April 3, 2007

 

Argentina beef producers blast new beef policy
 

 

The Liniers Market in Buenos Aires, Argentina has been an institution for Argentina's renowned beef industry in its more than 100 years of existence.

 

The market has been the centre of country's cattle trading as buyers and sellers are daily negotiates with live or processed cattle products.

 

Now cattle pens in the famous market are empty and sales have decreased by half as the government tries to control beef prices in its attempt to hold down inflation.

 

The rising inflation have also resulted to measures which have beef producers deem disadvantageous to the industry such as prohibiting beef exports and restricting prices for cattle at Liniers.

 

Cutting beef exports, authorities believed, would increase domestic supply, while controlling prices at Liniers would have a nationwide effect. Beef sales amount to 4.5 percent of the country's inflation index.

 

With this situation, cattle producers stopped selling their stock or switched to other, more profitable crops such as soybeans.

 

Consumer beef prices, which initially fell about 10 percent after the export ban took effect last March, have been surging since October. Prices surpassed their pre-ban levels in February and have continued to rise, though they're still well below US prices. A pound of the most popular cuts costs about US$1.40 per pound.

 

According to Luis Alberto Caro, an attorney representing three Argentine slaughterhouses that are exporting less than half of what they did before the ban, the government's actions on the sector is a "wrong" as in a free market system "these policies don't work, especially over a long period as producers aren't going to willingly lose money but find a way around the controls".

 

But what has triggered the action was the government officials' accusation on beef producers rigging domestic to match the higher rates they could get by exporting.

 

Cabinet chief Alberto Fernandez said they want export prices also similar to the local market which affects consumers.

 

Despite the complains, President Nestor Kirchner has continued setting price controls on everything from natural gas to clothing in a bid to keep inflation in check, a strategy with a long historical precedent here.

 

The government has already banned exports of wheat, wheat flour and corn.

 

Many believe the president will keep the controls in place at least until after October's presidential elections, in which he or his wife, Senator Cristina Fernandez de Kirchner, is expected to run.