Monday, December 21, 2009

Argentinean beef growers offered a better cut for Christmas

‘Tis the season for Argentinean beef farmers as they look forward to higher prices in the New Year – it’s about time! Beef markets rose 13% ahead of the holidays, when consumption peaks in the world’s largest red-meat-eating country, an Argentinean farm group said.

The prices are boosted due to cattle shortages and drought. Over the last four years cattle breeders have been cutting production in response to the Government export restrictions in an attempt to regulate prices. The decline in herd numbers in South America was only exacerbated this year by the worst drought in a century. The forecast reduction in cattle herds and therefore exports in 2010 could mean some extra business for Australia.

Around 5%, or 45,000 tonnes, of Australian beef exports is in direct competition with that of Argentina in the frozen manufacturing products category. In 2010 Argentinean exports are expected to back off sharply and Brazil is also not likely to produce much to counterbalance the effect. This will have a price influence into places like Russia to which we are competitive.

In a conversation with Bloomberg Arturo Llavallol, a board member of the Argentine Beef Promotion Institute said, “Next year, there will be 4 million fewer head of cattle than this year, which means 30% less cattle going into the slaughter house.” Since August this year there have been talks that the ‘proud country of the pampas’ may become a net importer of beef in 2010 in order to meet domestic demand. This would be downright embarrassing for the country which was once the world’s largest beef exporter.

However, we have our doubts whether these imports would actually occur. Argentina is still a strong exporter of 206,000 tonnes, according to Meat & Livestock Australia, and there are more cattle roaming the country than there are people. Typically with the Argentinean Government, when things are ‘dire’ enough they make the necessary changes to their restriction/subsidies.

The whole quagmire in which the industry is presently in has been blamed on the increasingly unpopular presidency of Christina Kirchner and her husband and predecessor Nestor Kirchner, who have their hands filthy of trade distorting restrictions. With ProFarmer visiting Argentina back in August it was obvious that Argentineans know no depths of pessimism about their economic woes and distrust of their leaders and this seems like a new low.

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