FERTILE LAND and fertile cattle are key to Argentine stockman David Hughes' operation. Located in the country's Pampas region, he rotates his fields between crops and improved grass, then rotates grazing on the grass. Hughes is able to get by with modest inputs and produces grass-fat beef ideally suited to the country's domestic market.

Argentine Producer Working
To Produce A "Beef" Dairy

By Colleen Schreiber

CHIVILCOY, Argentina — Beef is king in Argentina, and at Los Manuelitos the story is no different. Here, as elsewhere in the country, traditions run deep and grass-fed beef is one such tradition. David Hughes prides himself in producing high quality grass-fed beef good enough for consumption anywhere in the world with minimum inputs.

Los Manuelitos, a 2254 hectare (5567 acre) diversified farming, stocker and cow-calf operation, is located in Buenos Aires Province, the largest province in Argentina, about three hours west of the city. It lies in the Pampas region, Argentina's agricultural heartland, where the majority of beef cattle are raised. About 60 percent of the grain, beef and milk comes from this region. The Pampas encompasses the area south of Santa Fe and Cordoba, everything east of La Pampa Province and most of the Buenos Aires Province.

Here land is highly fertile and the price reflects its potential. Land around Los Manuelitos is worth about $4000 per hectare or $1600 per acre. Hughes figures a two to three percent return on his land investment and a 15 to 25 percent return on operating capital. In the Buenos Aires Province a viable economic unit, he expects, would be approximately 247 acres.

On this diversified farm and ranch operation, crops contribute the most to the bottom line, but Hughes hopes that in the near future the cattle operation will surpass income attained from his crops. His goal is to develop a "meat" dairy under an intensively managed grazing system.

In addition to Los Manuelitos, Hughes also operates another farm just outside the La Pampa Province and a breeding farm south of Buenos Aires at Pila.

Average annual rainfall at Los Manuelitos is 980 mm or 39 inches. Rains generally come in the spring and fall, though this spring, Hughes says, has been unusually dry. On average the area has 150 frost-free days, but most all days, he adds, are growing days.

In Argentina's early days, wool, which was easily transported, was the primary commodity throughout much of the Pampas. Beginning in the early 1800s the hide industry became extremely important in Argentina and leather rapidly became a primary export commodity. During this time wild cattle were slaughtered by the millions by the gauchos in much the same way the buffalo were throughout the Plains in America.

Using a lance with a U-shaped knife at the end, the gauchos would ride up on these wild herds, striking the animals' hind legs and cutting their tendons, which brought them to the ground. The cattle were skinned and the meat for the most part was left to rot.

In the late 1880s, Argentina experienced a boom. Immigration more than tripled the population between 1880 and 1910. This brought about great change. The country was fenced up and large registered herds were established by these immigrants. The Hereford, Angus and Shorthorn were the first cattle breeds to be introduced in Argentina. Today Angus and Hereford are the predominant breeds, but crossbreeding, particularly with Brahman-influence cattle, is predominant in the more tropical and humid areas of the northeast.

For the most part, Hughes runs Hereford cows in this rich Pampas grassland. His cows graze the less desirable native bottomlands where grasses like stipa, brome and ryegrass are prevalent. Mature cows utilize these areas better than stocker cattle, Hughes says. The stocker cattle are run on the improved pastures.

Hughes runs a commercial herd of Herefords and Red Angus from which bulls are selected for breeding. He also raises his own replacement heifers. Heifers are bred at 15 months of age under a 45-day breeding season.

"If they get pregnant in that period of time, they’re good mama cows," Hughes says.

Prior to breeding, heifers should weigh 270 kilograms (594 pounds) and be in a body condition score of at least 4.5. Heifers must be pregnant in two cycles, produce a calf and test negative for TB and brucellosis before going into the cow herd.

"We're pretty tough on them," Hughes admits. "If they can get pregnant in two cycles at 15 months of age they must have something in them."

Femininity, he adds, is also important.

Early weaning is a common practice on many operations in Argentina. If the cow's body condition is not where he wants, Hughes weans calves off at four months of age weighing 120 kilograms or (264 pounds). Calves go onto good pasture with no additional supplement. On some cull cows and "second breeding heifers," calves are weaned at 45 days of age. These calves generally weigh 90 kilos (198 pounds). Under this scenario calves are weaned off and supplemented on a special ration.

In general, Hughes figures it costs him about $1 a kilo or 60 cents a pound to raise a calf. Inputs are kept at a minimum. He drenches, vaccinates for foot and mouth (Aftosa) and brucellosis. Cattle are handled in such a way that stress is kept at a minimum. He doesn't allow any shouting or dogs while working in the pens. In preparation for the future when he predicts labor will be cost-prohibitive, Hughes is working to improve his yards so that one person can manage all the cattle on foot.

