Argentine officials try to prop up beef binge with price caps
Dwindling purchasing power, changing food trends are to blame.
Argentines, who have long been among the world’s most voracious meat eaters, can no longer afford to binge on their own beef.
Red-meat consumption in the country has fallen to the lowest in a century. Blame rampant local inflation, the insatiable hunger for beef in other parts of the world that’s adding to price gains at home and — to a lesser extent — a reluctant movement toward healthier and cheaper proteins. It’s a kick in the teeth for a country that traditionally has vied with neighboring Uruguay for the title of world’s biggest carnivore on a per capita basis.
Less affordable beef has created what the head of Argentina’s meat industry group calls “almost a disaster for my generation.” And the nation’s new president, Alberto Fernandez — who already has his work cut out with a debt restructuring and an economy in need of revival — knows the political stakes. He’s looking to put more caps on prices in supermarkets to make beef affordable again.
If history is any guide, intervention measures could also erode ranching profits in the world’s sixth-largest herd, prompting farmers to downsize and limit supplies of Argentina’s famed sirloin and short rib cuts just as global demand reaches record levels.
Limiting prices is straight out of the playbook of Fernandez’s Peronist party. Beef became a controversial part of a consumer-focused economic strategy when Fernandez served as cabinet chief to former late President Nestor Kirchner. In 2006, Kirchner temporarily suspended all beef exports to keep local prices in check.
In the 12 years that Kirchner and his widow, Cristina Fernandez de Kirchner, held office, domestic beef consumption was fueled by periodic export bans and price caps. But those measures were counter-productive as farmers on Argentina’s storied Pampas farmland exited the business. Cattle herds dwindled and supplies tightened.
Deregulation under Fernandez’s predecessor, Mauricio Macri, helped the industry ship more abroad and herds recovered. While more controls may play well politically, the extent of the decline and past experience suggest returning Argentina to its beef-binging past will be a tall order.
Carnivorous Argentines ate the least red meat last year since 1920.
Though the new president hasn’t specifically addressed beef-related measures, he recently raised export tariffs on all Argentine commodities. In January he relaunched a price freeze program on 310 staple items, including some beef products.
Now his administration is discussing the possibility of adding more beef cuts to the price-control system in supermarkets, a Production Ministry official said last week. Price caps are part of a strategy to ensure supply to all sectors of the population, Interior Commerce Secretary Paula Espanol said in a statement.
At the moment, prices are capped for four types, allowing butchers to compensate by charging more for other cuts, which in turn allows ranchers to get full market prices.
While the local beef industry expects Fernandez to refrain from intervening as dramatically as his predecessors, the impact of measures implemented more than a decade ago still linger today, according to Miguel Schiariti, president of industry group CICCRA.
“Twelve years later, we’ve only recovered half of the cattle we lost,” he said. “Like a house you knock down with a demolition ball, herds are easy to destroy but difficult to rebuild.”
Last year, Argentines ate an average of 51 kilograms (112 pounds) of red meat, the lowest level since 1920, CICCRA data show.
Health is one reason for the decline. Vegetarian restaurants have sprouted up in posh Buenos Aires neighborhoods and even world famous steakhouse Don Julio now offers non-meat options. But for many, it’s more about affordability.
With the economy poised to contract for a third straight year, inflation running over 50% and wage growth lagging behind price rises, red meat is becoming more of a luxury than a necessity. Argentines have pivoted to chicken or pork over the past few years.
An export renaissance is adding to the domestic price pressures, which spiked last year at a time when the country shipped 831,000 tons of beef, up from 199,000 in 2015. China’s struggle to fill a protein gap created by the spread of African swine fever is rippling through the market, pushing up export demand and prices globally.
Oscar Maradei sees no recovery at his butcher shop. Sales fell 40% last year, one of the worst in his 36 years running his open-air corner locale in Buenos Aires. He bought beef from wholesalers at 143 pesos a kilo a year ago. Now he’s paying 203 pesos as taxes, utilities and other costs remain high.
“It’s not a problem of eating less red meat,” said Maradei, 63. “It’s a problem of losing buying power, that’s the issue.”