Farm Ireland
Independent.ie

Thursday 22 February 2018

Brexit could allow Argentinian beef producers regain a foothold in the British market

The Argentinian pampas is some of the richest beef rearing land in the world
The Argentinian pampas is some of the richest beef rearing land in the world
John Fagan

John Fagan

THE BEEF producing giants of South America are in the frame once again, with a possible Mercosur deal back on the agenda in Brussels and concern mounting over low-cost meat flooding from the Pampas and Pantanal onto the British market.

The EU audit of Brazilian meat plants has resulted in all poultry and meat products from Brazil being subject to strict microbiological and other checks, but the current restrictions will be eased over time.

However, a more immediate target for South American beef and cereals is post-Brexit Britain.

While the British and Argentinians fought a nasty conflict over the Falklands/Malvinas Islands in the early 1980s, the South American country was the main supplier of carcass beef to the UK up to the mid-1960s and they view Brexit as an opportunity to win back some of that trade.

Ironically, Irish processors displaced their Argentine competitors in the wake of the Anglo-Irish Trade Agreement in 1965. However, the Argentine beef industry believe Brexit is a game changer that provides an opening to regain a foothold in what is the most lucrative meat market in Europe.

Tesco UK stocked Argentine beef last year, much to the annoyance of Welsh farmers, but in the light of Brexit and the UK market’s need for beef there is nothing to stop them doing it again.

In the event of Britain failing to agree an amicable divorce settlement with the EU, the UK will be forced to trade under WTO rules. This will level the playing field for everyone.

I recently returned to Argentina where I met with cousins; some of whom farm, or work in the wider food commodities sector. A man in the latter business is Sebastien Hope, a commodities broker in Buenos Aires. He is convinced that in the event of Brexit there will be opportunities for Argentine exports to Britain to resume to a far greater extent.

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Price is obviously a consideration. The live price for Argentine heifers and steers is €1.60/kg - and €1.35/kg for cows. This compares to an average Irish price for steers and heifers of €2.20-2.25/kg, with up to €1.60/kg being paid for cows.

There is a clear price advantage for Argentine beef, add to that the renowned quality of their steaks and you realise that Irish exports could face stiff competition.

In addition, the Argentine herd comes from Angus and Hereford stock – which are perfectly suited to British tastes.

Germany, Chile, Israel, Brazil and Russia are among the main outlets for Argentine beef at the moment but Sebastien says the country is securing new markets and increasing export volumes all the time.

Recovery

“In 2005 Argentina exported 750,000 tonnes of beef, this dropped to 150,000 tonnes in 2015 but it is expected to reach 400,000 tonnes in 2017,” Sebastien maintains.

He points out that exports to China, Israel and the EU have increased by more than 170pc this year.

He says the fall in beef exports in the 10 years from 2005 to 2015, and the more recent recovery, are due primarily to changes in government policy.

While the populist government of former president Christina Kirchner taxed beef exports, the centre-right administration of the current incumbent, Mauricio Macri, is actually encouraging the business.

However, building exports is a slow process — you can’t just magic up 20 million cows — and Sebastien reckons that it will take around five years to repopulate a national herd that was decimated in the decade up to 2015.

He attributes the recovery in beef exports not only to the Macri administration’s work on lifting the tax burden on beef farmers, but also to his efforts in improving the country’s animal health accreditation and traceability standards.

While he accepts that more work is needed in some areas, the control of FMD has already borne fruit, with both the US and Canada in preliminary talks with Buenos Aires on renewing beef imports.

Russia and China are two other markets which have been identified as outlets for increased volumes of Argentine beef over the next two years.

“With the last government we lost a lot of market share for everything. So he [Macri] is trying make new and long-term deals,” Sebastien says.

The return of Argentina to the beef export scene provides a worrying backdrop to the Brexit negotiations from an Irish perspective.

SCALE AND RICHNESS OF THE PAMPAS SETS ARGENTINA APART

ONCE one of the wealthiest countries in the world, Argentina has had its fair share of problems.

Populist governments, military dictatorships and political corruption has taken its toll on the country’s economy but time and again Argentina bounces back.

That it has been able to continually recover is due in no small part to the resilience of its farming sector.

The scale of the farms in Argentina is mind blowing. My cousins, the O’Farrells, own a 7,000ac farm south of Buenos Aires.

However, it is the richness of the pampas soils which sets Argentina apart. The region around Buenos Aires boasts some of the best land in the country. It is excellent grassland which can also be easily converted to crops.

That is one of the reasons why the Argentine beef herd declined to such an extent during the final years of the Christina Kirchner administration.

Because her government heavily taxed the export of the beef, farmers switched to tillage and increased the area of soya, wheat and maize.

Commodity trader Sebastien Hope points out Argentina is one of the world’s leading exporters in soybeans. The country harvests around 56m tonnes of the crop each year, and exports close to 10m tonnes. In addition, Argentina is a major grower and exporter of maize, wheat and sunflower oil.

Argentina originally was a major wool exporter. But as an Irish sheep farmer, I just hope they don’t start exporting lamb. One of my cousins, Benjamin O’Farrell, just got engaged and his fiancé has 60,000 ewes in the Patagonia.


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