Global beef supply impacted by Argentinian export ban
Argentina recently placed a ban on beef exports in response to severe inflation in the country. This action encouraged change within the global beef supply chain.
Argentina’s domestic challenges
On May 31, Argentina temporarily shut down 12 beef exporters because of alleged illegal and irregular activity. This, in turn, seized over 220 tons of meat. The 30-day shutdown is the second shutdown the country has faced.
Originally, officials closed six companies in attempt to increase domestic supply. However, this did not decrease inflation like the government had hoped. After shutting down another six firms, the country is investigating five more beef exporters for similar charges – a total of 17 beef exporting companies.
Beef is regularly enjoyed in Argentina. However, with the rising cost of local beef, it has become more of a delicacy in the country. This is largely contributed to three consecutive years of recession.
“Some consumers say they are no longer able to afford beef,” shares Dave Sherwood, in a Maximilian Health article. “Inflation has sapped growth and spending power.”
Sherwood credits this inflation to the rapid growth of beef exports, noting, “The country has ramped up beef exports in recent years, especially to the main buyer, China.”
Focusing on Argentina’s economy directly, Sherwood continues, “The government blames fast-rising exports for stoking inflation.”
Learning from previous experience, Argentina’s government hopes to keep beef in the country by banning exports. If this is successful, beef prices should decrease as supply increases within the South American country.
Effects on China
Argentina is the fifth largest global supplier of beef and the second largest contributor to China’s imported beef.
In an article featured by Bloomberg, Michael Hirtzer explains, “Argentina supplies almost one-quarter of China’s beef imports, and the ban is expected to shake up global meat markets, namely by prompting buyers in China to buy more from Brazil and the U.S.”
China, still hurting in meat imports from Argentina’s closure and decline in hog herds, is searching from more imports. With it’s number two supplier of meat shut down, beef prices should increase globally.
Impact on U.S. beef
Between an increase in exports to China, the changing demand from COVID-19 and upcoming summer barbeque season, beef prices in the United States are high.
“Already, as retail beef prices surge, there is building political momentum in Washington, D.C. for greater scrutiny of the four companies which dominate the meatpacking industry,” shares Hirtzer.
However, with one of China’s major imports temporarily unavailable, the door for increased U.S. beef trade is open.
“China has already been big in the U.S. market in the last few months before this export ban and I think that only has the potential to increase U.S. beef exports to China,” says American Farm Bureau Federation Economist Michael Nepveux.
Intrigued by the disruption Argentina has on U.S. beef exports to China, Nepveux shares, “U.S. prices for beef, the cutout, is already starting to hit extremely elevated levels. Now, how much of this is being passed back to the producers is still a point of contention for some.”
Still, the economist is excited about the positive terms of the beef exports.
Savannah Peterson is an intern for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
