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close this bookExporting High-Value Food Commodities: Success Stories from Developing Countries (WB, 1993, 119 p.)
close this folderAppendix The development and performance of case study commodity systems
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Argentina beef

The production and trade of beef has played a major role in the economic development of Argentina for nearly two centuries. In the 19th Century and through the 1920s, the sub-sector had a strong export orientation, first of salted meat and later for chilled beef. With the Depression, the establishment of the Commonwealth Preference System, and World War II, Argentina's international market for beef greatly contracted, stimulating the development of the domestic market.

While Argentina remains one of the principal beef-exporting nations in the world (ranked fourth in 1990 behind Australia, Germany, and the U.S.), since World War II, the greatest proportion of Argentina's moderately increasing beef production has been directed to the domestic market. Argentina remains the world's third largest beef producer (accounting for 5.4% of total world production in 1990) and has a per capita beef consumption which is more than 50% higher than that of the United States and more than three-times that for most West European countries. While Argentina has lost some of its traditional export markets for lower-value products (e.g. boned and manufactured beef) to subsidized EEC supplies and because of developed country market protection, the sub-sector has retained or even increased its exports of higher value products (e.g. boneless cuts, corned beef, cooked/frozen beef) which now account for over 90% of beef export value. Although now accounting for less than 10% of Argentina's total agricultural exports, beef exports still totalled $734 million in 1990.5° At least until recently, beef exports also provided one of the largest sources of government tax revenues.

The 'success' of the Argentine beef sub-sector over the past decade or two lies not in especially favorable trends in production, trade, or enterprise profitability, but in its ability to survive and maintain international competitiveness in a situation of rampant inflation, high interest rates, currency overvaluation, and overall macroeconomic uncertainty, heavy direct and indirect taxation against producers, processors, and traders, increased competition for resources from the Argentine cereals subsector, and growing subsidies and protection among its competitors or traditional markets.

Its sustenance stems from several factors, including: 1) Argentina's continued position as one of the world's lowest cost producers of quality beef (due to favorable climate and extensive grassland resources, 2) a well-developed, flexible and transparent livestock marketing system (which has provided numerous sales options and provided fast payments in an inflation-ridden economy), 3) innovations in domestic beef distribution (including supermarket sales of brand name products, vacuum packing, the development of butcher chain stores), 4) the development of new international market outlets (e.g. the Soviet Union in the early 1980s; Middle Eastern countries), and 5) debt rescheduling by official banks for livestock and beef processing and trading enterprises.

With an improvement in Argentina's macroeconomic situation since the late 1980s, and with a reduction in export taxes and some capacity rationalization within the sub-sector, beef production and processing has returned to profitability. Since 1986, beef exports have also increased steadily.

Argentina Beef

Sources: World Bank (1989); USDA Agricultural Attacheports.