MercoPress. South Atlantic News Agency

Excellent prospects for Mercosur beef exports, except Argentina

In 2017, Argentina was in the top five beef exporters, having previously been in the top three

The Argentine beef industry is optimistic about world meat production and global demand this year, with China again playing a leading market role. A report issued by Argentina's Rosario Stock Exchange (BCR) and the Mercado Ganadero Department (Rosgan), world beef production will reach 58 million tons, representing a 1% increase over 2021.

This prospect would reverse the downward trend seen in 2021, mainly because of the recovery of the meat-packing industries in Brazil and Australia, the world’s first and third-largest meat exporters, respectively.

As for the global flow of imports, the expected average, according to analysts at BCR/Rosgan, is 10 million tons, which would imply an increase of 2.7% compared to last year.

China, which reduced the pace of international beef purchases in 2021 to 950,000 tons compared to more than 1.1 million tons in 2020 will once again represent 32% of global consumption. According to BCR/Rosgan, China accounted for 13% of global meat demand in 2017.

At that time, Argentina was in the top five beef exporters, having previously been in the top three. But Argentina has dropped out of the top ten beef exporters in recent years, owing to government restrictions on beef exports with the purpose of supporting the domestic market and helping with lower prices.

Nevertheless the Brazilian and Argentine beef markets had an unusual year in 2021. Traditional animal protein producers, the two countries witnessed declines in their exports, particularly in the last months of the year. Overall compared to 2020, Brazil beef sales dropped 9,92% while Argentine exports decreased 13,84%.

The reduction experienced by Brazil can be explained by the beef embargo imposed by China. In effect on September 2021, Brazil voluntarily suspended exports to China after the identification of two cases of mad cow disease in the country.

The World Organization for Animal Health (OIE) recognized that these were atypical episodes and that the risk to the national herd was negligible. Despite this, China insisted in freezing Brazilian beef exports for over three months until December 15.

The drop in Argentine beef shipments were motivated by the high price of the product in the domestic market, and thus the government suspended all exports in May 2021. ” As a consequence of sustained increases in the price of beef cuts in the domestic market, the national government decided to implement a set of emergency measures to better organize the sector, restricting speculative practices, improving the traceability of exports and avoiding tax evasion,” said the decree issued at the time.

Further measures were implemented, and given the deteriorating economic situation of Argentina and its impact on inflation, the country’s export ban on certain beef cuts was extended until the end of 2023.

As a result of this situation, Mercosur junior member Uruguay strongly benefitted and saw beef shipments increase 35%. The same can be said of the other Mercosur member, Paraguay, that also experienced a record year of beef exports in 2021.