Argentine Beef Production and Exports
Argentina’s meat producing industry has undergone important changes ever since the change of government last year. Pork, chicken, and beef producers have received approximately US$50 million in preferential credit from official banks. This stimulus is part of a government-led effort to restore Argentina’s meat industry into the major producer that it was as well as regain competitiveness in the international markets in regards to its neighbours, such as Uruguay and Paraguay. This article explores worldwide beef markets and the outlook for Argentina’s national industry.
Argentine Beef Production and Exports
The United States is the largest meat producing country in the world and dominates 19% of the international market. Nevertheless, there are other major producers, such as the European Union and China. The largest meat producers in Latin America have historically been Argentina and Brazil. In the case of Argentina, economic difficulties over the last several years had reduced the country’s exports and production. However, the current government of Mauricio Macri, which took office in December of 2015, has taken important steps to restart the national meat industry.
These policies include the liberation of the national currency on the foreign exchange, the elimination of export quotas, the suppression of a 15% export tax on beef, and the elimination of beef price ceilings. As it would be expected, the national economic recovery will take several years, particularly considering the high levels of domestic inflation triggered by the liberation of the currency. Similarly, the freeing up of the national currency has led to a substantial decrease of the value of the Argentinian Peso against major currencies, such as the Euro and the US dollar. This measure is expected to minimize demand distortions within the national market as well as increase exports in the medium-term.
Argentina produced some 2.7 million tons of beef in 2015 and is expected to produce a total of 2.6 million tons during 2016. The domestic demand drives Argentina’s meat production, as 90% of the national output is consumed domestically. In fact, Argentina’s total beef output for 2017 is expected to be of 2.7 million tons, but total exports are only estimated at 240.000 tons. Likewise, during 2016, beef exports are of approximately 220.000 tons, while they were around 185.000 tons during 2015. Argentina was once amongst the top five world exporters of beef and its peak year was 2005 with some 750.000 tons exported. However, years of currency manipulation led to a distortion of its real prices and decreased international market demand for Argentine meats. It is important to mention that Argentina does not import any amount of beef into its domestic market.
Amongst Argentina’s chief international markets for sale are China, Israel, and Russia. The United States is expected to open up as an important export market as the relation between the two countries grows stronger once again. It is important to mention that the prices of beef production and sale in Argentina, and South America in general, are strongly tied to the price of corn, which is used as cow feed. In terms of sales to consumers, grass-fed beef is more expensive than corn-fed because of its higher quality.