Argentina beef exports to fall 40% on government limits

 

 

Argentina will limit beef exports to about 350,000 tonnes this year, down nearly 40% from 2009, according to the Agriculture Ministry.

 

The government has been holding up some shipments since December and totally shut them down earlier this month as prices continued to soar. The government regularly blocks exports when prices spike to increase domestic supply.

 

However, the export of a variety of different cuts would be allowed this year if they do not clash with internal needs, the ministry said.

 

The government plans to allow shipments of about 350,000 tonnes of beef under bilateral treaties, as well as Hilton Quota, cooked, some frozen and chilled beef. The Hilton Quota allows Argentina to ship 28,000 tonnes of high-grade beef to the EU each year with sharply lower tariffs.

 

The cost of beef has shot up since the beginning of the year. Argentine consumers are particularly sensitive to how much they pay for their red meat, with per-capita consumption among the highest in the world. Prices have risen about 40% since the start of 2010, according to reports.

 

Despite the interruptions to exports, local prices have surged due to a drought last year and the government's intervention in cattle markets since 2006. This has spurred ranchers to trim herds in favour of alternative, more-profitable pursuits such as soy. The herd trimming resulted in production of 3.54 million tonnes last year, up 10% from the previous record, as farmers cleared pastures for soy.

 

Faced with the rising prices, the government has added a new bureaucratic layer to the process of getting approval for exports, requiring a petition to be approved by Domestic Commerce secretary Guillermo Moreno. From this, companies can begin the normal process of asking the agricultural trade office for an export permit followed by submitting the paperwork to customs, according to an executive at a top exporter.

 

The government has been tightly controlling exports since 2006, blocking them periodically when local prices peak. In response, farmers launched a number of strikes to protest intervention in agricultural markets and high export taxes on grains.

 

Meanwhile, the problems are likely to sharpen through the year as there simply are not enough cattle heading to market to satisfy both local and overseas demand without driving prices even higher.

 

Overseas buyers are also increasingly wary of counting on Argentina as a stable source for beef owing to the periodic export halts.