From 1997 until last year, Brazil was able to achieve an important transformation of grain into animal protein, according to the BCR chart.

Argentina dispatches one ton of meat for every 40 tons of corn. While for Brazil that proportion is one in 5. Thus, for every ton of the cereal they ship, the South American giant sells to the world 8 times more than our country in bovine, avian and pork proteins.

The contrast was evidenced in a report from the Rosario Stock Exchange (BCR), which analyzed the evolution for the last 20 years in both countries. Although both nations are large suppliers of South American food, and share a similar profile, the composition of these exports “is considerably different,” they indicated. Desiré Sigaudo, Guido D’Angelo and Emilce Terré, analysts from the Department of Economic Studies of the Santa Fe entity.

The difference occurs because Brazil produces twice as much corn, 100 against 50 million tons, and uses a good part of the border grains inside. It transforms it into meat, both for consumption by its population (5 times greater than Argentina) and to sell it to other countries.

Tied in corn, defeated by a landslide in meat exports

While Argentina oscillates around one million annual tons of exports in the meat sector (Hegemonized by beef cattle with 750 thousand tons, plus 200 thousand tons of chicken and 50 of pork), Brazil reaches 6 million tons (4 chicken, 2 beef and 1 pork), although in the external shipments of the yellow grain they are almost equal, in around 35 million tons.

The BCR specialists highlighted that Brazil is “the third largest producer and exporter of corn worldwide”, and in the last 20 campaigns (1999 / 00-2019 / 20) its production of the cereal tripled, resulting in “In large exportable balances that led to a 5-fold increase in sales of yellow grain abroad.”

However, not all domestic productive growth resulted in corn exports, but this crop served as an input to promote the development of the meat sectors, which already enjoyed a strong roots in the rural activity of the South American giant. “In the period considered, Brazilian exports of beef, pork and poultry grew almost 7 times”, Highlighted the BCR.

From 1997 until last year, Brazil was able to achieve an important transformation of grain into animal protein, according to the BCR chart.

Thus, Brazil went from exporting more meat than corn in 1999, to currently dispatching 5 tons of cereal each of meat. “Although the exports of the meat industry could not keep up with the shipments of corn, they have a very close relationship that is vital if the prices paid for both products in international markets are taken into account,” added the BCR. .

As a reference, in 2020 the average value of the exported ton of Brazilian corn was US $ 170, while the average price of the tons of meat shipped abroad was US $ 2,300.

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Meanwhile, Argentina, which is the fourth largest producer and second exporter of corn in the world, has traveled “a very different path.” In the last 20 cycles (1999 / 00-2019 / 20) the national corn production tripled, leading exports to multiply 3.5 times their volume.

Unlike Brazil, where exports of meat grew in greater proportion than those of unprocessed grain, In Argentina, meat shipments tripled in this period, below the growth of grain shipments abroad.

The country could not boost meat production in the same way that it grew in corn exports.  (Source: BCR)
The country could not boost meat production in the same way that it grew in corn exports. (Source: BCR)

“With a higher exportable balance of corn in the late 1990s than Brazil, Argentina was unable to take advantage of the input to boost exports of higher value-added products, such as meat”, noted the BCR.

In fact, they stressed, These shipments were for a large part of the period limited by quotas or high export duties. In 1997, the country traded one ton of meat for every 36 of corn. This difference was reduced in the first years of the new millennium, dropped to 12 in 2009 and rose to 57 in 2016. Currently, it stands at around 40 tons of corn per ton of exported meat.

“This export composition deprives the Argentine economy of capturing the added value derived from transforming the export of vegetable protein into animal protein. In 2020, the average value of the exported ton of Argentine corn was US $ 160, while the average price of the exported tons of meat was US $ 2,780 ″, they detailed.

Interventionist measures hurt bovine exports

“To understand the fluctuations in Argentine meat exports during the last two decades, it is essential to review the main economic and political events that impacted the market,” analyzed the BCR.

In 1991, Argentina dissolved the National Meat Board, eliminating export restrictions and retentions. Towards the end of the decade, foot-and-mouth disease was eradicated, a fact that allowed the reopening of international markets for this food.

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In 1997, the starting year of the analyzed time series, Argentina exported 299,000 tons of beef (worth US $ 780 million FOB). In other words, it shipped 5 times more than Brazil’s exports and obtained an FOB value almost 4 times higher than that achieved by the neighboring country.

During 2001, Argentina suffered a re-outbreak of foot-and-mouth disease that resulted in a temporary drop in exports, although they would regain dynamic growth in subsequent years. But reference prices were reinstated in 2005, slaughter weight was limited, refunds to meat exporters were eliminated, and export duties of 15% were imposed on meat.

Brazil had an exponential growth of its bovine exports while Argentina showed strong periods of stagnation as a consequence of the different state interventions in the market.  (Source: BCR)
Brazil had an exponential growth of its bovine exports while Argentina showed strong periods of stagnation as a consequence of the different state interventions in the market. (Source: BCR)

In 2006, exports were closed for 180 days “In breach of Hilton quota commitments. Export quotas (red ROE) and reserve requirements were added to the withholdings, thus entering a stage of managed foreign trade ”, indicated the BCR on the measures taken during the mandate of Nestor Kirchner.

At the same time, Brazil had sustained “spectacular growth” in its external meat shipments. In 2006 it already sold 3 times the volume in tons shipped by Argentina, for a value 2.5 times higher.

After a decade with a heavily intervened market, the placement of Argentine meat fluctuated between 200,000 and 400,000 tons per year, when Brazil remained above one million tons in nine of the ten years.

As of 2016, with the beginning of the presidency of Mauricio Macri, the withholdings on meat exports were left without effect, taking advantage of the boom in Chinese demand, tripled in volume and value in the short period between 2015 and 2019.

In December 2019, withholdings on meat increased to 9%. In the current year, the meat sector was again intervened by the current president Alberto Fernandez, first with the creation of the Meat Export Affidavits and then by the temporary partial closure of shipments abroad.

The evolution and opportunities of poultry and pork

According to the pork meatArgentina has not yet exploited the “optimal conditions it has to see its production and export grow,” said the BCR outlook.

The swine trade balance was “consistently negative in recent years” for our country. And although in the last year the export of pork cuts doubled and it was possible to twist that historical negative balance, the closing of exports in 2021 “makes it difficult for foreign trade to grow above this level again.”

Even more, Until the month of September pig exports accumulate for about US $ 39 million, while imports in this same period of 2021 already exceed US $ 66 million.

In pork, our country has not yet exploited the “optimal conditions it has to see its production and export grow,” the Santa Fe entity reported.

In this framework, the comparisons of the foreign trade of Argentine pork with the Brazilian “are out of scale”, according to analysts. “Our main commercial partner has managed to boost its exports with much more impetus than Argentina.”

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The outlook is different for avian chain of our country, as specified. “Argentina rarely requires imports of poultry meat, at the same time that it exports in amounts much higher than the pig sector. However, avian foreign trade has not yet managed to break the historical exports of 2013, achieving in 2020 less than half of the value traded in that record ”.

The poultry sector has still not managed to exceed shipments abroad in 2013, falling last year to less than half of the value marketed in that record.
The poultry sector has still not managed to exceed shipments abroad in 2013, falling last year to less than half of the value marketed in that record.

Meanwhile, the BCR commented that a panorama of reconversion of many countries from importers to chicken producers “would limit the possibilities of commercial opening of our country.”

At the same time, sustained recessions in recent years limited domestic consumption of poultry meat, resulting in “limitations in taking advantage of opportunities in the sector.”

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