November 10, 2009

Argentina made the first subsidy payments to cattle feedlots in almost two months Monday (November 9), bringing relief to the sector which complained that many operations would have to shut down soon if the payments continued to lag.

 

The agricultural trade office, ONCCA, froze payments after a scandal broke in September. The ONCCA head was forced out after it emerged that about 1 million pesos was paid out to a nonexistent feedlot.

 

On Monday, ONCCA approved a ARS741,000 (US$193,979) payment to local feedlots, in addition to ARS15,623,747 for poultry producers and ARS124,000 to dairies which raise steers for beef production.

 

Over the past two months, many feedlots cut back operations in the face of tight financing and the slow payments.

 

The government is about eight months behind in making payments and owes feedlot operators about ARS1.1 billion, the president of the Argentine Feedlot Chamber, Juan Carlos Eiras said last month. A delay of several months is customary, but the total suspension of payments tested the companies' finances.

 

Argentina subsidizes domestic users of grain to compensate for feed prices they pay over a fixed reference price.

 

The subsidies for feedlots work out to about ARS80 per month per head, or ARS240 over the three months most cattle spend in a feedlot.

 

Without the subsidy, the operations would lose about ARS150 an animal, but the government payouts lead to a gain of ARS90, feedlot owner Jose Luis Trivino said last month.

 

The number of feedlots in Argentina has skyrocketed over the past year due to the subsidies.

 

Between five million and six million cattle are now passing through feedlots each year, almost half of the estimated 14 million animals slaughtered, said the Feedlot Chamber's Eiras.

 

US$1 = ARS3.81 (Nov 10)