The Year in Beef from Argentina!

This post is TOO LONG!  But it's chock-full of beefy goodness.  I hope you enjoy.

So much news!  So little time.  With the mid-fiestas lull in the events, my chance has arrived to update you on the state of Argentine beef.

For beef lovers, the state of the national dish is bad.

The past week or so has been chock-full of major developments in food producing.  I don't think there has been a more eventful week in Argentine beef ...and I'm including the big farm strike of a couple two tree years ago.

So let's get crackin'.

I can't speak for the causality ...but you can chart all the recent big doin's from two weeks ago when the NYT published an article in their Montevideo Journal.  It's a primer good enough to warrant your re-reading.

A day or two after reading that article, I found myself in my favorite road-side parilla on a trip to our ranch.  It's too far from Buenos Aires to recommend the trip ...but for my wife and me, there's no place in Capital that can touch it for the real flavor of Argentine beef.  All the cuts are lovingly prepared más o menos in the open air by a bald-headed fireplug of a man with the face of a cherub known only as Palomo.

The asado was disappointing.  Worse, it was about the third disappointment in almost as many recent visits.  The beef although beautifully prepared and tender just didn't satisfy.  We ordered more hoping against hope that it was an aberation.  I reached for the salt shaker two more times.  I even applied some black pepper.  Still no dice, nothing I could do would make this meat scream "BEEF" in my mouth the way it should.  Most disturbingly, the morsels of lean were swaddled and slathered in big layers of fat.  This was feedlot beef.

"Palomo, what is this?  Feedlot beef?"

He shook his head,"it's all feedlot beef now. I don't even eat the stuff anymore.  Nowadays, I eat chicken."

WTF?  My favorite asador in my favorite parrilla tells me he's a chicken eater? 

It had to be true, though.  I don't know of anyone, except my wife and I, that still produces grass-fed cattle.  I should know at least a few, but I don't.  In fact, I don't know all that many beef producers anymore.

A drive of 300km into the center of the province used to show you herds and herds of Aberdeen Angus cattle.  Now the sight is a bit of a rarity.  More freaky is the sight of fields of lush natural pasture ...with no cows.  That never used to happen.

This last year has been the worst in half a century for ranchers in Argentina, bar none, according to the experts.

You won't find a smoking gun or "lone assailant" in your search for the reason why.  When complex systems go down, it's never due to any one particular reason.

1. The worst drought in a half a century was a factor.  Depending on where, many herds were rushed off to slaughter before they starved to death.  Many did starve to death in the fields.  So many that it wasn't worth skinning them for their hides as the bottom has fallen out of the hide market.  You always could get someone to butcher your cattle for allowing them to keep the hides and innards.  Nowadays, the hide merchants are sitting on a six month inventory.

2. Price controls imposed on all levels of the industry trickled down to hurt ranchers the most, leaving cattlemen with the option of either getting out of the business or increasing the scale of their operations in order to cope with the low prices they now received per head.  Those restrictions combined with even earlier measures restricting the slaughter of animals below a legal weight had forced ranchers to keep cattle longer thus increasing their costs at the same time.

3. The price of grains on the world market skyrocketed at the same time.  Many ranchers converted their very best pastures to corn and soy, shrinking their herds onto whatever grass was left ...or just getting out of the cow business altogether.

4. Those who wanted to remain "grass-fed ranchers" found themselves selling exclusively to feedlots because their traditional buyers had all converted their "wintering pastures" to grain.  This consolidated the buying power of feedlot operators giving them more leverage to extract the lowest prices from ranchers.

5. Feedlot operators got into trouble, too.  With the record high prices for grains to feed their lots (not to mention the high overhead of blasting feedlot cattle with massive doses of imported anti-biotics) the only way they could make a profit was with the government subsidies.  Feedlot operators received financial support at first but, for many reasons, the checks stopped coming to most of them.  Many feedlot operators are now borrowing from banks in hopes that those back-payments will eventually arrive.

The result of the above cascade was slaughter, slaughter, and more slaughter.

At first, grass-fed beef flooded the cattle auctions as ranchers found it impossible to expand their economies of scale without either becoming feedlots themselves ...or by buying more pastureland which was now too expensive and/or unavailable from having been converted to high-paying grain production.  Beef from these ranchers may have constituted the last great wave of what we all came to love as Argentine beef.  Prices at auction for ranchers began to drop as the volume of cattle to market increased.

"Grain finished" beef, beef that was raised on grass for most of the animal's life but fattened on grain for the last part, then entered the market in a big way as even more ranchers decided to throw in the towel and feedlots ramped up production to take advantage of their economies of scale  The chance of prices recovering for ranchers was becoming nil under this scenario.

Corn-fed beef, from cattle raised almost exclusively on a non-grass diet is now taking the place of the above two catagories on grills and in supermarkets all over Argentina as traditional grass-fed beef is shrinking into non-existence.

