The Argentine government lost the battle in May to reduce the price of beef, the country’s star food. Despite export restrictions imposed for 30 days, its price increased 4.4% month-on-month in the Buenos Aires metropolitan area, more than one percentage point above headline inflation. The answer has been to extend the measure: the cuts of meat that Argentines consume the most – considered of average quality and which were already the least exported – will not be able to be sold abroad until the end of the year unless their price is lowered. For the rest, the current ban is lifted but a 50% quota will apply, that is, half of what it was last year may be used for the foreign market. Producers have already announced mobilizations against a measure that, they warn, will damage the sector and reduce the income of foreign exchange.
“The increase in meat prices in the international market, evidenced in recent months, implies pressure on prices in the domestic market due to its status as a tradable good,” says one of the recitals of the decree published this Tuesday in the Official Gazette. The measure is in force until December 31, but it can be extended until the end of the year if the objective of reducing the domestic market price is not met.
Beef has become more than 70% more expensive in the last year, compared to 48.8% for the CPI. Due to its price and the change in eating habits, consumption fell in 2020 below 50 kilos per capita, the lowest in the last century in this South American country, but still ten times higher than in Spain (4.8 kilos per capita). person).
Argentine President Alberto Fernández met with representatives of rural associations over the weekend to advance the measure and raised his concern about speculative maneuvers by some exporters that take advantage of increased demand from China to inflate domestic prices. “Let’s fight those 40 rogue exporters, but let’s not close the foreign market because in the end we are the ones who pay for the broken dishes,” criticized the president of the Argentine Rural Society, Nicolás Pino. In response, some producers have called for a protest for July 9, the day Argentina celebrates its independence from Spain.
Meat exports account for about 10% of Argentina’s foreign sales. In 2020, 3,126 million dollars entered from foreign trade in meat, compared to 14,000 million dollars obtained from soybeans, the most exported product. Producers warn that the export stocks is another shot to the foot in a country that is in debt and badly in need of foreign exchange.
In addition, they point out that what is sold abroad is different from what is consumed in Argentina. China, the main customer for Argentine meat, mostly buys very low-quality parts, destined for industrial processing. Europe keeps the most refined and expensive pieces. The most popular cuts in Argentina, such as roast and vacuum, are of intermediate quality.
The export restrictions will be accompanied by a livestock plan aimed at increasing production, in decline. In 1977, the ratio of head of cattle per inhabitant was 2.3 and in 2020 this ratio decreased to 1.2. In 2020 there were 54.5 million head registered, compared to 61 million in 2005.
Through tax exemptions, credit lines and training, the Fernández Executive hopes to reverse the trend and increase the supply so that annual production goes from the current three million tons to five. Details of the livestock plan will be announced in the coming weeks.
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