March 9, 2016

Argentina makes a comeback in world beef market

Argentina is back in the world beef market after a decade of self-limited beef exports.

A report by the USDA Foreign Agricultural Service (FAS) said Argentine beef exports this year are forecast to reach 265,000 tonnes carcass weight equivalent (cwe), the highest since 2011, due to policy changes implemented by the recently elected government to improve the country's export competitiveness. The volume is still much lower than the 762,000 tonnes cwe in 2005 when Argentina was the world's third-largest beef exporter.

The USDA-FAS noted that in December 2015, the newly elected government of President Mauricio Macri began to implement changes in policy affecting the local beef sector which he had promised during the presidential campaign. The 15% export tax on beef was eliminated and the exchange rate was liberalised, with an immediate devaluation of the peso of approximately 45%.

Later in the month the government stopped using the ROE (registry of export operations)

system to control and limit exports. These changes dismantled the policies implemented by the

previous government in 2005-2015, primarily aimed at supplying inexpensive beef to the

Argentine consumer, but which also resulted in lower production and exports.

The report said local operators will have to reestablish contacts with former and new clients. "Given current domestic and world beef prices and the cattle situation in the country, it will take Argentina a few years to export 400,000-500,000 tonnes cwe of beef, a normal volume prior to the market intervention a decade ago", USDA-FAS said.

By 2014, Argentina fell to No. 10 in world ranking as beef exporter, with only 197,000 tonnes cwe. Last year beef exports totalled 186,000 tonnes cwe, lower than earlier projected.