October 23, 2012

Argentina's Jan-Aug 2012 beef exports down 26.5% on-year

The Argentine Beef Chamber of Industry (CICCRA) assessed the country's January-August 2012 exports to have fallen by 26.5% on-year.

The business association that represents Argentina's beef exporters industry on October 19 published data highlighting the decline in the country's global status as an exporter of beef.

This weak export performance is likely to see Argentina slip to 10th place amongst global beef exporter countries. In 2005, Argentina was ranked third in global beef exports. According to CICCRA, the beef export sector generated income of US$681 million from January-August 2012. But the organisation has blamed the poor export performance since 2005 on a range of factors, including falling levels of stock and falling internal consumption of beef, and more recently the "institutional deterioration of SENASA", the national service that monitors and enforces agricultural and food production heath and quality standards.

This, according to CICCRA, is affecting product credibility, both within Argentina and overseas. Argentina has been historically a large-scale and globally recognised beef exporter, but in recent years has significantly boosted exports of soy and other agricultural products, mainly driven by Chinese demand. However, amid falling demand for Argentine beef from buyers in EU countries - a consequence of economic troubles in the EU - prices for Argentine beef are not providing strong incentives for Argentine producers to export.

This is reflected in falls of beef exports to Germany and Italy, down 29% and 48% respectively in 2012, according to SENASA. For this reason, the domestic market will remain key to beef producers in coming months. This puts beef producers at risk of the effects of inflation; although beef retail prices in the Argentine capital, Buenos Aires, remain below that of comparable expensive capital cities such as New York and Sao Paolo, prices have risen in recent years, and the average Argentine consumer eats less beef now that in the past.

While the fall in beef exports is of concern in economic terms; it could also prompt political sensitivities, especially if it means that beef producers are more dependent on the local than on global markets. This is because it is likely to see these producers take a closer interest in the government's domestic policy and on domestic inflation, which could potentially put beef prices out of the range of many Argentines. In a country where daily beef consumption is regarded almost as a fundamental right, such a development could be portrayed as highly symbolic of government's inability to meet its citizens' needs.