In addition to his 3000 head cow-calf herd, Hughes also runs an additional 7000 to 8000 stockers annually, of which he buys 70 to 80 percent. On 242 hectares or 600 acres of improved pasture, Hughes stocks about 1000 head of weaner calves. He uses order buyers and does most of his business over the phone. He prefers a good black baldy or red baldy steer weighing 330 to 440 pounds. He grazes some heifers but really prefers steers.

Hughes runs his stockers through an intensive grazing system on a combination of alfalfa, fescue, brome and white clover. His system is modeled after those in New Zealand which require getting the most out of the grass with few outside inputs. Grass is managed in such a way that it's grazed at its most optimum stage when it is most nutritious to the grazing animal.

"You can do more with management than you can with supplements," Hughes insists.

Pastures or "breaks" are divided by electric fencing. A lane down the middle leads to the water trough. The size of the "breaks" differ depending on the stocking rate and time of year.

Rotations are modified every month. Consistency of the cow pies, in part, tells him how the cattle are doing nutritionally. Hughes says there are no set rules when working with biology. For the most part, though, pastures are rested in the spring for 26 to 32 days, in the winter between 80 to 95 days, and in the summer and fall between 40 and 50 days.

"It's like a pizza that has to last me a month. I make a thin slice for each day," he explains. "In winter, because the grass isn't growing as fast, I make smaller 'breaks' and extend the rotation period. When spring comes, I hurry up the rotation and then slow it back down again during the winter."

Hughes is more interested in gain per head rather than gain per acre. In a normal spring, he would be stocked up to 1600 to 1800 kilograms per hectare or 3520-3960 pounds per acre. Today, because spring was slow in coming and rains have been deficient, pastures are stocked at 800 kilograms of liveweight per hectare or 1760 pounds per 2.47 acres. In the winter, during the shorter growing season, he drops back further.

Cattle are weighed every three months. During the spring he's measured gains of just over a kilogram per head per day or 2.2 pounds per head per day for 70 to 80 days.

There is no the beef cattle futures market in Argentina, therefore prices are set on a day to day basis based on supply and demand. The Buenos Aires central market, Mercado De Liniers, one of the largest in the country, is where price discovery takes place. Approximately 30,000 head of cattle are sold over a four-day period there, give or take 5000 head. Some 140 to 150 buyers working for 100 or so different commission houses competitively bid on any given day.

The activity of the market on that particular day sets the price for rest of the country, Hughes explains. Price on any given day may fluctuate two to five percent depending on supply and demand.

Most all of Hughes cattle, like the majority in the country, are marketed as grass fat. They're sold between 18 and 24 months of age with steers weighing between 880 to 925 pounds and heifers about 725 pounds.

The feedlot industry hasn't yet taken off, though there are a few around and more becoming established. Hughes doesn't do it often, but he has finished a few cattle on grain when the price of grain was cheap. If he goes this route he markets them at a much younger age, usually 12 to 14 months.

In general, however, Hughes markets about 60 percent of his beef through Liniers. He generally sends some steers and heifers to the central market once or twice a week. The cost of trucking into the city runs about 80 U.S. cents per kilometer or 80 cents for every .62 miles. A truckload is 30 to 33 head of cattle or about 30,000 pounds.

Cattle prices, Hughes says, have been on the rise, up some 30 to 50 percent, the last couple of years. He attributes that to the fact that the country's gross national product has been increasing. Eighty percent of production goes to satisfy domestic demand, and cattle numbers currently are stable to slightly diminishing.

The first week of December, good British breed weaner calves weighing 200 kg (440 pounds) were selling for $1.20 per kilo while grass fat steers weighing 420 kilograms (924 pounds) were selling for 90 U.S. cents per kilo liveweight.

Argentina has a grading system, of sorts, which is based on fat cover. The government sets the standards. Even in Argentina, there is that common thread of mistrust among producers when it comes to packers. For that reason,

Hughes says he prefers to market through the auction rather than direct to the packer, because he says he's never sure if he's getting paid for what he produces.

"When you send your animals direct to a packing plant and there’s too little beef, it grades beautifully. When there’s too much beef it doesn’t grade that well," Hughes says.

Approximately 12 million beef cattle are slaughtered annually in Argentina, about a million head a month. Argentines love their beef, and proof is in the domestic consumption, the highest in the world. Some 80 to 85 percent of the beef produced is consumed domestically. That amounts to roughly 60 to 70 kilograms (132-154 pounds) of beef consumed per person annually.

When Argentina lowered its trade barriers, chicken consumption, Hughes says, went from seven or eight kilograms (15-17 pounds) per person to just over 20 kilograms (44 pounds). That in turn brought beef consumption down.

Beef exports, Hughes says, average from 10 to 12 percent to as high as 20 to 25 percent depending on the year, the price, the markets, etc. Germany is their biggest export market. They primarily export what they call the "Hilton quarter," which accounts for roughly 28 kilograms or about 62 pounds of the beef carcass.

