November 2, 2009

Argentina may face a shortage in beef as early as this month if the government continues to withhold subsidies to feedlots, a farm group official said.

Feedlots are short of cash and feedlot operators are replacing less than 40 percent of the cattle, said Eduardo Ambrosetti, chief economist of the Argentine Rural Society.

Argentina's more than 500 feedlots rely on the ARS200 (US$52.4) per head that the government has failed to pay since September 1 as a steady source of income. The reduced income for cattle farmers follows government policies that made it unprofitable for producers to export beef.

There are warnings from analysts that a cattle shortage would lead Argentina's domestic beef consumption to drop by nearly one-third in the next two years, and the situation may cause Argentina to become a beef importer instead of exporter.

Argentineans eat on average about 70 kilogrammes of beef each every year. Argentina's herd has declined over the past year as the worst drought in a century harmed pastures.