Argentina registered a record low in domestic beef consumption in 2020, with a decline of 2.3% to an average 49.7 kg per person: the lowest level for 100 years according to the Argentinean Chamber of Industry and Meat and Derivatives Trade (CICCRA).
An Argentinian meat entrepreneur explained the local context, “There are several causes. Firstly, the economic situation is challenging, and the prices of the most popular cuts have increased a lot, on average 75%. Secondly, consumer habits are changing with people moving towards chicken, fish and pork. Finally, the government has taken a series of foreign trade measures which has reduced supply and increased prices.”
CICCRA argues that these consumer changes coupled with a lower purchasing power due to falling income levels in Argentina will result in further meat consumption decreases in the near future. Thus, future growth opportunities for Argentinean beef producers lie in increasing its export levels. In this context, beef exports from Argentina reached a record level of 45,000 tonnes in February 2021, a 31.1% increase compared to February 2020.
To restore some normality to the market an Argentinian economist had several recommendations, “The situation is complicated but it can be rebuilt. You have to encourage production and not be afraid of export as it hardly affects domestic consumption. When exports fall, incentives fall, labour falls, supply falls and it was obvious that would result in higher prices. Add to this the phenomenal increase in money supply from last year and the problem got even worse.”
“The situation is complicated but it can be rebuilt. You have to encourage production and not be afraid of export as it hardly affects domestic consumption.”
A senior figure of the Food and Beverage Chamber of Argentina had a similar view, “Price controls, registries, controls, restrictions on exports will just reduce the number of producers, reduce investment and reduce employment. Argentina should not be scared of exporting, on a dollar basis our neighbours pay more for food, this should mean more foreign exchange, more job creation and more resource for the country.”
China is the main destination for Argentinean beef products, accounting for 75% of the country’s total exports. But Argentina needs to expand its export market as, according to CICCRA, China demands a very specific product which has little acceptance in other countries. Furthermore, Beijing’s power allows the country to have the upper hand in negotiations which have progressively lowered the prices paid to Argentinean producers who are currently exploring new export opportunities in South East Asia.
“Argentina is as it is, to a large extent, because it has closed itself to the world. The country needs to export more.”
The Argentinian meat entrepreneur agreed, “China is fundamental to Argentina and a significant portion of meat export goes to China but it does not compete with or affect domestic consumption. In general, the cuts that go to China are not the most consumed locally, the two can co-exist.”
Let’s be clear, Argentina’s problems did not start with the current government but certainly it has done little to solve them. The Argentinian economist summarises, “Argentina is as it is, to a large extent, because it has closed itself to the world. The country needs to export more.”