Regulation of Meat Exports Could Generate a Renewed Decline in the Cattle Industry in Argentina

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This year’s partial closure of meat exports caused a 20-30% decline in the value of beef which is reminiscent of a cattle breeding crisis in 2006. In PERFIL Magazine of Argentina, Néstor Roulet reported that this has led to decreased investments in the technology, health, and feed in the breeding sector which has lowered the total cattle production. Roulet noted that Argentina loses US$ 8 million per day due to the meat export restrictions.

In 2006, the closure of meat exports and state intervention of beef markets led to the progressive decline of meat production in Argentina. In 2008, there were almost 58 million head of cattle and from then on, the progressive deterioration of the herds meant that in 2011 the country had only 48 million head of cattle, 10 million head less. In this context, the number of cows bred to produce calves went from 24 million to only 20 million.

The decrease in mothers and calves affects the profitability of the meat industry as the income is based on the number of calves produced and the expenditure is the sum of slaughter and mortality. Thus, through this calculation it is evident that in the years 2008, 2009, 2010, and 2011 there was not enough to cover the cattle that needed to be replaced. This difference explains the loss of 10 million heads of cattle. 

After the state intervention of meat exports in 2006, the price of beef dropped, which considerably increased the slaughtering level. All these numbers indicate what the 2006 intervention in the meat market did. The numbers are clear, so it is important to regularize the market to stabilize the economy. However, Roulet noted that as government officials are unlikely to act quickly, Argentina will face another crisis in the cow production industry.