October 21, 2010

 

Argentine beef consumption to hit 50-year low

 

 

Argentine beef consumption will next year fall, per head, to its lowest for at least half a century, while demand for chicken and pork rises "significantly".

 

Argentines, whose country was largely built on beef, are being forced to switch to other meats, as a drive by farmers to rebuild drought-savaged herds sends prices soaring.

 

The switch away from the meat which made Argentina a world power a century ago, after railways and refrigeration cars opened up pampas cattle ranches to the world, reflects stock rebuilding by farmers who were forced by drought in 2008 and 2009 to liquidate herds.

 

Meat packers, who last year were presented with a surplus of beef as slaughter rates hit their highest in at least 50 years, are now having to pay US$1.65 per live kilogramme for fed cattle, the highest in at least two decades.

 

"Smaller beef output will reflect both the domestic market and export surpluses," a report from USDA staff in Buenos Aires said, adding that per capita consumption is expected to drop to 56 kilos, the lowest of the past 50 years, reducing its proportion of total meat consumption nearly to one-half.

 

The consequent rise in beef prices, up by about 60% this year, will limit exports to all but the more exclusive cuts, for which top-end foreign buyers will be willing to pay up, and limit shipments to 300,000 tonnes, less than half their levels of last year when shippers were awash with supplies.

 

"Beef exporters have reduced their operations by either shutting plants or reducing drastically the number of cattle slaughtered," the report said.

 

Cattle producers, meanwhile, are "enjoying high prices and increased profitability," after marked turnaround from losses sustained in 2008 and 2009, when they were forced to sell down their herds in a buyers' market.

 

Calf prices have soared 130% in more than a year, taking average prices for a male calf of a British breed to US$2.00-2.50 a live kilo.

 

Indeed, the higher price of animals has prevented feedlots from enjoying the full fruits of the jump in beef prices, with the sector also losing a government subsidy of US$60-65 per animal introduced last year during the depths of the crisis.

 

Cattle ranchers, meanwhile, face the hurdle of "strong competition" for good land with arable farmers, enriched by soaring crop prices.