Tuesday, December 06, 2011

The Year in Argentine Beef - 2011

It´s the Argentine National Day of the Gaucho!  What better time to look back on the state of the Argentine National Dish: Grass-fed, Free-range BEEF?

Was it a good year?  I guess it depends on whose ox was gored in 2011.

Supplies of any kind of Argentine beef are down.  Prices for beef ...from on-the-hoof to your supermercado ...are up.  Grass-fed, no-grain beef is disappearing rapidly while feedlot beef takes the day over and over again.

The number of cattle in Argentina continued to drop in 2011 ...20% in just in the last 4 years.  At the same time, the number of cattle that went to slaughter went up 10% from last year's incredible, historic lows.  What´s that mean?  Answer: fewer and fewer cattle and cattle-ranchers in Argentina.

Why are the numbers of cattle dropping?  Answer: the irresistible pull and profit from soy.  Raising free-range cattle is not all that complicated, as you might imagine.  However, growing genetically modified soy is so simple that it is often referred to as "the farmer-less farm."  You spray, you plant, you spray again, you wait, you harvest ...then sell at historically high prices.  The local saying is, "most of the soya in Argentina is planted in Buenos Aires ...by telephone."  You can literally "phone it in" ...and reap big profits even when soy exports are taxed at 35%.

What´s a cattleman to do?  Switch to soy.  It´s a no-brainer.  The money is so big that you can´t say no to it.  It´s the "offer you can´t refuse" especially when an outside company offers to pay you in advance, in US dollars, to plow-up your pastures.  You don´t care if the crop fails ...you already got paid in hard cash ...but your pasture and your herd are gone.

For cattlemen who have resisted soy´s siren song ...there is a consolation prize: prices of live cattle continue to rise.  Within the last four years, cattle prices have quadrupled for the most sought after categories.

But those live-cattle prices are the same for both feedlot producers and the remaining traditional free-range ranchers.  As such, there really is no economic reason for grass-fed ranchers to continue.  2011 did not see the emergence of "boutique meat" or any sort of premium for ranchers who continue avoid feeding their cattle anything but grass.

For that reason, as much as any other, only 20% of beef in Argentina came from all-grass ranches in 2011 ...down from virtually 100% in 1993.

My contacts in the meatpacking industry, however, inform me that there actually is a premium for what little grass-fed beef remaining in Argentina.  High-end steakhouses in Buenos Aires entice their suppliers to steer any obviously grass-fed beef to their restaurants.  In 2011, supplies of grass-fed beef even to those well-heeled establishments fell short.  For about a month this year, bife de lomo (filet mignon) of any kind was almost impossible to find anywhere.

The old saying from the commodity traders in Chicago is, "high prices cure high prices," meaning that if the price of beef is at an all-time high ...beef production will inevitably rise as investors enter that market in search of those high returns.  However, beef cattle has a natural cycle that is different from soy, corn, or household appliances.

Pastureland is economically easy to convert to grain production.  However, once converted to grain, it is a difficult proposition to revert to pasture.  A soy farmer, for example, would have to "give up an annual payday" harvest to wait for grass to return.  Even then, to populate his newly returned pasture with cattle is difficult because the price of live cattle is so very high now.  No one appears willing this year to give up a year´s soy profits in order to grow grass for cattle for which they will have to pay record prices ...then wait a year to send the calves to feed lots ...or the 3 years to fatten the cattle on grass.  Future free-range beef will no doubt come from those small and medium ranchers who have not given-up the method.  Expansion of beef production in Argentina doesn´t seem to be in the cards in the near term.

To add insult to the injury which the beef industry has felt this year, Argentines are turning away from their national dish due to its high price.  Argentines consumed a whopping 216 pounds of beef per person in 1958.  This year, the average may end up being about 100 pounds.  In 2011, beef consumption dropped 25% from the year before.  The title of "beef-eatingest nation" fell to Uruguay last year and remains so.

