Uruguay takes advantage of the context where Argentina restricts beef exports.
The national government’s decision to restrict beef exports not only affected local shipments, causing multimillion-dollar losses to the chain as a whole. It also represented a spectacular advantage for external competitors, especially for our neighbors, such as Uruguay, which since then had an explosion in prices, labor and shipments abroad.
Although Argentine exports to August (the last month where there is official data) did not drop much in volume (-0.2%) and value (-3.4%) in the year-on-year comparison, there are declines in June shipments , July and August, in which the stocks had its longest validity. According to the Institute for the Promotion of Beef (IPCVA), monthly shipments went from 63,420 tons in May to 36,299 in June, 36,787 in July and 45,925 in August, figures much lower even than the average of the first months of the year, in shipments they are minors.
It was in those months that Uruguay got off the ground. Although the explanation of the jump is not only attributable to the Argentine retreat, the coincidence weighs. For example, according to data from the National Meat Institute of Uruguay (INAC), accumulated sales to date grew 44.9% year-on-year, to USD 1,628 million.
Until June, the increase in shipments measured in value was 27.6%, a very considerable figure. But the increase since June was 65.4%, with a peak of 90.4% in July, and interannual increases of 89.2% in August and 68.2% in September. They slaughtered 1.94 million heads, an increase of 36.6%, but until May it was 28.4% and from June to date it was 46.5%.
With a little help from the chamigos
In dialogue with Infobae, the former Vice Minister of Economy of Uruguay, livestock producer and consultant, Gustavo Licandro, assured that “the available information is that indeed the restrictions of Argentina have ended up favoring our country as an exporter of meat. Here, three-quarters of what is produced is exported and volumes have been growing, average export prices continue to rise and slaughter levels in winter were record high. It means that the demand is there. How much Argentina contributes to the success of Uruguay is difficult to measure, but Argentine meat that is not consumed in the world and in some places was replaced by Uruguayan meat ”.
Gustavo Licandro, former Uruguayan official.
Likewise, Licandro placed special emphasis on the strong Chinese demand which, as for Argentina, is the main destination for Uruguayan meat: it accounts for 65% of shipments from the Banda Oriental. According to former administration official Lacalle Herrera, “what Argentina did was shoot itself in the foot, because he said ‘the Chinese want to buy me but I don’t want to sell them, let them sell another one.’ And there the work increased and the export volumes and prices also ”.
The phenomenal increase in Uruguayan export indexes, apart from the empty space left by Argentina, is also related to the fact that some Brazilian plants have prevented access to the Chinese market and also that there is a political conflict with Australia, limiting shipments, explained Licandro. “Uruguay is benefiting from these situations. The export price has reached an all-time high, with the average tonne exceeding USD 5,000, ″ he said.
For the Argentine consultant who has been living in the neighboring country for 16 years, Guillermo Binello, although neighboring countries and other geopolitical issues opened doors to Uruguay, there is also merit in his long-term policies. “Uruguay has done things well: there is merit from the neighbors, but let’s agree that in the last 15 years (Uruguay) has worked very well,” he said.
“All governments historically protected the agricultural sector, without withholdings and without differential dollars. No government interfered with the great national policies: they are respected and fulfilled. It is very easy for me to do a project of an agricultural establishment, because I open an Excel spreadsheet and I can do them despite ten years from now, because I know that the rules of the game are not going to change and the only thing I have to do is to pray is that the prices of the commodities are maintained and that it rains ”, concluded Binello.
“In Uruguay the price of the farm follows the international price; there is freedom of export; there are no withholdings; there is no need to make the export settlement in national currency, which means that the export is made in dollars and in the place of the world that you want and, finally, the export of live cattle is allowed ”, highlighted Licandro, who was one of the mentors of these reforms in the early 1990s.
In Uruguay the price of the farm follows the international price.
“All of that was never touched. Uruguay has had total freedom of cattle trade for more than 30 years. The price of meat moves in the world and it moves in Uruguay and the consumer. Today the price of meat has risen, but no politician or consumers themselves, beyond the annoyance that something you want to buy is more expensive, no one complains and no one thinks of an administrative measure to lower the price ” Licandro remarked.
Beyond this, Binello remarked that “whoever comes to Uruguay thinking that he is going to be filled with money is wrong: he is going to have to come to work, the profit margins are not really high and living here is not cheap, but probably Get rid of having a heart attack on the road “and he concluded:” It is not the same tax pressure as in Argentina that for every ten soybean trucks that are produced the State keeps seven, it is much less. The profit cap is 25%, for example ”.
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