How competitive is Argentina's beef production?

Argentina is an important producer of quality beef. Beef is produced in extensive grazing systems at low productivity levels and low final weights. Sporadic outbreaks of foot and mouth disease still create problems in the northern parts of the country. There has never been a reported BSE-case in Argentina. The costs of producing one kg of beef in Argentina are just 25 % of production costs in Germany. At approximately 60 kilograms per capita and year, Argentina has the highest beef consumption in the world. Export shares vary between 10-15 % of production. The most important export type of meat is fresh and chilled meat. Main export destinations are the EU (mainly Germany), the U.S. and, with increasing importance, North Africa and the Far East. Argentina has a market share of approximately 20 % in the market for high-value beef in Germany. Favourable natural and climatic conditions, large and well structured farms, and low land prices create favourable conditions for beef production in Argentina. For export purposes there are modem slaughtering plants meeting EU-standards. On the other hand, a number of mainly 'self-made' problems exist including political instability, corruption, high interest rates and the absence of an active foreign marketing. The potential of increasing beef production and/or net exports appear to be less than frequently assumed. Competition with other land uses, possible increases in the domestic beef prices, orientation toward traditional production systems, the reputation for 'natural' beef and a lack of capital set the limits. It is, however, likely that further liberalisation will create further price pressure on the German high-value beef market.