World-class beef in Argentina was as much of the national patrimony as cheap gasoline is for US citizens.  No one I know would have imagined either disappearing without a major expression of discontent.  As it has happened in 2011, Argentines have not complained in any notable fashion.  My opinion is that all the beef available outside the toniest restaurants ...just isn´t as satisfying as it used to be anyway.

Are exports sucking-up all the good stuff?  Not a chance.  I have not seen export figures for this year yet.  However, 2010's figures were the lowest in a decade.  Nothing has convinced me that the 2011 figures will not follow that trend.  We´ll see.

Once the PBR of a proud people, the reknowned Argentine beef (even feedlot beef) has become akin to champagne in 2011.


Knox said...

I'm moving to Buenos Aires next year and to be totally honest, easy access to grass-fed beef was a big draw. Is it easy enough to get? Are there a lot of vendors who sell grass-fed?

yanqui mike said...

Git it while you can, Knoxy!

20% of the beef here still tastes like la del Abuelo ...but it is being directed to only the best steakhouses ...and they´re all pricey in local terms.

Anywhere in Puerto Madero is probably a safe bet for the remaining grass-fed beef.

Personally, I´ve been pointing folks to La Brigada in San Telmo. If you go, please lemme know if you are please with the steaks there. If you are not ...I´ll have to start recommending somewhere else.


Anonymous said...

Hey, interesting blog!! As a cattle rancher here in Argentina I've never read such an informed yanqui opinion about Argentine cattle as yours!
En el interior todavìa podes comer carne a pasto, en las zonas de cria donde se faena vaca vieja localmente. No es la màs tierna, pero todavìa tiene el sabor, y es baratìsima. Un kilo de lomo de vaca cuesta 30 pesos el kilo, y es como debìa ser.
Voy a pasar a leer con màs tiempo!

yanqui mike said...

Thanks, Maxy! But I´m not so sure that you have any more chance of getting grass-fed beef in the interior than in downtown Buenos Aires ...after all, there´s only two kinds of buyers at cattle auctions nowadays: feedlots and meatpackers. The meatpackers take most of their share to Capital ...and the feedlots turn it into grain-fed.

Our ranch in in the exact center of the Province of Buenos Aires ...tell me where to go to buy or eat grass-fed beef.

I´d love to go ...maybe we can go together!

un abrazo,

Anonymous said...

Basicamente en zonas de cria donde la vaca y todos los descartes se venden a carnicerìas locales. Yo trabajo en Formosa y la compra local es para consumo, a la gente le gusta esa carne, no la que compras en las cadenas de supermercados. Yo vivo en Buenos Aires, y la verdad que la carne de supermercado es muy mala, tiene gusto a chancho. Igual que el chivo, conejo, cordero y todo lo que està terminado a grano, una làstima.

Anonymous said...

Por ejemplo, en 9 de Julio se vende carne bastante barata de vacas de tambo y otros, el holando no es gran cosa pero a pasto sigue siendo màs sabroso. Dependiendo del gusto personal y el corte se pueden conseguir cosas muy buenas. Tendrìa que averiguar.

Néstor Sánchez Cordero said...

Saludos desde Venezuela! Interesante blog!

yanqui mike said...

Saludos, Néstor! Muchas gracias.

yanqui mike said...

Eso es, Max! A mi me parece que la carne de feedlot no molesta la gran majoría de los Argentinos ...que te parece vos?

Anonymous said...

