Argentina sees surge in feedlot cattle
December 1, 2008
BUENOS AIRES – Argentina’s fame as a home for happy cows wandering the lush pastures of the Pampas is being challenged as an increasing number of cattle are being crowded into feedlots for the last months of their lives before being served at the table.
While feedlots are common in the U.S., Canada and Europe, Argentina has built up a strong brand as the land of purely grass-fed steak, with flocks of tourists lauding the lean, flavorful steaks served up in Buenos Aires’ ubiquitous steakhouses.
But the high price of croplands across the Pampas, higher relative profits for growing grains and government subsidies on feed designed to stimulate production is leading to a surge in the use of feedlots.
However, only feedlots supplying the domestic market are subsidized by the government, said Miguel Gorelik, director of leading beef exporter Quickfood SA. U.S. imports from Argentina were only 1.2 percent of all fresh beef imported through September 2008, according to the U.S. Agriculture department.
However, in the future more grain-fattened meat is likely to be shipped overseas by Argentina, the world’s fifth-leading beef exporter. “Argentina is going to be a proficient producer of both feedlot and grass-fed beef,” Mr. Gorelik said.
While feedlot beef is specifically excluded from the pricey Hilton Quota of low-tax beef imports allowed into the European Union, Argentine sells a variety of products abroad.
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“Sometimes the buyer asks specifically for grass-fed beef, others ask for feedlot beef and others aren’t too concerned,” Mr.Gorelik said.
With Argentines leading the world in per capita beef consumption, the price of beef is a sensitive political issue and the government has struggled over the last two years to keep down prices by limiting exports and trying to boost supply. Each Argentine eats nearly 155 pounds of beef every year.
The use of feedlots for finishing cattle in Argentina has risen in recent years due to the subsidies, with 4.5 million to 5 million animals passing through the pens this year compared to just 1.5 million in 2001, according to the Argentine Feedlot Chamber.
An estimated 15 million head of cattle were slaughtered in 2007, according to the Agriculture Secretariat. If the number is similar this year, that would mean that about a third of Argentina’s cattle are fattened in feed lots now.
“There is no turning back — more than 50 percent, and likely 70 percent or 80 percent, of Argentina’s cattle are going to be finished in feed lots within the next five years,” the president of the Argentine Feedlot Chamber Juan Carlos Eiras told local daily La Voz del Interior.
Yet, as the use of feedlots has spread, there have been moves by provincial governments to regulate the sector and mitigate the impact of a high concentration of cattle.
As the experience in the U.S. has shown, the business brings a host of complications, including increased antibiotic use to control disease and less-than-pleasant smells for neighboring communities.
Greeley, Colo., home to many U.S. feedlots, operates an Odor Hotline which residents can call with complaints about smells.
On the other hand, when out-of-town visitors complain about the smell, locals reply: “Nah, smells like money,” according to a local joke.
Brazilian beef behemoth JBS Swift and Co. owns one of the largest feedlot chains in the area and in the U.S, Five Rivers Ranch Cattle Feeding. Five Rivers has capacity to feed 800,000 animals at its operations in Colorado, Idaho, Kansas, Oklahoma and Texas.
In the U.S., most cattle spend the last four months of their lives in the feedlots eating combination of corn, sorghum or wheat and high-quality hay and mineral supplements.
Corn is the principal cattle feed in Argentina, totaling about 3.6 million tons, or 18 percent of the country’s crop this season. And much of that corn was heavily subsidized to compensate domestic users for high international prices.
More than 2.1 billion Argentine pesos ($622.8 million) has been paid out for subsidies this year since April, according to the agricultural trade office ONCCA. Beef feedlots received 354 million pesos of those payments.
However, the recent pullback in international corn values is likely to lead to some major savings for the government, as prices have fallen under the cut-off price set for making subsidy payouts.
With corn prices falling more than 50 percent from their peaks earlier this year, the cheaper grain is likely to add fuel to the already brisk expansion of feedlots.
More and more often one may hear U.S. or European tourists exclaiming as they dig into their Argentine steaks: “Hmm, this tastes the same as back home.”