You are here
Argentine Cattle Exports Seen as Long-Term Threat to U.S. Producers
BUENOS AIRES, Argentina – In the last several years, cattle prices have seen a significant rebound. On the other hand, the advent of new players, or not so new in the case of Argentina, could have U.S. cattle producers on edge.
For years, extensive reports articulated how export taxes impacted grain farmers in Argentina. However, not many talked about the results of brutal government intervention in the cattle business for the country and global markets.
Since 2009, the government of Argentina imposed periodical bans on beef exports in order to control domestic food prices and 15% export taxes. As a result, the country lost nearly 10 million cattle herds and currently has slightly fewer than 50 million herds in stock, according to officials. In stark contrast, countries like Brazil, India, and Paraguay increased their stocks and exports exponentially in those years.
After Mauricio Macri was inaugurated as president of Argentina, one of his first measures was to eliminate those export taxes and any beef trade limits. The USDA’s Agricultural Animal and Plant Health Inspection Service, after President Barack Obama visited Argentina, said it could allow imports of Argentinian beef after a 14-year ban. A deal was also announced, allowing Brazil to export 60,000 tons to the U.S.
According to Kevin Good, a senior analyst at CattleFax, in Centennial, Colorado, there is not a threat from Argentina to U.S. cattle producers in the short-term. It’s a different story in the long-term, however, as the strength of Argentina’s markets rebuild.
“For the domestic market, there will be just a quota of 20,000 tons. In the international markets, Brazil and Argentina usually sell to different countries. We [in the U.S.] sell more to Korea, Japan, Mexico. But in the long-term, there will be strong competition with Argentina and Brazil for the greater China market, which includes Hong Kong, Taiwan, and others,” analyzed Good in a conversation with Agriculture.com.
Alan Brugler, president of Brugler & Marketing LLC in Omaha, Nebraska, believes that this deal would not hurt U.S. cattle growers. “Mostly it will replace beef imports from Australia, who is also rebuilding their cattle herd. It will be little additional tonnage,” Brugler told Agriculture.com.
Adblick Agro, a company based in the Buenos Aires province of Argentina, is gathering investors for new livestock-related opportunities. Juan Pablo Carrera, business director at Adblick, revealed that the company is working on a $5 million project with 10,000 cattle herds. The company could raise another $7 million with money from a government tax pardon program.
In Carrera’s opinion, new policies in the country will allow a recovery of stocks and an increase from the current 200,000 tons of exports to 1.5 million metric tons in 2025. “The current trend is to retain heifers to recover our stock. But in the midterm perspective, there will be an exponential growth of exports. This is not a threat for major producing countries, but there will be a trend of higher income for agricultural and major cattle producing countries,” summarized Carrera.
Exports to U.S. and Canada are not insignificant for the Argentine rancher, assessed local cattle market expert Victor Tonelli. After 15 years without exports to Canada, South America shipped 26,000 tons of beef to Canada recently. “This is not small at all. The U.S. and Canada represent 22% of the world’s beef imports. It also means a high-value market. Probably, we will see agencies approving our beef entrance in Mexico, Korea, and others countries after the USDA approval. It is not very different from having a U.S. visa. Once you have it, you are able to go everywhere,” said Tonelli at a conference for livestock investors in Buenos Aires.
Tip of the Day
It can be difficult to justify the cost of technology when commodity prices are low. However, experts say it's actually the best time... read more