May 10, 2007

 

Argentina's beef producers, government reach price accord

 

 

Argentine farm groups and the government are expected to sign an agreement Wednesday (May 9) regulating domestic beef prices, according to local press reports.

 

The agreement would set a price band for domestic wholesale and retail prices, according to the reports.

 

However, one of the four leading farm groups, Carbap, rejected the expected agreement. The group represents ranchers in the Buenos Aires and La Pampa provinces who have been on strike for nine days. The strike is planned to last six more days and has caused the number of cattle entering the principal beef market, Liniers, to plunge.

 

"Carbap repeats one more time that it is against any price accord and/or mechanisms that interfere with the free functioning of supply and demand," Carbap said in a release Tuesday.

 

Beef consumption in Argentina is the highest in the world, with per-capita consumption around 65 kilogrammes per year. Beef prices make up 7 percent of the nation's consumer price index.

 

Increased prices pose a major challenge to the government of President Nestor Kirchner ahead of presidential elections due in October.

 

In its effort to control prices, the government has intervened heavily in the beef export market, with exports currently limited to about 70 percent of year-earlier levels. Despite this, local prices have continued to surge due to increasing international and domestic demand amid tight supply.

 

In addition, the government has been circulating a list of reference prices for certain cuts, which the government expects vendors at the nation's principal slaughterhouse to honour.

 

Farmers are also upset by export limits imposed on wheat and corn, increased export taxes on soybeans and a subsidy programme for producers that farmers complain is complicated and slow to make payments.