A millionaire business about to be lost for Argentina

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This is an activity that generated more than $ 3.1 billion over the past year. Now, the sector operates at just 15% compared to the rhythm of 2019

The pandemic is hitting numerous branches of activity. And without a doubt, in the top 3 worldwide are the aeronautical industry, the hotel industry -including travel agencies- and gastronomy.

In the case of Argentina, one of the sectors that is suffering the most from the pandemic is meat: exports of beef cuts are virtually slowed down.

“The complex situation of the export markets for Argentine meat added to the null reaction that we can expect from the domestic market, will consolidate a downward price trend in the short term,” warns a report by the Rosario Stock Exchange, in a context where the value of the cuts copied the national agenda.

BCR experts warn that “foreign buyers are in a situation similar to the local one, exacerbated by the greater proportion of consumption outside the home, which is currently literally devastated.”

From the entity confirm that, while waiting for signals from China, the main European markets to which Argentina supplies. “Many buyers have stopped the charges while others are pretending to renegotiate contracts under very unfavorable conditions. Given this, many exporters decide to cancel operations at the cost of continuing to accumulate warehouse stocks, “they warn.

Along these lines, a Reuters report warns that shipments of beef cuts to the two main destinations “are practically stopped due to the effects of the coronavirus pandemic.” China, according to the agency, You are buying just 15% of what you used to buy.

This is a business that Argentina lost, the key to generating foreign exchange – it is definitely a surplus – and decisive for regional economies: in 2019, the volume of total beef exported reached a record high of 567.5 thousand tons of product weight ( boneless).

According to data reported by the Chamber of the Meat Industry (CICCRA), this implied an increase of almost 59 percent compared to the volume registered in 2018.

In terms of bone-in beef, then shipments totaled almost 845,000 tonnes, up 50 percent. In addition, it represented a level 9 points higher than the previous record, which had taken place in 1969.

In parallel, the total invoiced for foreign sales of beef was equivalent to 3,104 million dollars in 2019. This implied an increase of no less than 58 percent in relation to the values ​​of the previous year.

And what role did China play in this boom experienced by the Argentine beef? The Asian giant consolidated as the main client for the national refrigerators.

China has a gravitating power over the meat business in Argentina: according to CICCRA, its share of total exported volume reached 75% in 2019.

Not only that: the growth of shipments to the Asian giant, of more than 100%, explained all the rise experienced by shipments from the industry in general during the past year.

However, that is already history: the Consortium of Exports of Meat ABC confirms that The Asian giant is buying a minimal portion of what it used to buy.

Stock accumulates

The Rosario Stock Exchange warns that, despite the drop in exports, the task remained relatively constant.

“In the first two months of the year, meat exports reached some 112,000 tons after falling more than 36% compared to the last two months of last year. However, the level of production contracted only 12%, responding more to a matter of seasonality that a movement of market adaptation. This has generated a surplus of supply that reflects an increase in the stock of merchandise accumulated by most of the refrigeration plants, “warned the entity.

Paragraph aside, they added that this was far from being a speculative move. “On the contrary, the industry stock it has been the result of an abrupt drop in export demand, in a context in which domestic consumption offers little absorption capacity. ”

Furthermore, the BCRA warned that the growth in domestic demand that occurred in March was not genuine. “What was bought in excess in the last days, will be less demand for the next. Recall that the purchasing power of the employee remains low, to which is added the retraction that is suffering the consumption of meat that is sold in restaurants” they concluded.

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