Argentinian beef sector takes a hit from the EU foodservice closure
The Argentinian beef industry is feeling the impact of the COVID-19 pandemic in most of the main markets opened so far. Exports to China have decreased in the first quarter of the year, especially in February, when 11 major cities were lockdown by the Chinese authorities in a bid to stop the spreading of coronavirus. In January 2020, there was a 35% reduction in shipments in relation to the previous month, according to sector sources, while February saw a further 30% decline. March data are unavailable but the volumes exported to China are not expected to make a sudden jump.
At the same time, March was the month when almost every member state in the EU entered the state of alert due to the COVID-19 pandemic and the closure of foodservice channels across the continent is also expected to add severe losses for beef exporters. European beef purchases, particularly for high-value-added cuts included in Hilton and 481 quotas, have halted since March as the coronavirus crisis impacted the EU market. Even with demand for kosher cuts, particularly from Israel and the US, remaining firm, this temporary reduction in export shipments together with government measures – increased export taxes and the creation of a system to monitor the weekly variation in meat prices – has boosted supplies of beef in the local market. However, minimal interest from other markets will likely mean Argentina’s reliance on the China market will grow, according to a recent report from Meat and Livestock Australia.
Last year, Argentina´s beef exports reached a new record in 2019, with the shipment of around 840,000 metric tons, generating revenue of approximately USD 3bn. Global animal protein trade soared last year as a consequence of the African swine fever outbreak in China – the Chinese market accounted for 75% of Argentina´s beef exports.
Along with those elements, lockdown measures approved in Argentina since 20 March have slowed beef production as a number of processors have been forced to close, impacting the availability of beef for exports. A global beef market outlook released recently shows that China is the only major beef market to increase imports this year by 15% but that is expected to increase the competition between the suppliers and in the last 12 months there were signs that China is looking to diversify the sources for the beef imported, adding even small players in the global market as beef suppliers.
Photo source: Amigo Foods
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