Argentina has been limiting the export of beef to China in order to reduce domestic price increases on meat. The government would like to continue in 2022.
Since May, Argentine has been restricting exports of beef but the regulations were supposed to end on December 31. Except that, as part of the negotiation, the government plans on continuing restrictions on beef export in 2022, according to Argentine news media.
On November 30, the minister of Agriculture Julián Domínguez sent the plan to the major organizations representing the agriculture industry for 2022. It included a status quo of the current restrictions.
But for Jorge Chemes, the president of the Argentine Rural Confederations, one of the four corporations negotiating with the government, the minister promised they would release the restrictions by the end of the year.
Suspension of beef export to slow down inflation
The meeting between both parts was then postponed. They will discuss on December 9 to find a solution before the end of the year.
The restrictions on beef exports have been put in place to stop inflation in meat prices in May 2021. If the government imposes a status quo, the volume of exports in 2022 would be 25% lower than in 2021.
In May, the government completely suspended export of beef for a month, except for some agreements with Europe and the United States. The decision specifically targets and affects China, the largest client of Argentine meat, which buys 75% of the beef exports.
Restrictions of this type already took place in Argentine in the past. Beef exports were under a quota between 2006 and 2015 to avoid food price increases.
Since the limitations got removed in 2015, the volume of exports increased fourfold. In 2015, less than 200,000 tonnes (metric tons) of cows were exported. It reached 933,000 tonnes in the 12 months before May 2021.
In the meantime, Argentina has been suffering from rampant inflation. In October, Argentina froze prices of 1,432 mass consumption goods until the end of the year as prices grew more than the inflation rate in the last four years.
The price of beef also increased more than the inflation rate while domestic supply and consumption shrank substantially (-12% in a year). The government considers that producers focus more on meeting the increasing demand of China than the domestic market. More than 25% of the beef production was dedicated to export in 2019 and 2020, compared to 18% in 2018.
The most popular cuts of beef kept for the Argentine
Argentina has been prohibiting exports of the seven most popular cuts of beef like brisket, roast (asado), cuts to grill, for a barbecue or a Milanesa for instance. They are preempted for the Argentine market.
In June, the government then decided to slightly open up to the external market again. It then also allowed some kosher meat to be sent to Israel, or allowed exports to Chile and Colombia. And in October, it agreed on exports to China for a limited volume of a specific type of meat meant for canned or processed beef.
The industry claims that 90% of the exports to China are meat that an Argentine would not eat anyway. They send meat with low quality coming from cows 8 to 10 years old, too old to breed or produce milk.
Ideally, producers would like all restrictions to be lifted. They ensure there would be no shortage of beef for Argentina.
Argentine beef producers will close the year 2021 at around 800,000 tonnes of beef export. As the restrictions started in May, the year 2022 would end up with about 600,000 tonnes, 25% less than in 2021.
The four agriculture organizations, called La mesa de enlace, will make a counter proposal to the government. They will ask all restrictions to go away, except for the best cuts of meat which will be kept for the Argentine population.