There’s no question that Argentina’s history, culture and economy have been immersed in cows and beef. And today, cattle ranching and beef production remain central to the Argentine economy and, thus, ride the waves of a tumultuous society.

The latest unraveling

The Argentine government has a track record of using cattle and beef to either boost its economy through exports – or turn on a dime and control markets and limit exports to keep a lid on domestic beef prices. Beef is that important to the country.

In early 1991, to preserve the failing economy, laws were passed to link the Argentina peso at parity to the U.S. dollar. In the all-important cattle sector, ranchers could again afford to import a host of inputs while receiving loans in dollars at favorable interest rates. Beef processors followed suit, making subsidized investments into infrastructure while ramping up export supply chains.

The Argentine economy unraveled in December 2001 when the government defaulted on $85 billion owed to the International Monetary Fund. A banking crisis ensued. Personal account withdrawals were limited to $250 per week. Within days, panicked Argentinians found their money was worth a quarter on the dollar.

Price controls and export taxes

In early 2002, to help quell civil unrest, the Argentine government moved to keep a lid on consumer beef prices by halting exports and controlling the retail price of the most popular domestic cuts.

Related:Global beef roundup: Focus on Argentina - Part 1

Over the next few years, similar supply control measures were decreed in attempts to keep domestic beef prices low. As late as 2021, former President Alberto Fernández temporarily suspended all beef exports. He later implemented a quota/export tax system and issued a ban on exports of certain beef cuts that lasted until mid-2024.

Since last August, the Argentine government has been dismantling export regulations but still uses export taxes to manipulate domestic beef supplies. Export taxes on cull-cow beef were eliminated to help flush underproductive females from cow herds. Export taxes on other chilled and frozen beef cuts were reduced from 9% to 6.75%. The export tax on thermally processed beef was lowered from 6.75% to 3.25%.

Improving the genetic base

Over the years Argentine cattlemen have been adept at using brief periods of prosperity to improve their genetic base and herd diversity. Trade teams from across the U.S. marketed new generations of mostly Angus, Red Angus and Hereford genetics to Pampas seedstock producers. Synthetic breeds like Brangus and Braford have found homes in the warmer northern regions.

Related:Global beef roundup: Focus on Brazil - Part 1

Today, black-hided cattle represent 50-60% of the commercial cattle herd. Advances in cattle breeding and genomic technology, both beef and dairy, have helped Argentina become a hub for production and export of purebred live cattle, semen and embryos throughout South America.

Genetic improvement is a slow and expensive process. And in Argentina least-cost production is especially critical to its comparative advantage in export markets and essential as beef competes domestically with other proteins.

Angus genetics, much of it imported from the U.S. via semen and embryos, represent 50-60% of Argentina’s commercial beef cattle herd. Photo: Clint Peck

Beyond the Pampas

The Pampas remains the heart of Argentina’s beef supply chain. But for the past 30-plus years, graziers there have been losing ground to soybean and corn farmers. Today, about 40% of all Argentine beef is raised outside the Pampas.

As Argentine beef producers migrate away from the Pampas, they’re implementing grass-grain hybridized systems to improve productivity. The model is to run feeder cattle on grass until about 20-24 months of age then finish by supplementing with 3-5 lbs. of corn or soybean meal for 30-50 days prior to harvest.

In 1998, Texas-based Cactus Feeders blazed new trails by building a feedlot on the southern fringe of the Pampas in San Luis province. Starting at 10,000-head capacity, the operation expanded to 25,000 head after merging in 2007 with domestic agribusiness giant Cresud S.A.

Related:Global beef roundup: Focus on Brazil, Part 2

The Argentine feedlot business has grown under the Cactus model. It’s estimated that 45% of all the country’s 13.5 million slaughter cattle now spend some amount of time in a feedlot. The feedlot industry periodically benefits from government subsidies intended to offset high grain prices and increase production of high-value beef for export.

Argentine ranchers typically run feeder cattle on grass until about 20-24 months of age, then finish with 3-5 lb. of corn or soybean meal for 30-50 days prior to harvest. Photo: Clint Peck

Exports, quotas and tariffs

Argentina is slowly starting to move away from exporting “commodity-industrial” beef to higher-priced cuts for niche markets around the globe. A large share of Argentina’s grain-fed beef is exported to the European Union through a 29,389 metric ton Hilton Quota at a 20% tariff.

China is forecasted to continue as Argentina’s largest beef market – as it has been in the last 10 years – mostly receiving 85-95% chemical lean (CL) frozen forequarter beef blocks.

Argentine beef can enter the U.S. under a tariff rate quota (TRQ) of 20,000 mt annually. Exports outside the quota are subject to a 26.4% tariff. In 2024, the TRQ is expected to be met, with a significant volume shipped outside the quota.

Nearly all exports to the U.S. are 85-90 CL beef blocks destined for grinding. Exports of beef trimmings declined abruptly in 2023-2024 as exporters prefer not to run sanitary risks at the border. Kosher beef exports are increasing, and Argentina is also finding niche markets in the U.S. for some low-value chilled beef cuts.

Exports to the Russian Federation have increased significantly. Mexico, Canada, Israel and the Philippines are also emerging markets for 85-90 CL frozen forequarter blocks shipped under TRQs. Argentine meat packers are also aggressively pursuing the Japanese and South Korean markets.

Time marches on

The austerity movement of Argentina’s new Libertarian President Javier Milei – designed to reduce inflation – is currently causing a strong economic recession. It’s hit the average Argentinian hard, resulting in reduced domestic beef consumption – now 99 lb. per capita annually. That’s the lowest level in the past 110 years. U.S. Department of Agriculture analysts project that per capita beef consumption could drop an additional 8-12 lb. over the next decade.

A larger herd and abundant calf crops in 2022 and 2023 are expected to support slightly higher cattle slaughter this year. Beef production is projected to increase marginally over the next three to five years. Argentine beef exports in 2025 are projected to reach a record 860,000 mt.

Like their counterparts globally, Argentine ranchers are facing growing environmental regulations and, of late, production rules aimed at reducing greenhouse gas emissions.

As new generations of Argentine beef cattle producers face the future, they’ll continue to see recurring government intervention; it’s as reliable as the grass on the Pampas. But their global advantage will continue to revolve around the natural resources of the Pampas and the tradition of the iconic gaucho

In this series of reports on “Global BEEF Production,” the author draws on years of studying and analyzing global beef systems. His extensive travel to many of the world’s leading beef-producing countries offers a first-hand, objective look at the challenges and opportunities beef producers worldwide face in a highly competitive protein marketplace.

Article 1: https://www.beefmagazine.com/market-news/global-beef-series-leveling-the-playing-field-on-quality-beef

Article 2: https://www.beefmagazine.com/market-news/global-beef-roundup-focus-on-brazil-part-1

Article 3: https://www.beefmagazine.com/market-news/global-beef-roundup-focus-on-brazil-part-2

Article 4: https://www.beefmagazine.com/market-news/global-beef-roundup-focus-on-argentina-part-1

Read part 1 of this series on Argentina.