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Argentina Challenges to Regain Place Among Major Beef Exporters

23 August 2013
Meat & Livestock Australia

ARGENTINA - Argentina traditionally been one of the world’s largest beef exporters has seen them decline recently because of restrictive government policy and drought.

Illustrating the decline in exports, in 2005 Argentinean beef represented 11 per cent of total global beef exports, compared to only 2 per cent currently.

Despite favourable global beef demand and a weakened currency, the domestic policy challenges faced by the Argentinean beef industry have compromised any potential recovery in beef exports, according to analysts at Meat and Livestock Australia.

The ingredients for export success, at least externally, appear to be in place, MLA said.

The Argentinean Peso has depreciated significantly in recent years (in July quoted 0.18U$ - the lowest quotation since the Argentinean economic crisis of 2000-01), while global demand for beef has been strong.

Argentina, unlike some other South American beef exporters, has no market access restrictions in emerging market such as China, Hong Kong and Russia.

Internally, it appears that any recovery in beef production to make the most of these encouraging external conditions is unlikely.

According to a recent article published in “La Voz” (Argentinean newspaper), a recovery in exports with the current policies facing the beef industry would appear to be a ‘Utopia’.

MLA said that the Argentinean cattle herd, which went through severe liquidation between 2007 and 2010, has only recovered three million head of the approximately 10 million head liquidated during the period.

The current increase in slaughter (up 12 per cent year-on-year, to 6.27 million head), driven by higher female slaughter, suggests that further herd liquidation is underway according to CICCRA.

Adding to decline in the cattle herd has been a reduction in the number of abattoir’s operating in the country (which decreased 65 per cent in the last five years - SENASA).

These changes have been, in the most part, driven by the export quota implemented by the Argentinean government in 2006 (which effectively increased the price of Argentinean beef on the international market and compromised Argentinean competitiveness).

The fact that these policies remain in place, combined with the anticipated herd liquidation, present further challenges for Argentina in supplying high volumes of beef into markets such as China, Hong Kong, Venezuela and Russia

.

The favourable external conditions have seen Argentinean exports recover somewhat in 2013 (up 11 per cent year-on-year, totalling 61,501 tonnes in the first half of the year), although any long term increase in exports appears unlikely.

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