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 News

10/07/2017 0:00 - Agricultural Commodities Market
RAÚL MILANO
Choosing between household consumption and exporting beef

Argentina’s livestock and meat chain is going to experience the best moment in their history. This is the time where we must define a strategic guide within the whole chain. Should we promote meat exporting or domestic consumption? Inside this article, we propose to explain that the sector needs both exports and domestic consumption to guarantee sustained growth over time.

First, we should look at the livestock and meat chain as a whole, where each participant should be taken into account. Beyond the cyclical imbalance, we should never believe a sector could growth at the expense of the other. An organic vision compels us to think as a group, adding all the forces behind of a general interest objective.

The livestock and meat chain is labor-intensive. This main characteristic must be taken into account for the welfare of our nation, so it is important to point it out in detail. This chain employs several amounts of people that gives services to every livestock and meat sector throughout the entire country, such as veterinarians, truck drivers, meat traders (established more than a century ago, like the Cattle trading companies) and specialized personal to run feedlot business. Not forgetting to mention the big meatpacking / processing industry that generates labor to thousands of people that will not lose their jobs due to technological advance. This entire people must be taken into account when we talk about the livestock and meat chain.

The inputs for the whole livestock sector are authentically national almost without imported products such as pastures, mills, water recipients for animals, wires, corrals for cattle, stopping and gates, sanitary products and livestock. The livestock is the main capital of an exploitation that has genetic build lasting decades of responsible job.

I detail all this because it help us to understand that we are not talking of any particular sector, without underestimate any of them. We rather highlight its strength when we show its high strategic value.

What to do we do with the chain?

Considering the premise that what is important in all the sustainability models, guarantee of permanence in time, we should act as a transparent market of a competence almost perfect that gathers tens of thousands, we should think how to act in a market establishing prices certain and transparent.

The chain survived supporting even periods of distortion in different formats, the closure to the meat sale during decades 60/70 or the offsets from the last decade helping the proliferation of the confinement system. Keeping these extreme cases from active state politics never passed from some subsidized rates in credits for livestock restocking or exports reimbursement, limited amounts for the many state subsidies format explicit in provincial regime of deferred tax benefit.

The livestock and meat chain has been daughter of her own efforts, maintained its leadership in the Argentina diet, thanks to its high protein value, and knew how to provide the world showing its best cuts and showing the quality and country profile.

At this moment, it is necessary not to forget the experience of the immediate past that made us to lose almost 12 million heads so we cannot commit mistakes again. We have to assess what the livestock and meat chain already build: associativity and dialogue, that enable to join in various points the interests of all sectors, which know how to value the consensuses on top the sectorial benefits.

Today the livestock and meat chain has only one sector that guarantees a sustainable growth over the time. This is the export sector. This statement does not implies a decrease in the household consumption, but remarks a main berth to set sail. We acknowledge that the market is limited to the domestic consumer preferences and must compete with other meats markets. The prices paid for beef cannot be below the pork and broiler meat prices because of its conversion rate and capital costs. Only the social habits and the inhabitant’s preferences made the beef lead the consumption in the meat market.

We must clearly state that there should be active policies to accelerate the process to obtain a heavy steer. We have to feed the world, so we can not only look at our domestic market, and the light steer it requires. Several markets requests our products and few sectors are lucky to sell all the production they generate. Argentina has no roof for what we want to produce and sell if we simply have a serious and reliable commercial policy and guarantee a permanent supply.

Three key instruments to improve the livestock sector

Having active policies to accelerate the production of heavy steers is an indispensable task, which is not only done with public funds, but also requires indispensable instruments for its development. Mentioning only three tools helps us to understand how delayed it is the livestock sector respect to other sectors such as agriculture, which have improved a lot with these instruments. Livestock forward is a contract that allows us to sell the livestock in the future with delivery of merchandise joining the producer with the buyer, meat packing industry or supermarket, giving predictability to delivery and the definition of a price. The start-up of cattle futures will allow the hedge of risks. The Livestock Warrant is a vital instrument of guarantee that open the possibility to obtain finance to the several actors of the chain today, away from the conventional financial system affording accessible costs.

Export does not mean to remove meat from the table of Argentina’s houses. Quite the opposite, means to produce more to place the surplus accessible to consumers. The exorbitant local ‘barbecue’ can only occur when there is no enough barbecue meat to export. When we have enough supply, this is replicated on prices.

Argentina is in the right place and at the right time. It is nothing worth to cry about what we could be and ‘whatever they left us’. The livestock and meat chain is prepared to add to the associative character achieving a work plan with concrete objectives to be met. This plan should include the entire sector and not limit the growth for anyone. The worst thing would be that within a few years we would feel responsible for not having taken this opportunity, as the Spanish thinker Ortega y Gasset said in 1939 from a conference in La Plata, Argentina: ‘Argentinos a las cosas.’
 

 Institutional video


Institutional Video of the Bolsa de Comercio of Rosario (Rosario Board of Trade)

 Rosario Board of Trade

The Rosario Board of Trade is a centennial institution located in Rosario, in the most important agroindustrial zone of Argentina. Throughout its history it has created and boosted transparent, solid and reliable markets: the Grains Physical Market, the Futures Market, the Capital Market, and the Livestock Market.

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