Argentina no longer a global beef powerhouse
This is the final article in a short series about agriculture in Argentina, a country I had a chance to visit as part of the International Federation of Agriculture Journalists conference in 2013.
Argentina has traditionally been amongst the world’s leading beef producing nations.
Much of its proud rural history is based on cattle, ranching and gauchos – the legendary cowboys of the South American Pampas region who spend their lives herding cattle on the vast grasslands.
But the country is far from the global beef powerhouse it used to be, as delegates to the International Federation of Agricultural Journalists’ congress held in Argentina learned in early September.
The government’s drive to regain economic stability following its latest economic crisis a decade ago through development of its soybean production has also thrown its beef industry into transition.
In 2005, the country was the world’s third largest meat exporter, sending 25 per cent of its production to 70 different countries.
Today, its ranking has dropped to 11th, exporting only seven per cent of its production to 40 international markets.
Amongst its fellow Mercosur members – a South American common market zone that also currently includes Brazil, Uruguay, Paraguay and Venezuela – Argentina’s beef exports rank dead last, falling even behind tiny Uruguay, the second smallest country on the continent with a population of only about three million people.
Industry experts blame the downturn largely on government intervention, which has destroyed producer profitability.
In 2006, former Argentinian President Nelson Kirchner raised export taxes on beef from five to 15 per cent and restricted beef exports to keep beef prices – which were skyrocketing due to widespread inflation – low for domestic consumers.
Ongoing monetary restrictions affecting the US dollar to Argentine Peso conversion rate also continue to play a role.
And although Argentinians are rabid meat eaters – leading the world in beef consumption with an average of 62 kilograms per person per year – that’s not enough to sustain the industry.
While the rest of the Mercosur region has been increasing the size of their cattle herds, Argentina’s has decreased – from 57 million head in 2006 to a historic low of 48 million in 2010.
It rebounded somewhat to 52 million by 2012, but producers are afraid the increase in supply will further depress their prices.
Many Argentinian farmers have shifted their agricultural production to cash crops, particularly soybeans, which they say is more profitable, and where the government is aggressively promoting expansion.
And although 80 per cent of beef farmers have less than 500 head of cattle, consolidation and economies of scale are driving expansion of feedlot production, further changing the industry and eroding Argentina’s gaucho traditions.
The beef farmers that remain are actively trying to improve their industry’s relationship with President Cristina Fernandez de Kirchner’s government, they say, but admit that these efforts have yet to translate in the opening of new export markets.
For the beef that is exported, approximately 70 per cent of it goes to as fresh meat to Chile, Israel and to the European Union (primarily Germany).
Some processed products are exported to Great Britain and the United States, and offal products are sent to Hong Kong and China.
Argentina’s leading beef breeds are Hereford, Angus and Charolais.