Newsflash: Feedlot operators, however, are now having trouble keeping up with demand.  Their vital subsidies, at last report, are still slow in coming and their interest payments on money borrowed against those payments are due with regularity.  Prices for grain and imported antibiotics are still high.

Although statistics for 2009 show a robust year for cattle production in Argentina, there's a big problem.  Half of the more than 15 million cattle slaughtered this year have been females, a shockingly high percentage.  That figure alone means that beef production, from either grass or grain, will take a long time to recover.

Recovering lost beef production is always a long hard task.  In the current environment, however, it will be even more of a problem.

Once pasture is converted to cropland, it is an expensive proposition to convert it back.  So much so that it is hard to imagine it being done on any appreciable scale.

For example, if you were to consider converting a field of soy into pasture, you would have invest about the same amount of money in fertilizer, pesticide, and seed as you would to replant in a high-paying grain.  Add to that the "lost" harvest as you wait for the grass to be ready for cattle ...then the expense of buying cattle to eat it ...then waiting for the animal to fatten and/or reproduce ...and you begin to see quickly how pastureland never comes back. 

It especially looks like a losing proposition if there are no cattle to buy.

Newsflash: Argentina's national herd could drop to its lowest level in history.  Unless females are held back from the market this season, Argentina could end up with 50 million cows, down from a recent record high of more than 70 million.  Among that smaller herd are many animals still recovering from the drought making them poor candidates for pregnancy and weaning.

Retaining those animals will be an even more difficult decision in light of new higher prices making sale to slaughter even harder to resist.

Newsflash: A sudden drop in the number of cattle sent to auction just before Christmas sent prices up.  Female calves have been selling for about $3 pesos per kilo for years.  Prices have recently risen by 60%.

Newsflash: The Argentine commerce ministry sent price inspectors into the major meatpacking plants last week to enforce price restrictions on beef.

Newsflash: Argentina has stopped issuing permits for beef exportation in order to keep domestic beef supplies high for the holidays.




Analysis?  All-in-all a rough year for lovers of that beefy goodness that is synonymous with Argentina.  Something's got to give ...but, as of this writing, nobody knows quite what it will be.  Already, your asados are less tasty albeit as cheap and plentiful as ever.

What could bring back the days of that grass-fed flavor and healthfulness?  I can't think of anything.

In some ways, it is a natural progression: the grain-yields available to folks with agricultural lands since the Green Revolution have made grass-fed cattle a less and less attractive proposition.  Although shot-through with the necessity of spraying expensive poisons, growing genetically modified corn and soy also removed a lot of the risk of crop failure from farmers at the same time reducing their need for farm labor.  This effect of g.m. crops has sometimes been called the "farmerless farm" even further consolidating the hold of giant agribusiness.  A local saying reinforces this by inferring that gm soy and corn "are planted in downtown Buenos Aires ...by telephone."

In other ways, the production of the world-famous Argentine beef has been abandoned and/or deliberately thwarted.  Ranchers here have never asked for nor received protection from the marketplace ...but can't survive the combination of being subject to the controls deemed necessary for an industry deemed to be of national importance without some corresponding support.  Similar situations become political "footballs" for other nations, as well (think: cheap gasoline to yanquis ...or nationally produced rice for japanese) but those nations give something of a corresponding measure of support to their "national treasures."  Perhaps, Argentine beef is neither deemed necessary nor a national treasure but a political football it remains. 

The recent rise in beef prices could be a boon to those ranchers with grasslands too marginal for crops ...but grasslands that marginal probably don't stand much chance of fattening cattle to market weight.  Those ranchers will probably end up supplying young cattle to what will be left of the feedlot industry.

Grass-fed beef could become a "boutique industry" but only if the market can differentiate it from corn-fed.  As it stands today, my grass-fed beef goes into the food chain without any distinction ...in price, quality, or otherwise.  That could change in the coming year but for it to be possible there would have to be large-scale, widespread changes in the way that beef is allowed to go from farm to table.

My wife and I maintain our herd to this day in all their traditional, natural goodness.  We decided last year not to sell our beautiful black babies to the feedlots in favor of intensifying our grasslands toward fattening them to full market weight.  We can't sell them directly to you, however, so put away that possible solution to your obtaining the beef that you came here for.  The only help for us is help for everyone that has not yet abandoned the traditional ways.  Studiodio, suggested that we expats should all begin asking our waiters if the beef is grass-fed or feedlot.  On reflection, I haven't been able to think of a better way for consumers to move this marketplace.  If you've got some more ideas just let me know.

If you can forward and link to this post ...it might help get the word out.

I could have "beefed-up" every paragraph in this post to point of at least doubling it.  If I've done my job right, I've left you with more questions than answers.  Please feel free to send your questions regarding Argentine beef in the comments.  The coming year stands to be the most interesting since Pedro de Mendoza set his herd free into what could only be described as "cow heaven."

Grass-fed cattle will be focal point for this blog throughout 2010.

Happy New Year,
Mike