January 18, 2011

Argentina Beef Production Declines 22.6% First 11 Months of 2010

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

During the first eleven months of 2010, beef production in Argentina declined 22.6% compared to 2009. The number of head slaughtered also fell 26% to 10.9 million during the same time period and beef exports declined by 53% during the period. The near term outlook does not look any brighter and beef production is expected to decline again in 2011. According to the Argentine Meat Council (Ciccra), beef production in Argentina might start to rebound only in 2013 or 2014.

An ongoing trend in Argentina is to move away from beef production and to move toward more row crop production. Reasons for the trend include: a severe drought in 2008 that devastated the cattle herd and restriction put in place by the government on the sale of cattle and on beef exports. To many cattle ranchers, the evidence was clear that a cattle ranching was not going to be profitable for the foreseeable future and as a result, many plowed up their hay and pasture fields and planted soybeans and corn instead.

In 2008 and 2009 many ranchers liquidated their herds out of financial necessity. In 2009 50% of the cattle slaughtered were female and in 2010 that declined to 43.7% indicating that a rebuilding process was slowly starting. This rebuilding process is one of the reasons for the lower slaughter numbers in 2010. But, the damage to the heard was so bad in 2008 and 2009 that it will take years to fully recuperate if ever. Further government interference in the cattle market or adverse weather could delay the recuperation even further.

Argentines love their beef, but during the January-November period, the per capita beef consumption in Argentina declined to 57.2 kilograms, which is down from the 68.5 kilograms registered the year before. High prices were blamed for the drop in consumption.