September 16, 2008


Soaring world food prices may spell the end of Argentina's premium beef


Argentine grass-fed beef, whose and texture and taste are believed to be superior to corn-feed beef, may soon become a rarity in the country as more farmers are turning to feedlots to fatten their cattle. 


About 30 percent of Argentine cattle now finish their lives in feedlots as compared to none at all 10 or 15 years ago, according to the Argentine Feedlot Chamber.


Beef farmers are saying that ranching in Argentina is going the way of the US, morphing from an artisan craft to an industrial system.


While fat-marbled, corn-fed beef is considered premium in the US, producers of grass-fed beef says the meat cultivated on the pampas has a richer flavor.


Feedlot cattle are now 2.5 to 3 times more profitable than those raised on pasture when combined with crop production.


Feedlot beef tend to be fattier than grass-fed meat. But some farmers say it is possible to circumvent this by feeding cattle corn husks.


Other major beef exporters such as Brazil and Australia are joining the trend, which is also fuelled by rising beef consumption worldwide as middle-class incomes and tastes take hold in developing countries. Corn-fed cows in lots where they can't roam fatten quicker. In the last 10 years, Australia has seen about a 50 percent hike in the number of cattle on feed instead of grass, while Brazil has seen a threefold increase.


The country's best steaks are sent to Europe under the EU's Hilton Quota, which regulates the import of top-quality beef from a number of places. Argentine steaks fetch the highest prices under the quota and make up the majority of beef imports.


However, more of Argentina's farmers are switching to crops in the face of increased profitability from high grain prices.


Argentina's switch to crops started about a decade ago with the introduction of new technology, such as GM crops and no-till farming. The trend accelerated as international prices for grain and other commodities began to rise in 2002 and have soared in the last two years.


When the Argentine government implemented price controls and export bans to keep domestic beef prices low, even more ranchers switched to farming. The government began subsidizing feedlots to ensure a steady supply of beef to Argentines, who lead the world in beef consumption.


American agribusiness sees opportunities in Argentina's switch from ranching to farming. Last year, Tyson Foods said it planned to expand feedlot capacity in central Argentina, investing in a 25,000-head lot jointly run by Cresud, an Argentine agribusiness, and Cactus Feeders, a Texas-based operator.

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