said the price hikes for meat "had no justification.”

"Our plan has short-term objectives of organising the sector to provide a supply of meat in the domestic market at affordable prices," he added.

Beef has benefitted from a rise in prices on international markets, averaging out to US$4,000 per ton in April, in turn putting pressure on domestic prices.

In mid-May, President Alberto Fernández's government announced a one-month suspension on foreign meat sales to "get the sector in order, restrict speculative practices and avoid tax evasion in foreign trade."

Poverty affects 42 percent of Argentines, and the president sought to reduce the cost of living by implementing price controls.

The Peronist leader insisted Argentina could not accept the recent rise in meat prices in a country already reeling from three years of recession and the adverse economic impact of the coronavirus pandemic.

The price rises contributed to Argentine inflation, already among the highest in the world, reaching 17.6 percent in the first quarter of 2021, according to the INDEC national statistics bureau.

Cattle farmers announced a two-week halt on domestic beef sales in response to the government's move.

The protest did not harm domestic availability, with butcheries and markets having stocked up and consumption dropping due to a sharp price increase – some 76.2 percent year-on-year in May. 

According to Argentina's chamber of industry and commerce, the industry employs some 100,000 people. 

 

'Livestock plan'

The new plan announced by the government also includes incentives encouraging producers to increase beef production in the long term. The government's hopes to increase the current 3.2 million tonnes produced annually to five million tonnes per year, the Productive Development Ministry later said in a written statement, confirming it would launch a 'Livestock Plan' in the next 30 days.

New measures to avoid potential under-invoicing and discourage illegal operations will also be introduced.

According to IPCVA data, last April shipments from Argentina of chilled, frozen cuts and processed meat totalled 50,150 tons, worth about US$204.2 million.

Of that amount, 40,300 tons were destined for China (75.9 percent), and the rest other world markets, including Israel, Chile, Germany, the United States and Brazil.

Argentine meat production reached 258,000 tons in March, according to the latest available government data.

 

– TIMES/AFP

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