China's Meat Craving Could Fuel Argentina Export Boom
Argentina, one of the world's big meat exporters, could earn itself a fortune exporting to China. For now the Argentine government is more focused on avoiding shortages at home.
BUENOS AIRES — China's voracious and growing appetite for meat should be great news for Argentina, one of the world's biggest meat exporters and a country in dire need of boosting foreign trade.
Business ties between the two states were recently confirmed with an official visit to China by an Argentinian delegation led by President Cristina Fernández de Kirchner. The two sides reached a crucial agreement that fine-tunes existing protocols on the hygiene of meat products.
Seemingly overnight, China — already a crucial consumer market for so many economies — has become the planet's leading beef importer, a sign of prosperity and its citizens' adoption, for better or worse, of "Western" eating habits.
As recently as 15 years ago, China imported virtually no food products. Yet even then, writer Lester Brown could foresee changes, observing in Who Will Feed China? that the world's most populous country had overcome the hunger problem but would soon face another challenge, that of changing eating habits. A society that emerges from poverty and betters its living standards consumes more animal proteins in all their forms.
Beef is the highest stage of this dietary transition. China is already the biggest consumer of pork meat products, with chicken close behind. The KFC chain — owned by Yum!, the world's biggest food firm — opens a store in China every 16 hours.
[rebelmouse-image 27088647 alt="""" original_size="1024x768" expand=1]
In Beijing — Photo: Tom Caswell
To meet such demand, China has increased domestic production and is also vacuuming up soy worldwide, this being a key component of livestock feed.
A tax blunder
While it managed to export some of its excess soy production in 1996, this year the country will import 75 million tons of soy, 50% more than Argentina's production. Again, while in 2008 investment bank Goldman Sachs spoke of buying a dozen pig farms in the Hengyang area, last year China bought the biggest U.S. food producer, Smithfield Foods. It is also buying 51% of Nidera and Noble, two seeds and grains firms, to consolidate the irreversible flow of basic food products toward China.
Self-sufficiency is much more complex when it comes to beef, which is an enormous opportunity for Argentina. Or would be, if the rules had not changed for producers here. In spite of an incipient recovery in beef stocks, this follows the 2009-10 debacle when officials decided to penalize exportation with the "clever" idea that this would assure domestic meat supplies. They were mistaken, because incentives for exportation would have boosted production overall, both in terms of animal numbers and weight per head.
There were no incentives of course and exporters still have to pay a 15% export tax. This is a real glitch for a high value-added product with a range of spin-off revenues — through the refrigeration industry for example, which creates the most jobs in quantitative and qualitative terms. Stricter exportation conditions also help boost quality and security for domestic supplies.
The export industry is in deep crisis, especially those firms that arrived here 10 years ago hoping to exploit a promising global market. These included Brazil's leading animal protein producers JBS, BRF and Marfrig, whose arrival was a strategic decision taken by the Brazilian presidency. Most of their plants today stand idle or are barely running. With current livestock prices, they would need some kind of fiscal or sanitary magic to become competitive again. China is waiting.