March 15, 2010

Argentina beef production drops sharply in January

 

Argentina's beef production fell sharply in January, as the effects of several years of ranchers trimming herds hit supply, the beef chamber Ciccra said in a report Friday (March 12).

Argentina, one of the world's leading exporters, produced 238,000 tonnes of beef in January, down 16% on the year, Ciccra said.

With local prices surging late last year and during the first two months of 2010, the government has been stalling export permits. The government tightly controls beef exports, regularly limiting exports to boost local supply when domestic prices rise.

January's beef exports totalled 25,680 tonnes, down from 29,730 tonnes in December and 39,592 tonnes in November, according to the animal health and sanitation service, or Senasa.

But local prices have continued to soar, spurring Argentine diners to give up their beloved steaks and turn to other meats. In January, per-capita consumption plunged almost 20% on the year to 59 kilogrammes (130 pounds) per person per year, Ciccra said.

Tight beef supplies are expected to continue through 2010 and 2011 while ranchers hold back stock to increase their herd sizes, according to Ciccra.

The expected drop in production follows near-record output last year as ranchers thinned herds due to drought and government intervention in beef markets.

Beef production last year totalled 3.54 million tonnes, more than 10% higher than the previous records set in 1978 and 2007, according to Ciccra.

According to the USDA, Argentina's beef production is seen falling 13% to 2.8 million tonnes in 2010. The country is expected to begin the year with a herd of 50.2 million, down 10% from just two years ago.

Meanwhile, despite government assurances to the contrary, Ciccra argued that the slow pace of doling out the lucrative Hilton Quota of low-tax beef shipments to Europe will cause exporters to fall short of filling that quota this year.

The Hilton Quota currently allows Argentina to ship 28,000 tonnes of high-grade beef to the EU each year with sharply lower tariffs, although last week Argentine President Cristina Fernandez said that the EU had agreed to increase the quota by 1,000 tonnes per year. The quota is for the 12 months between July 1 and June 30.

So far, just 40% of the Hilton Quota has been distributed and the country is likely to fall at least 10,000 tonnes short of filling the quota this year, Ciccra said.

However, the government has said it will distribute the remaining 60% of the quota this month.