Business & Economy

Argentine beef sector wary of export ban repercussions

By Natalia Kidd

Buenos Aires, May 24 (EFE).- Argentine beef producers are expressing alarm about the government’s bid to lower domestic prices through a ban on exports, warning of a repeat of the scenario that played out in 2006.

The measure, which went into effect on Thursday for a period of one month, has been widely denounced by exporters, processing plants and unions in that sector, which employs 400,000 people and generates export revenue totaling roughly $3 billion annually.

Opposition also has come from governments in some beef-producing provinces and from ranchers, who have protested the measure by refraining from sending live cattle to Buenos Aires’ Liniers livestock market, Argentina’s largest, until Friday.

That South American country is one of the world’s largest beef consumers per inhabitant (45 kilos annually), and the government says the measure is aimed at bringing down prices for domestic consumers.

Beef prices skyrocketed by 66.1 percent in April compared to the same month of 2020, well above the 46.3 percent spike in overall consumer prices.

But the beef sector says an export ban will not help contain inflation and will have multiple adverse economic effects on the country, which has been in recession for the past three years.

It also urged the government to learn from “past mistakes,” referring to interventions in the beef supply chain between 2005 and 2010, including a months-long beef export ban in 2006.

“It was a disaster. We lost 10 million head of cattle. We went from a 10 percent global market share to less than 2 percent. And three years (after that earlier ban was instituted) beef ended up costing three times more in real terms,” livestock consultant Victor Tonelli told Efe.

What’s worse, according to the expert, is that the government is well aware of the impact because current President Alberto Fernandez served as Cabinet chief from 2003 to 2008.

According to a report by the Mediterranean Foundation’s Institute for the Study of the Argentine and Latin American Reality, the 2006 beef export ban caused export losses totaling $1.5 billion annually, production declines and an estimated $4.9 billion reduction in the value of the nation’s cattle stock.

The sector also says that measure led to the loss of 19,000 jobs.

Argentina is the world’s fifth-largest beef producer and fourth-largest beef exporter.

Roughly 30 percent of the sector’s production is shipped abroad, with export revenue coming in at around $2.72 billion in 2020. Chinese importers account for about 75 percent of that foreign demand.

Global beef prices rose by around 10 percent after Argentina announced its latest export ban, Tonelli said, adding that the South American country will lose out on export revenue totaling around $250 million per month.

Although the ban excludes some shipments associated with export quotas (including the European Union’s Hilton quota for high-quality beef) and preferential tariff arrangements, many companies will be forced into non-compliance with their export contracts.

“Companies that don’t fulfill their contract obligations clearly are going to incur penalties. And worst of all Argentina loses seriousness and credibility as a supplier,” livestock consultant Fernando Canosa said. EFE


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