In the pubs of Buenos Aires, conversation flows are high, and in hushed tones, one topic dominates everybody’s talk. Argentina importing beef. The talk has fueled the prevailing pessimistic mood at the world-renowned Palermo agricultural show in the country’s capital. Argentina importing beef. A thought almost untenable in the minds of common Argentinians – soccer, beef and wine, these are the three measures of a good life for them. And if one of these staples of life falters, it is a sign of bad times. Starting with a crippling drought that played havoc with its wheat crop, Argentina now is grappling with the prospect of having to import beef from neighboring Uruguay.
Facing criticism is Argentine President Cristina Fernandez de Kirchner and her predecessor and husband, Nestor Kirchner. When faced with spiraling inflation and sky-high food prices, the President imposed price controls on food. The policies were popular with the poor as domestic prices of beef were kept low; but beef producers fumed, stifled by the export taxes. In 2006, Argentina exported one million tons of beef to a range of destinations. This year, exports will barely make it to 100,000 tons.
Which leads to the unthinkable question uppermost on everyone’s minds: would Argentina finally have to import beef?
The country is the highest consumer of beef in the world, with each Argentinian consuming about 150 pounds of beef a year. Uruguayans follow, clocking a distant second. Beef producers acknowledge that demand remains strong but government policies have stymied growth this year. Kirchner’s government suffered a severe setback in recent mid-term elections as farmers vented their fury over the government’s commodity-export taxes. Kirchner on her part insists that her goal in keeping the taxes high was to provide economic stability and keep inflation within manageable limits. Official inflation figures, which are hovering at just around 2.7% in the first half of the year, are barely trusted in Argentina, and unofficial figures estimate the rate to be as high as 7%. All this paints the picture of an economy simmering in unrest, and with popularity ratings sliding, it appears that Kirchner is desperate to arrest the slump.
There may be one silver lining among the clouds, though. With soybeans hardly being the staple diet of Argentinians, the government left that sector virtually untaxed and many desperate farmers are cutting herd sizes and instead planting soybeans. Between 1994 and 2004, it is estimated that the total land in Argentina under soybean cultivation grew by 236%, reflecting global demand for biofuels as environmentally sustainable energy sources. Consequently, Argentina became a top soybean producing and exporting nation, reaping the benefit from its vast expanses of land. It is now estimated that over 60% of Argentine farmland is now used for soybean cultivation. Still, this only means that there is less land available for grazing cattle or the cultivation of grains like wheat.
The Argentinian government has indicated that it may relax the strict export limits following an increase in beef supply. But is too little too late? Already, competitors like Brazil and Uruguay have risen to the ranks of the top beef producers. With Argentina facing a recession and a currently unpopular government, the country might just have to solve its internal problems soon before the unthinkable becomes reality.
Postcards from Around the World
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