high steaks

Why Argentina isn’t sharing its famous steaks anymore

May 22, 2013
May 22, 2013

argentina-beefArgentina’s steaks are world-renowned, but good luck finding one these days. Argentines have become oddly bashful about sharing their beef.

That’s what their country’s mind-boggling red meat exports suggest, anyway: Argentina now ships less than 7% of its beef.

The current insularity of Argentina’s beef industry is especially surprising considering that back in 2005 the country was the world’s third largest beef exporter. At the time, Argentina exported nearly 800,000 tonnes (882,000 US tonnes); last year, that number fell to a paltry 183,000 tonnes (202,000 US tonnes), dropping Argentina to 11th in the world in beef exports. It’s not like the country is suddenly starved for cows; the number of cattle grew from 48 million in 2010 to almost 52 million last year. Neighboring Uruguay and Paraguay may export more beef than Argentina, but it still produces more than the two countries combined.

So what happened then? A few things.

First, beef got really expensive in Argentina 

When global demand for Argentina’s beef drove exports up in the early 2000s, farmer’s didn’t complain—they were turning a profit shipping out cattle. But locals did. The global demand drove up the price of beef domestically as well. Coupled with the country’s 2001 default and subsequent inflationary problems, steak got really expensive. It all culminated in 2005, when Argentina exported 771,000 tonnes (850,000 US tonnes) of beef, nearly 25% of all the beef produced in Argentina that year.

So former President Kirchner did something about it

In 2006, former president Nestor Kirchner (current president Cristina Kirchner’s husband) raised the tax on beef exports from 5% to 15%. But that’s not all; just four months later, he banned all exports of beef for 180 days. The combined measures were meant to combat rising beef prices in the country, but many, including local farmers, responded angrily. The ban, farmers held, would hurt their ability to sell beef overseas.

At the time, Javier Martinez del Valle, the director of the Argentine Association of Producers and Exporters, conjectured that “even if exports reopen at some point, it will be very difficult for Argentina to recover the confidence of markets,” a forecast largely validated by the sharp decline in beef exports ever since.

Thus, exports dropped sharply in the ensuing years—beef exports fell 45% from 2006 to 2011.

And Cristina Kirchner isn’t crazy about exporting beef either

Beef exporters in Argentina have been hit hard by their country’s current wonky monetary system and trade restrictions, too. The confluence of Argentina’s unreliable currency and president Cristina Kirchners lack of support for the beef export industry have made it increasingly difficult to turn a profit.

“Restrictions on exports, a non competitive foreign exchange and the fact that the meat industry for every 2.5 tons exported must sell one in the domestic market at 50% the export price, makes the whole business unprofitable,” Victor Tonelli, a consultant for the meat industry, told South Atlantic news agency Merco Press. As a result, exporters today get about 4 pesos to every US dollar, even though the official rate is upwards of 5 pesos and the black market rate is hovering near 10 pesos. The incentive to export beef just isn’t there anymore.

The US does ban the import of Argentinian beef, but that policy began long before the country’s beef exports dropped and Argentina has historically relied more on European consumption, anyway.

The world may still long for Argentine steaks, but for the time being traveling to Argentina is the only viable way to get them. The plane ticket might cost a hefty sum, but at least the meal won’t.

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