Moscow concerned over Argentina’s decision to cut beef exports

When Argentine president Nestor Kirchner decided last week to suspend beef exports for 180 days in an attempt to tame inflation, he might have not taken into account the consequences it could have for the local industry and its clients around the world. As local farmers reacted angrily to the government decision, Russian and Israeli authorities have expressed their concern over a measure that could hit their local markets.

Russia is the main importer of Argentine beef, but despite its prominent position was not adviced that something like that could happened. According to specialists, Russia widely depends on Argentina to keep its beef market undercontrol since banned imports from Brazil due to foot-and-mouth Disease (FMD) cases reported.

According to the Argentine daily Clarin, the Russian Embassy in Buenos Aires is concerned over the situation but refused to formally protest at the moment. Moscow has reasons to be angry and feel somehow discriminated by Buenos Aires; Morocco, Venezuela and the EU are going to keep being supplied regularly.

Analysts believe that if Argentina do not overturn the decision, Russian beef internal prices could go up to 25% in cities as Moscow and Saint Petersburg. Therefore, processors who import their beef from Argentina are scrambling for another source of supply but there are not many options available in the market.

Argentina is the world third beef exporter after Brazil and Australia but also a great internal consumer. In what some consider a extraordinary move Argentine President Nestor Kirchner last week said the six-month ban on most beef exports would help the country fight rising inflation and escalating food prices. The ban took effect on Monday.

Kirchner said the ban is a way to protect Argentinians from export-driven price hikes. He expects increased domestic supplies will reduce prices, which rose by 20 per cent in 2005, according to media reports.

The ban sparked angry protests from local producers who see how their patient policy to fight FMD and open markets across the world vanished in a minute. Farmers accused Kirchner of “having no policy to support the industry and adopt populist measures to bring down retail prices”.

In an article printed on Wednesday by the local daily La Nacion, the center-left leader Elisa Carrio urged Kirchner to overturn the measure and adopt a comprehensive “plan to develop the beef industry”. Mrs. Carrio said that inept policies adopted by incompetent officials lead to the crisis and that “lies do not bring down prices”.

The discovery last year of foot-and-mouth disease on ranches in the northern province of Corrientes led to a Russian ban on beef from the region. The foot-and-mouth outbreak was discovered less than three months after Kirchner decided to increase Argentina's tax on beef exports to 15 per cent from five per cent and to cancel rebates of other taxes for meat exporters.

Russia buys as much as 32% of Argentine beef exports, which means incomes for the South American country of about $ 450 million.

Hernan Etchaleco

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Author`s name Dmitry Sudakov