Beef Industry in Argentina

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.

Source: nbcnews.com

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 5^th 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.

Source: FAOSTAT, Nautilytics

 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.

Source: FAOSTAT, Nautilytics

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