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Milei’s victory in Argentina unlikely to shake up global beef market

Dec, 01, 2023 Posted by Gabriel Malheiros

Week 202344

Javier Milei’s victory in the Argentine presidential election and his policy to boost the country’s agribusiness exports by eliminating export taxes, known as “retenciones,” are not expected to impact Brazil’s beef exports. This prognostic comes from the Center for Advanced Studies in Applied Economics (Cepea/Esalq-USP).

According to Cepea, although Argentina is a strong beef exporter, much like Brazil, there are “few direct competition overlaps.” The analysis suggests that even though Argentina is expected to increase its exports, its beef, renowned for its quality, tends to be marketed in different segments than those occupied by Brazilian protein.

Cepea also emphasizes that production costs in Argentina are significantly higher than those in Brazil, “hindering its competitiveness with Brazilian partners, even if the Argentine government implements policies for broad trade liberalization.”

See below the top ten export destinations for Brazilian beef in 2023. The data is from DataLiner.

Top Export Destinations | Beef | 2023 | WTMT

Source: DataLiner (click here to request a demo)

Data from Agribenchmark, an international initiative in which Cepea participates in collaboration with the Brazilian Confederation of Agriculture and Livestock (CNA), reveals that in 2022, the production cost in Brazil averaged US$47.90 per arroba (cattle weight measuring unit) in pasture-based systems and US$57.40 per arroba in feedlots. In Argentina, the average cost in pasture-based systems was US$62.69 per arroba, representing a 31% increase compared to Brazil, and in feedlots, it was US$78.02 per arroba, a 36% difference.

There might even be a potential advantage for Brazil in the growth of Argentine beef exports: Brazilian meatpacking plants could expand sales to the neighboring country. However, Cepea notes, “In any case, this trade is likely to be modest.” According to USDA data from last year, Argentina’s total beef import was only 7,000 tonnes.

Source: Broadcast Agro

Click here to read the original text: http://broadcast.com.br/cadernos/agro/?id=T09vUUlLV21BTGxuYzVnOXA1ZitYQT09

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