For three weeks, Argentine farmers blocked farm goods and livestock from reaching Argentine cities, stripping supermarket shelves of food and meat, paralyzing beef and grain exports and sparking a political crisis. The blockade – sponsored by four farm groups – was in opposition to a government decision to raise taxes on exports, a tactic aimed at keeping more domestic production at home in a bid to control domestic food prices and curb runaway inflation.
Last week, Argentina’s President, Cristina Fernandez, made it clear in two brutal speeches that she would not talk to farmers "with a gun to her head" and no matter what talks transpire, the export taxes would not be removed. But on Wednesday, the farm groups announced they would call off the strike for 30 days, while continuing to negotiate with the government.
While the dispute has raged, a backlog of more than 500,000 head of slaughter-ready cattle has been built. Slaughter is expected to begin in earnest on Friday (today). The result is there will be no new arrivals of Argentine beef on the world markets until mid-May. That is assuming there are no further disruptions.
Argentina’s booming domestic market consumes 80% of the nation’s beef production. That 80% consists mainly of lower-value cuts, such as flank on the bone, known as asado, which is the main national dish used for barbeque. The chuck and blade along with the flank fillets are the only steaks available to the majority of the Argentine population. Higher-value cuts have traditionally been exported.
But in recent years, Argentina has dropped from its position as the world’s number-one beef exporter to third, and the beef herd now stands at only 70 million cattle. The government initiated restrictions on beef exports in March 2005, and the recent crisis has been two years in the making, culminating in a total blockade for the last three weeks by farmers and producers.
On Wednesday, Mario Rauettino, head of the Argentine Beef Consortium (ABC), reported heavy staff layoffs at packing plants in the last 20 days, while foreign buyers are complaining the Argentine beef industry had breached its delivery contracts. Despite this, ABC was backing the government in its dispute against farm groups. And earlier this week, leading industrialists, bankers, packers and unions pledged their support of Fernandez in a rally that included 300,000 protesters against the farmers. It was the biggest display of government support ever witnessed in Argentina.
The switch by Argentine farmers from beef to the more lucrative soybean and wheat farming in recent years has added to the country’s beef-industry woes. The government claims a 142% increase this year in acreage devoted to soybeans, mostly at the expense of wheat acreage and cattle grazing.
Little wonder, what with Argentine soybean farmers earning $279 (US)/ton as opposed to $237 last year, according to Argentine government sources. And the recent sharp increase in commodity prices on the world market has done nothing to reverse this trend toward grain farming.
The biofuels frenzy has driven Brazilian farm prices up by an average of 18% in the past year. Foreign investment has also helped spike prices, with such diverse investors as George Soros, Bill Clinton, Bill Gates, the owners of Google and Ted Turner reportedly being involved.
-- Muriel Elizabeth Hayes, Buenos Aires, Argentina