Their second largest client is Chile, which only recently opened its market. Now approximately 80 percent of Chile’s imported beef comes from Argentina, Hughes says. Additionally, Mercosur, a common market of sorts in which free trade occurs between Argentina, Brazil, Paraguay and Uruguay, has allowed for more and better bilateral agreements between these countries, which in turn has improved the flow of trade.

Currently Argentina may only export 2000 metric tons or 2200 tons of fresh beef to the U.S., and thus far they haven't come near reaching that maximum figure. Standards for packing plants exporting to the U.S. and European countries, Hughes says, are higher than even those established in the U.S.

"These improved standards at our packing plants helps us to be able to sell to the U.S. rather than the U.S. buy from us," he explains.

There is no domestic promotion of Argentine beef, per se. The government directs $500,000 to $800,000 a year to beef promotion, a small pittance in Hughes' opinion.

"In today’s world you cannot afford not to advertise what you’re selling," Hughes insists.

In terms of crops, in total, some 10,000 tons of maize, 5000-6000 tons of wheat, 2000 tons of soybeans, and 2000 tons of sunflower are produced annually on the entire operation. Los Manuelitos is on a 15-year rotation cycle — 10 years of cropping and five years of grazing of improved pastures.

The crop rotation is corn, wheat, double crop soybean, corn, wheat, double crop soybean, and corn. Rotation serves several purposes, Hughes says, but primarily he rotates for disease and weed control. Rotation of crops also helps minimize climatic and market risk.

When he shifts to improved pastures he usually goes from soybeans to grass. Soybeans, Hughes says, is a good crop to clean weeds. Roundup, which is used extensively in Argentina at about half what it costs in the U.S., can be used to clean the pastures without harming the crop.

Everything here is custom farmed, and no-till farming is becoming commonplace. Currently about 80 percent of the corn and 100 percent of soybeans are under no-till, and he's beginning to plant wheat also using the no-till method.

The no-till method helps keep the humidity in the ground and also lowers costs, Hughes says, by about 20 to 30 percent. In some cases, as with his maize crop, it actually helps increase yields.

The soil here is low in phosphorus, so the entire farm is fertilized once a year with 100 kilograms of DAP. Nitrogen is applied when necessary depending on the crop, but generally it's applied when there is less than 120 kilograms (264 pounds) of nitrogen per hectare in the soil.

To put in a crop costs roughly $180-200 per hectare or about $73-81 an acre. Of that total, labor accounts for about $70 a hectare. If the no-till method is employed, costs drop to $30 per hectare, $25 for planting and an additional $5 per hectare for spraying.

Corn is planted from the 10th of September through the 10th of October. He buys his corn and sunflower seed but uses his own wheat and soybean seed for replant. Corn is harvested in March and April and the wheat in December. Last year the wheat crop averaged 4.2 to 4.3 tons per hectare and the corn has averaged 6.8 tons per hectare over the last four to five years.

Hughes is in the process of buying half interest in a grain elevator at Chivilcoy. The elevator currently has 9000 tons of capacity and Hughes will be adding an additional 9000 tons of capacity for his own use. In general, grain elevators are paid a three percent commission.

The elevator is located right on the rail line, so grain can easily be shipped to the respective ports. Wheat is exported from three main ports: Buenos Aires, Bahia Blanca to the south and Rosario to the north. Hughes sends his wheat to Rosario for export.

Hughes says the only subsidy Argentine producers receive is in their research program. Argentine farmers currently pay up to a 25 percent export tax on grain. The country competes heavily with the U.S. in the sunflower and soybean markets, and they're some sort of a thorn in the U.S. side in the wheat and corn markets, Hughes says. Unlike the cattle industry, there is a futures and options market in the grain industry. Hughes closely follows the Chicago Board of Trade and USDA bulletins. Part of the year their corn price, he says, is under the U.S. market and other times it's over.

Things have changed tremendously in the last eight years for everyone in Argentina. Before then, inflation of 1000 percent or more kept the country in a constant state of instability.

"In 1989 the best car you could buy was a Ford Falcon with power steering, air conditioning and radio as the three options," Hughes says. "The first car we bought sold for $500 more than what we bought it for two years later, and it was falling apart. That's how the system worked.

"With inflation there weren’t cattle cycles, there weren’t even economic cycles," he continues, "and you didn’t worry about upgrading your cattle.

"Today how you manage your operating capital is what determines if you'll make money. With inflation we didn’t have operating capital."

Hughes says the shift from a closed market to a highly competitive world market with no inflation was difficult and it hit most producers hard. A decade ago there were 500,000 agricultural producers in Argentina. Today there are only 400,000.

As with any change, the challenge is in adapting. In general, Hughes says he's optimistic about the future of agriculture in his country. He expects many more changes over the next five to 10 years, but he plans to survive because every day he prepares for those upcoming changes.