July 8, 2004

 

 

Argentine Beef Industry Regains Positive Outlook

 

Nearly four years have passed since Argentina's last major outbreak of the highly contagious foot-and-mouth disease, made worse by the government's failure to report it promptly as international rules demand.

 

The grass-fed beef from the pampas was banned from foreign markets in early 2001 and many meatpackers went bankrupt. The Argentine economy's collapse in 2002 made things even more difficult.

 

With the cattle disease now under control, markets are reopening and exports are up 50 percent by volume so far this year.

 

"We made mistakes. We were not in a position to stop vaccinating. But today we are fighting to get where we deserve to be," Fernando Saenz Valiente, one of Argentina's top cattle brokers, said.

 

Investment is coming back and some traditional meatpacking plants have new owners, like U.S.-based agribusiness group Cargill in its first incursion into Argentine beef.

 

One of the main draws is the low cost of raising and processing cattle after the sharp devaluation of the peso during the crisis in 2002. The peso now trades at around 3 per dollar after 10 years of a one-to-one peg.

 

"For the first time in many years, we have possibilities abroad and our international sales potential is unparalleled," said Carlos Oliva Funes, president and majority owner of Swift, Argentina's top beef exporter.

 

CRACKING THE U.S. MARKET

 

Argentina's beef barons admire neighboring Brazil, which once exported the same amount as Argentina of around 400,000 tonnes per year. Now, in 2004, Brazil is poised to overtake Australia as the world No. 1 beef exporter with 1.4 million tonnes.

 

Argentina, the top exporter a century ago thanks to British investment, has slipped to No. 8 in the rankings with just 6 percent of the world beef trade. Exports represent a mere 16 percent of Argentine production of 2.5 million tonnes.

 

The locals do their part in sustaining the beef industry with per capita consumption of 130 lbs (60 kilos) per year -- double the amount of the United States.

 

"Argentine beef is recognized the world over and our quality is better than Brazil's, thanks to our types of herds and pastures," said Oliva Funes. "It's just a question of getting out there and working."

 

The government of President Nestor Kirchner believes Argentina can reach exports of 1 million tonnes in four years.

 

At the top of the government's agenda is rebuilding credibility on health to gain access to the recalcitrant U.S. and Japanese markets, which still ban fresh Argentine beef. The European Union imports 50 percent of Argentine beef, 65 percent of which is high-quality fresh cuts.

 

Agriculture Secretary Miguel Campos says a group of U.S., Mexican and Canadian representatives will visit Argentina in September and he hopes to see those markets opened by mid-2005.

 

NO MAD COW ON THE PAMPAS

 

Isolated cases of mad cow disease in Canada and the United States in the last year might weaken any remaining resistance to Argentine beef. Mad cow disease can affect the health of humans, while foot-and-mouth disease is limited to cloven-hoofed animals.

 

"This double standard has to end," Campos said. "Our beef is limited because of foot-and-mouth. But imagine how much more serious the mad cow situation is."

 

Argentina hopes to be declared free of foot-and-mouth with vaccination this year and is already considered free of mad cow disease, having banned feed with animal parts years ago.

 

Everyone in these parts agrees that one of the best selling points of Argentine beef is the healthy way cattle are raised, usually just on the natural grasses of the pampas.

 

But finding sufficient grazing land may be a problem as Argentina's stellar farm crop -- soy -- spreads across the fertile pampas. The area planted with soy has grown 250 percent in the last decade.

 

To compete, Argentina's cattle prices have to rise, experts say, and for that to happen exports have to take off.

 

"We need access to the United States, Canada and Mexico and the next to Japan and Korea," said Oliva Funes. "When we make it to Japan and we have good cattle prices, then we will see the real boom."