May 8, 2010

Argentine meatpackers negotiate beef exports

The Argentine Secretary for Domestic Trade announced an agreement this week with a group of meatpackers to allow 25,000 tonnes cwt of beef exports each month.

According to the deal, processors consented to sell 13 highly demanded cuts on the domestic market, at low prices set by the Secretary. Other export companies may join this arrangement, as long as they sell the products at the suggested prices.

The agreed export volume is around half the average monthly beef exports last year. Low supplies and high beef prices continue to be a major contributor to Argentina's high consumer price inflation.

In an effort to increase domestic beef supply, the Secretary also announced the imposition of a "domestic beef quota" which meatpackers will need to fill in order to be granted approval for export certificates, according to Infocampo.

These latest arrangements and discussions between the Secretary and the industry have not been formalised into government regulations and, in the past, these pacts have rarely been fulfilled. In addition, procedures to bring effect to the current and previous agreements remain unclear and bureaucratic.

Since December, Argentine cattle and beef prices have soared, as supplies slumped due to the liquidation experienced since 2006, exacerbated by a severe drought in 2008-09. As a result, the government nearly halted export certificate approvals, aiming to increase supplies on the domestic market.

These severe restrictions on Argentine exports have been one of the contributing factors in the lift in demand for Australian beef in Russia over the past month, and in the strong lift in global manufacturing beef prices.