History of Beef
Industry in Argentina:
Argentine beef and its
production have played a major part in the Culture of Argentina, from the “asado” to the history of the “gauchos of the Pampas”. Landowners became wealthy
from beef production and export, and they built large houses, important buildings in Buenos Aires
and elsewhere, and contributed to politics, philanthropy and society.
The flipped seasons between
the Northern and Southern Hemispheres meant that Argentine beef came onto the
market at a time of year when beef was less at hand in the Northern Hemisphere,
which further lifted the potential export market in the United States and European markets. Beef and beef products, including
packaged and processed beef are key components of economy in Argentina. In
early 1900s, neighboring countries tried to impose import duties, taxes, and
kept the price artificially high for beef from Argentina to promote their
domestic beef; this led to meat riots in 1905, in which more than 220 people
were killed.
Quality of Argentinian Beef:
Beef is a key component of traditional Argentine cuisine. Beef quality is dependent on the diet provided to cattle and their
living conditions. The two different farming regimes used for beef production
in Argentina are grass pasture and feedlot-based farming. Grass-fed beef is
believed to be healthier than beef from feedlots, as it contains more omega 3 fatty
acids than grain-fed beef,
and so does not contribute so much to raising cholesterol in humans. Although the latter diet is increasing,
grass-fed beef is still the most popular in Argentina. Grass-fed cattle are
living under more natural conditions, and are less likely to have hormone implants.
Recent
news and decline of beef exports:
Argentina has made a name for itself around
the world with its steaks and this country was called “carnivore heaven.” Argentina has the world's second highest consumption
rate of beef, with yearly consumption at 55 kg per head. In 2006,
livestock farmers kept between 50 and 55 million head of cattle, mostly in the
fertile pastures of the Pampas. It can be said that Argentina produces annually
about two 240-gram steaks per person worldwide and has six steaks more standing
on its pastures.
On 8 March 2006, after
unsuccessfully trying to control the rising prices of beef in the internal
market (26% since the beginning of that year), the Argentine government banned
beef exports for 180 days. On 26 May, the ban was replaced by a quota, to
be in force between June and November, equivalent to 40% of the amount of beef
exported in the same period of 2005. It followed that up by imposing a 15% export tax on fresh
beef – a tax that’s still in force. The export tax choked off exports and
domestic beef prices dropped.
Argentina is currently the
third largest beef producer in the world after United Sates and Brazil. Argentina used to be one of the biggest exporters
of beef and slowly it slipped to 5th place by 2012.
Argentina slipped into 11th place,
behind countries like New Zealand and Mexico, in the global ranking of beef
exporters by end of 2013, prompting solemn reactions like one in a major
newspaper that declared it “the end of a
reign.”
Between 2009 and 2013, annual
consumption fell from 68 kg per person to 55 kg. Beef farmers say production
levels are still falling fast, largely because of the government quotas on beef
exports in place since 2006 to control prices of beef domestically. The type of
cuts the Argentine beef industry exports is not the same type consumed inside
Argentina. Traditionally, cuts such as filet mignon are destined for exports,
while others like skirt tend to be a popular choice within the country. In
recent years, farmers and ranchers started cutting their herds and converted
their pastures to soybean production – which is more profitable than raising
cattle for the artificially depressed beef market.
Fish exports have overtaken
traditional beef exports – which reflect the rapid decline of the
cattle-farming sector in recent years. The latest figures show that during the
first quarter of 2011, Argentina exported more than 145,000 tons of fish and
seafood, double the amount of beef sent abroad during the same period of time.
And while fish exports are on the rise, beef is looking at the wrong side of
the scale.
Steps being taken to promote beef industry:
In order to increase sales in foreign
countries and to improve the production and reliability of beef produced in
Argentina, a public non-governmental organization, the IPCVA (Instituto de Promoción
de la Carne Vacuna Argentina— The Argentine Beef Promotion Institute) was
founded in December 2001. Furthermore, the IPCVA is also concerned with
promotional work in Argentina itself.
The IPCVA is made up of a range of
partners involved in Argentine Beef production and export, from experienced
cattle farmers to managers. This broad expertise in various fields aims to
allow the IPCVA to organize beef production and beef sales professionally. As a
fairly young institution, the IPCVA has had to define an image which allows the
identification of the main product, beef. Three key factors influence this
image: history, tradition, and prestige. All of them are considered to be
unique selling propositions.Several
activities have been undertaken to make Argentine beef better known in the
world. IPCVA presence can be seen at all the major food and drinks events in
North America, Caribbean, Latin America, and Europe. However, with the export
restrictions for beef set by the Argentine government, these measures may be of
little use. Therefore, the IPCVA also focuses on promotion work in Argentina.
Future
opportunities for United States and Other countries:
Argentina’s beef export decline is a
welcome development to American cattlemen. After all, the less beef the Argentinians offer
for the world market, the less competition for our U.S. beef exports. Argentina has two major competitors in its own hemisphere –
Brazil and the United States.
Along with
United Sates and Brazil, India has also thwarted Argentina’s reign on global
beef. India and Brazil are the major
up-and-comers in the cattle meat production industry. Brazil’s production
probably won’t be slowing down anytime soon.
Argentina’s problems also serve as a
warning for just how quickly bad government policies can cripple an industry. Argentina,
a nation that prides itself on having more cattle than people, may soon be
forced to import beef to keep its meat-loving citizens happy at the dinner
table.
(This
blog was written as part of MBA Global Trip news round up effort)
--By
Nishant Sahni
