Argentine beef trade decimated by policy shifts

May 21, 2013 at 6:10 PM
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BUENOS AIRES, May 21 (UPI) -- To the joy of neighboring rivals, Argentina's beef exports are dwindling and traders blame government policies.

At the same time as Argentine beef exports plummet, neighboring Brazil, Paraguay and Uruguay are raising their market share, indicating a recovery in Argentina's beef exports will be an uphill task for both government and traders.

Argentine beef exports fell from 771,000 tons in 2005 to 183,000 tons in 2012 even as beef production rose in the country. Higher domestic consumption explains only part of the problem; restrictive government policies and high taxation are seen behind the rest of issues bedeviling Argentina's beef industry.

Added to the country's runaway inflation are frequent government crackdowns on traders responding to inflationary pressures and a maze of regulation that has frightened many traders away from the livestock industry, shut abattoirs and cost jobs, new data indicated.

Argentina dropped from world leader to third position in 2005 and now ranks the 11th, the data showed. In Latin America's Mercosur trade region, Brazil led the group with 1.3 million tons of exports. It was followed by Uruguay and Paraguay and the three were trailed by Argentina.

Agriculture and livestock industry blamed the government of President Cristina Fernandez de Kirchner for restrictive or interventionist policies at a time of rising global meat consumption and production.

Government pricing curbs and taxation have put many Argentine meat production companies out of business. Beef traders often lose money, making little profit, when forced to sell their produce locally.

The traders also lose out on peso-to-U.S. dollar parities applied by the government. Argentina has a vast "informal" currency market where the dollar rates higher than official parities enforced by the government. As a result, traders find foreign currency earnings slashed by unrealistic exchange rates.

Argentine Rural Society officials said the government needs to act fast to reverse the loss of Argentina's trade position to neighbors Paraguay and Uruguay.

Argentina also failed to fulfill its EU meat export quotas last year, Meat Trade Daily said on its website.

Argentina is the largest EU beef quota holder with 29,375 tons, 44 percent of the total allocated EU quota to eligible nations. In the 2011-12 period, Argentina shipped only 64 percent of its allocation, or 18,800 tons, the data indicated.

Beef industry traders blame government intervention and herd liquidation caused by those interventionist policies.

Argentine government policy continues to limit export opportunities, a situation made worse by the over-valued local currency and high cattle prices, Eblex, the English beef and sheep industry organization said on its website.

Industry experts predict rising Indian beef exports will threaten other Latin American exporters, too.

Indian beef exports in 2012 accounted for nearly a quarter of the world beef trade, compared to just 8 percent in 2009, U.S. Department of Agriculture data indicated.

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