Monday, July 6, 2020
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ECONOMY | 20-06-2020 11:01

Beef industry surmounts coronavirus-led disruption of trade

Exports overall dropped in the first third of 2020, but overseas beef sales rose more than 10% in the same period, when compared to the previous year.

The coronavirus pandemic has altered international trade, undoubtedly hitting Argentine exports. However, Argentina’s most emblematic product, its famous beef, has straddled most of the difficulties – it continues to be the favourite of the markets.

"Argentina has the advantage of not needing to promote our beef too much. It’s like the French with champagne. You say France and people say champagne, you say Argentina and people say beef and Maradona," Miguel Schiariti, president of the sector’s chamber of commerce, said in an interview.

"It’s one of the elements which identifies us. When you talk about beef and gauchos, you’re talking about the origins of Argentina," he added.

Argentine exports in the first third of 2020 totalled US$17.54 billion, implying a fall of 10.1 percent as against the same period last year, according to the INDEC national statistics bureau. But overseas beef sales totalled US$1.048 billion – 10.8 percent more than the first third of 2019. And that’s despite China, the destination for around 75 percent of these exports, closing its doors for several weeks due to the pandemic, while the European Union, paralysed by its quarantines, halted purchases.

In that context, prices fell: from US$8,000 per ton to US$4,000 in China and from around US$10,000 per ton to US$7,500 in Europe, according to Schiariti.

"Ours is an optimistic horizon in the face of the crisis. This year’s profits will doubtless be lower. But given the magnitude of the crisis, the meat-packing industry is not suffering like other sectors of production and commerce," he highlighted.

The situation of cattle-breeders selling locally is more difficult. Raúl Victores, of San Pedro (in the delta area of Buenos Aires Province), complains about the low prices and the distortions caused by currency controls.

"A kilo of veal on the hoof, which we sell here for a dollar, goes for twice that in Uruguay and with half the taxation,” he gives as an example.

"New competitors have arisen like Paraguay and Brazil, which have improved a lot. We think we’re the only ones who produce meat but we’re not."

 

New opportunities

Though the pandemic closed down options in China and Europe, opportunity knocks in the United States. Argentina returned to that market in 2018 after 17 years out in the cold.

"In the US market the pandemic favours us cyclically. Due to the problems of coronavirus, some big meat plants have had to close down, creating shortages and increasing purchases from Argentina," explains Schiariti.

Last year Argentina exported 1,750 tons of beef to the US and in the first four months of 2020 already totals 3,600 tons, according to the sector’s data.

A premium market for Argentina is Israel, to which it exports kosher meat at very good prices. But the closure of the frontiers due to the pandemic prevented the 'shojetim' (kosher slaughterhouse workers) from travelling from Israel in April, thus delaying shipments because they could not be certified. 

Finally, in early June, 100 of these workers arrived here on a charter flight after help from the Foreign Ministry and they will be active over the next six months in the ritual slaughter of kosher meat. 

Foreign Minister Felipe Solá explained that "in the first three months (of 2020) 8,500 tons of beef were exported to Israel for a value of US$60 million with a shipment of 15,500 tons still pending, taking up the earnings in hard currency to US$110 million."

For Argentine exporters the big attraction consists of kosher meat coming from the forequarters of the carcass, thus perfectly complementing the European market, which only buys the hindquarters.

"Hindquarters are sold to destinations which pay well and forequarters to Israel, which pays very well," sums up Schiariti.

 

by Nina Negron, AFP

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