May 22, 2009

Argentina's cattle breeders are expecting intense disinvesting this year, as several problems are piled onto the industry.

The severe drought has affected the central-east region of South America since last year, and the problems intensified with the current financial difficulties.

The lack of forage and rising financial pressures have forced many breeders to market their cattle earlier, creating restocker oversupply (animals under 150kg), with prices falling about 20 percent in May.

There is also a lack of support from the government, which has set up a series of restrictions since 2005 to encourage the production of light steers for the domestic market through payments to feedlots, measures which aim to increase local beef supply in the short term.

Due to negative prospects and low profitable, many breeders aim to leave the industry but most of them are located on land that is unsuitable for other agricultural enterprises.