Local supply of beef tightens in Argentina forcing authorities to ban exports

ARGENTINA – Argentina, the world’s fourth-largest beef exporter, has announced a one month ban on beef exports, in an effort to shore up local supply of the commodity and fight rising inflation.

The government hopes that by reducing exports, there would be more supply of meat into the domestic market which would in turn result in lowering of beef prices.

According to a report by the United States Department of Agriculture (USDA), meat prices in the greater Buenos Aires region  have risen by 64.7% from April 2020 to April 2021.

This has caught the eye of Argentine officials who are now speaking of the need to “decouple” domestic prices from international prices.

The government has also been negotiating with the beef industry in recent months to reach certain price and volume guarantees for the domestic market.

According to USDA,  officials have suggested that the export ban could be lifted prior to its 30 day expiration if the industry comes to an agreement.

Farmer groups against beef export ban

This is not the first time that Argentina is imposing temporary bans on beef exports as a similar temporary (180 days) export restrictions were imposed in 2006 in an attempt to reduce meat prices.

While this temporarily increased domestic supply, it quickly led to production declines as ranchers reduced the size of their herds due to lower expected returns, slaughter plants closed, and planted area for grains dropped.

Perhaps learning from the past, major beef producers in the country have criticised the ban on exports and have started a 9 day strike on cattle sales to make their protest heard.

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The strike has resulted in no cattle being delivered to the Liniers cattle market in Buenos Aires. Some slaughterhouses increased cattle purchases in advance of the strike but at least one slaughterhouse has announced that it will close for the duration of the export ban.

 Farm groups have warned that they may expand the sales strike to include grains and oilseeds if interventionist measures continue.

Farmers may also reconsider their planting intentions in the coming year, potentially viewing soybeans as less risky than corn, which currently has higher expected returns, but may face both decreased domestic demand from feedlots and ethanol plants and government imposed export restrictions.

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