On 22 June 2021, the Argentine Government enacted a new beef export restriction regime. Under Decree 408/2021 (the Decree), the Government is limiting total Argentine beef exports and banning the export of certain cuts. The Decree follows the suspension of beef exports for 30 days on 19 May 2021.
The restrictions are purportedly aimed at reducing domestic beef prices, which increased 64.7% between April 2020 and April 2021. The new measures will be trialled until 31 August 2021. They could be extended to 31 December depending on the Argentine Government’s assessment of the impact on domestic prices.
New quotas under the Decree
The quotas announced under the Decree limit Argentine beef exports to 50% of the average monthly volumes exported from July to December 2020. Argentina exported an average of 57,000 tonnes of beef per month in July–December 2020.[i] Total Argentinian beef exports could be limited to approximately 28,500 tonnes per month, depending on how the new quota limits are applied.
The Decree also prohibits the export of bovine carcass, half-carcass, forequarters and hindquarters bone-in, as well as seven popular beef cuts, until the end of 2021. These cuts include barbecue cuts (short and back ribs), navel, rose meat, brisket, bottom round, chuck and flank.
The export ban does not apply to high-quality cuts destined for the EU under the Hilton Quota Agreement and the 481 Quota, as well as the 20,000 tonne quota to the US and 800 tonnes to Colombia.
The Argentine Government has not ruled out additional export restrictions to support domestic food security and reduce food prices.
What the quota limit means for Australian beef exports
Australian beef production is currently constrained by herd-rebuilding following several years of drought. This limits the ability of Australian exporters to increase the quantity of exports. Australia, however, will benefit from increased beef prices if global supply is further constrained.
The long-term impact on beef markets will depend on the duration of the disruption to Argentine beef exports and the ability of Argentine exporters to continue supplying their regular markets. Ongoing disruptions may result in opportunities for Australian exporters as markets traditionally supplied by Argentinian beef exporters seek alternative suppliers.
In 2020, Argentina was the world’s fifth largest exporter of beef (by value).[ii] Argentina was China’s second largest supplier of beef, accounting for 20% of the value of China’s beef imports. Argentina is also a key supplier to the EU, Israel and Chile.
Argentina beef and veal exports by country, 2016 to 2020
Source: UNComtrade, 2021
China beef and veal imports by country, January 2018 to April 2021
Source: General Administration of China Customers, 2021
Beef is an important component of Argentinian culture. Rising beef prices and falling GDP per-capita, however, have seen beef consumption fall to its lowest level in 100 years. The 2021 Argentine legislative election is scheduled for 14 November 2021, with high beef-prices a politically sensitive issue.
The use of quotas, export taxes and suspensions aimed at reducing food prices is not unusual in Argentina. While these measures are resisted by exporting sectors, they are popular with sections of the population who believe these measures will increase food affordability.
- In 2006, the Argentine Government suspended beef exports for 180 days, aimed at halting domestic price increases. Following the initial period, beef export quotas were put in place until December 2015. Over this period, Argentine beef stocks decreased substantially.
- Since December 2019, the Argentine Government has introduced a range of policies, including export taxes, temporary suspensions of exports in key commodities and food price controls.
Export taxes levied on selected Argentine agricultural commodities
Argentina regularly maintains a range of variable export taxes on certain agricultural products.
Export tax rate
Wheat, rye, barley and corn
As of 22 June 2021. Export taxes may vary within HS Chapter groupings[iii]