Argentine Packer Sends Share
Of Fresh Beef To U.S. Market

By Colleen Schreiber

BUENOS AIRES, Argentina — For the first time in 68 years, just since the eradication of foot and mouth disease in 1995, Argentina has been able to export fresh beef to the U.S. Currently the quota stands at 20,000 metric tons.

Juan Carlos Grimaldi, director and Gerente General of Estancias Del Sur S.A., is one of 10 or so packers in Argentina approved for export to the U.S. There are a hundred or more smaller packers which keep the domestic beef market in Argentina competitive. Of the 50 million head of beef cattle in Argentina, only five percent are fattened in feedlots. Grass fat cattle are still the tradition.

Grimaldi says the U.S. really has nothing to fear from Argentine exports.

"What Argentina is aiming for is not quantity but quality," he remarks. "It's a niche market. Europe is paying 25 percent more for grass-fat, BSE-free Argentine beef."

Argentina is the king of beef when it comes to domestic consumption, but Grimaldi admits that consumption has dropped off in recent years. He attributes the decline in large part to a growing health craze, much like what has been going on in the U.S. for more than a decade. In the 1980s, the packer says, Argentines consumed more than 80 kilograms per person. That corresponds to more than 176 pounds per person, far in excess of U.S. domestic consumption. USDA's projected figures for 1998 show the average annual per capita consumption in the U.S. to be 67.71 pounds retail weight.

The packer says Argentine production currently barely covers their own domestic demand.

"We don't have the cattle. We have 50 million head of cattle in Argentina and 30 million people who eat 30 kilos of beef per person a year. That amounts to 6650 tons."

Argentina is the wealthiest nation in all of Latin America on a per capita basis. The name comes from the Latin argentum, which means silver. The origin of the name goes back to the voyages made by the first Spanish conquistadors to the Rio de la Plata (Silver River). Since 1860 the official name of the country has been the Republica Argentina.

Mercosur is a common market formed by Argentina, Brazil, Paraguay, and Uruguay in January 1995. The agreement offers reduced tariffs and other benefits to the countries and sets a higher common external tariff, channeling more trade among the members. The combined population of the four countries is 200 million and the total gross domestic product is equivalent to approximately $1000 billion.

Argentina's economy was privatized about eight years ago. Since then, the economic stability built on the policies of the administration of President Carlos Menem, the liberalization of trade laws, the reduction of tariffs, a drastically reduced inflation rate — which has recently fallen to its lowest point in 30 years — and the country’s growing economy make Argentina attractive to foreign investment.

Bounded on the west by Chile across the Andes Mountains, to the northwest by Bolivia, by Paraguay nearly due north and by Brazil and Uruguay to the northeast, Argentina is the eighth largest country in the world, the second largest in Latin America. Its topography is highly varied, ranging from fertile plains in the central region to mountains in the west and a semi-arid zone in the south. The climate varies from subtropical to subantarctic. About one-third of the continent is grassland and 16 percent is classified as natural forests. Nearly 11 percent is under cultivation. Argentina ranks 11th in the world in wheat production and is a major producer of oilseeds, corn and meat.

Some of Grimaldi's beef was part of the first shipment which went to Washington D.C. for politicians to sample. The Washington Post carried the story.

Grimaldi exports primarily to the larger American cities like New York and San Francisco. He has a sales representative in the U.S. who handles his larger restaurant and hotel accounts.

He averages 900 tons per year to the U.S. This past November, however, he had only exported 500 tons for the year. He attributed the cutback to poor margins in the U.S. market. He ships both fresh and frozen product, the latter going into ground meat and the fresh or cooled beef to upscale restaurants.

Argentine lomo (tenderloin) sells in the U.S., Grimaldi says, for about $7 a kilo, just over $15 a pound. In Europe it's priced at $10 to $12 a kilo.

Currently, the packer says of his total exports to the U.S., the high end cuts like lomo only account for 20 percent. He claims to take a beating on the front cuts, which in November were selling into the U.S. for about $1.50 per kilo. In October he sold 25 tons of hamburger at that price and lost money. Generally he makes up the difference in the hind cuts.

Grimaldi says it is important for an Argentine packer to be able to export to the U.S., and his goal is to increase the percentage of high end cuts in his export mix.

Grimaldi started out in the auction business, buying and selling cattle, so he knows how the system works. He especially knows the cattle around the Province of Cordoba. Producing quality carcasses at the packing house level, the packer says, starts at the corrals. The best steers that come to the plant on any given day go to the U.S. because, he reiterates, "they want quality."

The packing industry, Grimaldi says, is a tough business. His return on investment ranges from zero to five percent in a good year.

The years 1992-96, he says, were really good years but the BSE problem blew a hole in his export business. Since then he says he's been losing money, but he's noticed some improvement in recent months.

His business is also growing. Initially he had about 30 people working at his plant. Today there are 600 employees at Estancia Del Sur. He's also entering a partnership on another packing plant in Buenos Aires.

Despite the struggles and stress involved with his current occupation, Grimaldi says he much prefers the packing business over being an auctioneer.

Many producers, butchers and packers work hand in hand with Liniers, the country's largest auction facility.

Started in May 1901, the National Cattle Market, better known as "Liniers Market" was founded in its current location at the heart of the Mataderos Area, a neighborhood near the outskirts of Buenos Aires.

Today Mercado de Liniers S.A., a private company constituted by 100 livestock broker and cattle auction market firms, accounts for about 20 percent of the whole national slaughter and 50 percent of the business done in the Buenos Aires area.

At Liniers approximately 150,000 head of fats, feeders, culls, cattle of every breed and category, the majority being Angus and Hereford, are marketed on a monthly basis. That accounts for 1.65 million head a year. Bidding between buyers takes place daily and the final prices rule the value for the whole national livestock inventory.

Small and medium size producers benefit since it allows them to deliver a varied range of animal categories in the same batch. It's the responsibility of the brokers to classify and sort the animals prior to being sold.

The auction sits on 34 hectares, about 84 acres. There are 32 catwalks, 450 entry and exit pens for cattle, 40 automatic scales and 5500 small exhibition pens distributed among brokers' firms. Linears employs some 1500 gauchos.

Daily activities begin with the arrival and unloading of cattle from 6 p.m. to 5 a.m. the next morning. Linears has a special tracking system in place which allows them to track the animals basically from farm to table. Once at the yards the livestock are monitored through a special software program which tracks them from the time they enter the yards through every step from unloading to entering pens, weighing, classification, exhibition, removal, etc. Weighing is performed on special scales linked to the computer, which automatically enters the information into the system. It is estimated that some 15,000 cattle can be weighed and the information processed in a 90-minute period.

A sanitary control inspection is performed by the National Service of Animal Health (SENASA), and then animals are sent to the different brokers' pens, sorted and weighed. The tracking procedure and the sanitary documents provided by SENASA make it possible for Argentina to fulfill any requirement for export of Argentine beef.

Linears charges a three percent commission per lot. A lot usually averages 20 to 23 head. The auction starts at 8 a.m. Viewing and bidding is done from catwalks in much the same way as it was done at the old terminal markets in Kansas City and Fort Worth. Representatives of meat processors, butchers, supermarkets and slaughterhouses attend the sale.

Once sold, the lot of cattle are painted with the buyer's identification number. They're weighed and reloaded on trucks and transported to the corresponding slaughterhouses. An "extraction guide" is then issued, which includes all data concerning animals, buyers and transport vehicles.

Linears has outgrown its original facilities and another is in the process of being developed. To better accommodate the livestock industry in terms of access and to satisfy growing complaints from city dwellers, the new auction is being built well outside the city limits.