Es el gran tema: la carne ha sido siempre un commodity para los argentinos. Mientras no hubo opciones màs rentables para usar la tierra en agricultura la carne se hacia a pasto porque no habìa costo de oportunidad.
Pero la ganaderìa era un negocio miserable. Toda mi niñez el valor de un ternero te alcanzaba para cargar un tanque de combustible a tu auto, imaginate la rentabilidad.
El consumidor argentino jamas fue propenso a tratar esa carne como un producto premium, ni los frigorificos dispuestos a diferenciar entre distintos tipos de carne, porque eso siempre les posibilitaba comprar al menor precio posible.
Con los precios altos agricolas eso hizo que a nadie le convenga seguir alimentando a pasto, sumado a lo largo del proceso y la inestabilidad local.
Y la gente de las ciudades honestamente no tiene idea de carne. Si preferis terneza antes que sabor, sos feliz con el feedlot. A mi casi me da asco, esa carne blanca, con grasa blanca y gusto a chancho.
En el interior la gente aprecia màs la carne con gusto, pero como decis la disponibilidad de carne hecha a pasto se ha corrido con la frontera ganadera, ya que es casi un byproduct marginal, en situaciones que se dan circunstancialmente (vacas de cria rechazo, animales que no se mandan por quebrados, etc).
Las posibilidades de hacer carne a pasto en Argentina estan a la mano, siempre y cuando se cambie la mentalidad de commodity o se consiga canales donde esa carne se venda como un producto premium. Eso a los grandes intermediarios no les interesa ni les conviene, es complicarse la vida para satisfacer un nicho de mercado que realmente en la areas màs pobladas no esta educado ni definido.
Para volver a la carne a pasto habrìa que definir el nicho de mercado y un producto especial, pero cualquier productor sabe que ese es un producto mucho mejor porque come esa carne. El tema es que no va a poner un plus de esfuerzo y costo en un mercado que no lo reconoce ni lo paga.

Anonymous said...

In the end there's a lot of an ideological conflict. A product treated as a first necessity tends to be commoditized. Grass fed beef is aggregate value beef. If you need to have "carne para todos", you are in an open conflict with the aggregate value beef concept, because asking for a product to be manufactured in the cheapest way possible will destroy any strategies of aggregating value, because that's costly.
And that's happening to the whole economy, loosing more expensive variants of every product, subsidizing the "popular versions".
The drive for improvement is in the extra amount you'll be able to charge for your product if the consumer perceives it as more valuable. The "x para todos" concept goes in the exact opposite direction.

Lora said...

Estuve leyendo al respecto y me da bronca y pena leer que cada vez hay menos grassfed cows... Lei que una manera de distinguir si fue grassfed es observando el color de la grasa, qeu color tiene que ser? Y te pregunto de paso, la carne mas cara de COTO, (yo como tapa de cuadril y es excelente) es grassfed o no lo saben? es muy poca la que ponen, es mas rica que la de los de Puerto Madero y nadie la comrpa de lo cara que es. Otra cosa: Deberia crearse algun movimiento tipo Labelit.org que asi como existe para los GMO, tendria que existir para los beefs!

yanqui mike said...

Hola, Lora! Que Lástima, eh? Si, el color de la grasa es una manera. Tambien carne de pasto no es tan blanda como la de feedlot. Además carne de pasto no tiene tanta grasa especialmente adentro el musculo.

Hoy en dia aun las parrillas mas cheta en Puerto Madero no pueden obtener suficiente carne de pasto. Los supermercados... aun menos.

Estoy de acuerdo que la Argentina necesita algun metedo para distinguir carne de pasto ...hay Alianza del Pastizal pero todavía la alianza no está lista.

besos y abrazos,

Anonymous said...

Soy de Quilmes, Buenos Aires; en éste momento estoy por unos meses en Uruguay...no puedo creer la calidad de la carne grass feed que tienen.Hay variedades, le gente sabe que es un producto caro, pero lo toman como algo normal. Lo que no entienden es que en Argentina se haya pasado a una producción industrializada a corral. Es un placer disfrutar de ésta calidad de producción, que se exporta y le ha ganado terreno a mi país, creo por mucho tiempo.
El problema será cuando vuelva a mi ciudad y tenga que comer nada más que pescado, ya que los pollos, si bien consigo alimentado "naturalmente", si darle maíz es una alimentación "única y natural para un ave..."
Iniciaré la búsqueda de carne green cuando llegue.
Muy bueno el blog, saludos