Argentina bans beef exports
Source Louis Proyect
Date 06/03/11/18:36

Argentina Pens In Sales of Iconic Food
President Kirchner bans export of beef in a bid to wrangle inflation. The commodity is a cultural icon and a major product of the nation.
By Patrick J. McDonnell
Times Staff Writer

March 11, 2006

BUENOS AIRES Argentine President Nestor Kirchner has a plan to fight rising inflation and escalating food prices: Let them eat beef.

In an extraordinary decision, the government this week announced a six-month ban on most beef exports from the world's third-largest purveyor of the meat.

In Argentina, prime beef is a cultural icon, rivaling tango, soccer and the late Eva Peron. Argentines are voracious beefeaters, consuming 143 pounds per capita annually.

But consumers here have been grumbling about beef prices for months, and Kirchner a left-leaning populist often at odds with big business presented the ban as a way to protect his people from export-driven price hikes.

The government hopes that meat targeted for overseas sale will now stay at home. Increased supplies will reduce domestic prices, which skyrocketed 20% last year, surpassing the worrisome inflation rate of more than 12%.

"It doesn't interest us to export at the cost of hunger for the people," Kirchner declared.

The president's edict took effect Friday. Delighted shoppers rushed to butcher shops to inquire whether prices had dropped yet from the $2 or so a pound for the prime cuts that can go for 10 times as much in the United States and Europe.

"The president's move was absolutely necessary in the moment we are living," said Hector Polino, who heads a consumer group that is critical of rising prices.

"Beef is the principal food of habit in Argentine culture."

From a political standpoint, Kirchner's bold stroke should also shore up his constituency as he contemplates a 2007 run for another four-year term.

But cattlemen said Kirchner's move would kill the golden calf. Beef exports earn vital foreign exchange for Argentina and amounted to a record $1.4 billion last year. Foreign sales rose 24%.

Cattle farmers say the export ban will probably reduce supplies in the long term, cost them hundreds of millions of dollars and throw thousands of people out of work.

"The plants will begin to shut down," Carlos Oliva Funes, president of Swift Armour Argentina, a large meat producer, told the conservative daily paper La Nacion.

"This is like telling Colombia it cannot export coffee," said Javier Jayo Ordoqui, who heads a rancher's association outside Buenos Aires, the capital. "This is cattle country."

Indeed, on Friday, prices were reported to have plunged as much as 20% at Liniers, the country's largest live cattle market. Economists predicted that modestly lower prices would eventually trickle down to consumers.

Kirchner has sparred angrily with the cattlemen and other industries that resisted his inflation-fighting tactics. Last year, he called for a boycott against oil giant Shell because it would not cap its gas prices.

It's one thing to protect consumers from inflation at the pump. But in moving to rein in beef prices, Kirchner is wrangling with a commodity at the core of Argentine identity. Dining on beef in Argentina has survived, largely unfazed, the low-fat trend and cancer worries, mad cow frenzy and other scares that have cut back consumption elsewhere.

The Sunday parrilla, or barbecue, is an Argentine ritual, and prime cuts of pasture-raised beef even tasty filet mignon slowly cooked over wood are reputed to be higher in protein and lower in fat than the varieties common in the U.S.

In 2005, as inflation crept up, the government began to sign agreements with supermarkets and manufacturers to control prices on many basic goods. The administration also raised export taxes on beef and increased the minimum slaughter weight in an unsuccessful effort to curtail exports and keep prices down at home.

The Buenos Aires Herald, an English-language daily often critical of the president, even compared the export ban to President Juan Peron's decision to exclude the Argentine soccer squad from the World Cup tournaments of 1950 and 1954. Peron feared that no championship was forthcoming and "gratuitously [hid] Argentina's most competitive face from the world," the paper said.

"But evidently economic logic has little sway with the Nestor Kirchner administration," the Herald declared, noting that beef had become more valuable since the avian flu outbreak started deflating poultry sales. "And now Argentina has to shoot itself in the foot in this absurd fashion."

Kirchner, 56, was elected in 2003 with less than a quarter of the national vote, assuming the presidency after the other top vote getter dropped out of the race. He consolidated his power base in the Peronist party in midterm elections last year and now has 70%-plus approval ratings.

Many credit the president for three consecutive years of 9% growth that has helped revive the bottomed-out Argentine economy. Kirchner has made fighting inflation his administration's top priority as the country continues its robust comeback from the meltdown of 2001-02.

Many economists say Kirchner's anti-inflation strategy of price controls and tactics such as the beef-export ban will fail absent a revised monetary policy. But others argue that price mandates and Kirchner's efforts to bring down beef prices may provide a short-term solution.

Many observers believe that the ban may have been largely a hardball tactic to force the cattle industry to reduce domestic prices. Authorities have left open the possibility of lifting or modifying the ban should the situation change.

"It seems to be more of a negotiating stance," said Mark Weisbrot, co-director of the Center for Economic and Policy Research, a Washington think tank. "Kirchner is saying, 'Well, if you won't agree to hold prices down, we'll force them down by stopping you from exporting.' "

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