February 27, 2007

 

Argentina to subsidise corn feed for cattle feedlots and piggeries

 

 

Argentina's federal government will subsidise corn feed for cattle feedlots and piggeries in a bid to keep domestic prices of beef and pork products stable in the face of rising international corn prices, Economy Minister Felisa Miceli said Friday (Feb 23).

 

The government will provide the subsidies to piggeries and feedlots that use corn to fatten animals, Miceli said at a press conference flanked by Agriculture Secretary Javier de Urquiza.

 

The government has said it is creating a system of subsidies for farmers financed by export taxes on beef, soybeans and soy products. The move is an effort to calm complaints by the sector that has spurred strikes since last year because of the government's intervention in the sector keep down domestic prices of food, a key element of the consumer price inflation index.

 

The government is trying to keep inflation at less than 10 percent this year, in line with 2006. According to some economists, inflation could reach 12-15 percent this year.

 

Miceli also said a minimum slaughter weight of 240 kilogrammes for some livestock will be extended until Dec 31, another move to keep a lid on domestic beef prices.

 

The government is struggling to keep down domestic beef prices--a hot political issue in the run-up to October presidential election of this year.

 

Meat prices were up 1.4 percent in January compared to a month earlier, according to the national statistics office, Indec. During 2006, prices climbed over 5 percent.

 

The average Argentine eats about 66 kg of beef, the highest rate of consumption in the world. In March, President Nestor Kirchner banned all beef exports to prevent soaring domestic and international demand from pushing beef prices up. The restrictions were progressively eased and now exports are limited to about 70 percent of 2005 levels. In addition, the government has been circulating a list of reference prices for certain cuts, which vendors at the nation's principal slaughterhouse, Liniers, are "recommended" to honour.

 

However, volumes at Liniers have plunged, as farmers turn to smaller regional markets or are withholding stocks due to the price controls.

 

In January, just 85,698 cattle were processed at Liniers, compared with 151,579 during the same period last year, according to the Agriculture Secretariat, which said a drought and lower prices expected by farmers was behind this.

 

In 2006, beef exports fell 21.6 percent to 467,097 tonnes from the 596,014 tonnes shipped in 2005, according to the animal and food-inspection agency, Senasa.

 

The export and price limits have caused production and investment to plunge, with beef producers cutting investment in infrastructure, pastures, genetics, fertilisers and other inputs in response to the government measures, according to the Argentine Rural Society, or SRA.

 

Production also fell to 3.13 million tonnes, down 3 percent compared to 2005, according to SRA.