March 5, 2010

EU raises Argentina beef Hilton Quota by 1,000 tonnes

The EU has agreed to increase Argentina's Hilton Quota of low-tax beef shipments to Europe by 1,000 tonnes, Argentina President Cristina Fernandez said Thursday (Mar 4).

The Hilton Quota currently allows Argentina to ship 28,000 tonnes of high-grade beef to the EU each year with sharply lower tariffs. The quota is for the 12 months between July 1 and June 30.

Earlier this week, Argentina assigned a further 10% of the lucrative Hilton Quota to local slaughterhouses, bringing the total amount of the 2009-10 quota already doled out to 40%.

The 2,800 tonnes of export permits distributed were a "special authorisation," and the remaining 60% of the quota will be distributed through a public auction in mid-March, the agricultural trade office Oncca said in a press release Tuesday (Mar 2).

But the beef chamber, known as Ciccra, has complained that the slow pace of distributing the Hilton Quota makes it unlikely that exporters will be able to ship the full 28,000 tonnes this year.

The government tightly controls beef exports, regularly limiting exports to boost local supply when domestic prices rise. With local prices surging late last year and during the first two months of 2010, the government has been stalling export permits. While Hilton Quota shipments have been unaffected, the export of cheaper, domestically popular cuts has been curtailed, according to exporters.

January's beef exports totalled 25,680 tonnes, down from 29,730 tonnes in December and 39,592 tonnes in November, according to the animal health and sanitation service, or Senasa.

Argentine beef production is expected to slump in 2010, auguring a year of higher prices for local consumers and decreased exports, according to Ciccra. The expected drop in production follows near-record output last year as ranchers thinned herds due to drought and government intervention in beef markets.

Beef production last year totalled 3.54 million tonnes, more than 10% higher than the previous records set in 1978 and 2007, according to Ciccra. The effects of that reduction in breeding stock in past years are just being felt now as cattle have a production cycle of about two years. Likewise, it will take as much time to restore herd sizes.

According to the USDA, Argentina's beef production is seen falling 13% to 2.8 million tonnes in 2010. The country is expected to begin the year with a herd of 50.2 million, down 10% from just two years ago.