May 21, 2007

Argentina's government, beef farmers reach agreement on beef prices

After three months of negotiations, Argentina's government and beef representatives have agreed to have a fixed price in beef carcases as well as higher average prices in the wholesale market in the Liniers (the main live cattle market in Argentina).

The two parties have also agreed to enforce and maintain fixed retail prices for 12 most popular cuts to constrain domestic beef prices and the ongoing inflation rate.

The government has also committed to boost transparency in cattle prices, allowing an annual minimum of 500,000 tonnes to be exported, ease export certificate issuance procedures, and pour funds up to US$70.22 million on a National Cattle Plan which aims to increase calf production.

Restricted cattle prices in Liniers started in November 2006 which slashed down the number of cattle being traded while increasing trade and prices in other unregulated markets-the butcheries' main source of supply as seventy percent of retail beef is sold in Argentina.

The agreement expects to have supply and prices of cattle in Liniers market increased.

However, it remains to be seen whether the agreement will reduce retail beef prices as butcheries and supermarkets have not been included. Prices for popular cuts have been capped since 2006, but retailers have exceeded maximum levels due to scarce supplies.