Consumer relationship with beef shapes industry

There’s a stark contrast between the Argentinian shopper’s attitude to beef and that of the European consumer – and it’s something which has impacted the whole supply chain.

70% of beef is bought from a butcher in Argentina, with little to no demand for pre-packed meat. The consumer has inherent trust in the system and isn’t particularly concerned about where their meat comes from – as long as it’s consistent, high quality and tender. They also have confidence in their own ability to choose meat from the butcher’s counter – showing preference for the national favourite; ribs and cuts to make schnitzel.

This links back to the current requirements for finished beef in the country. All cattle are sold live weight, with the farmer having to produce an animal of over 300kg. As the consumer believes smaller animals are more tender (see previous post) the average size of a heifer (usually Aberdeen Angus or Hereford) is around 340kg live weight at finish and around 400kg for a steer.

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To date, the Argentine farmer receives payment based on the weight of that live animal and whether it’s classed as ‘good’ or ‘bad’. How the animal has killed out has traditionally been of little concern as animals aren’t graded in any more detail.

Very little beef is sold pre-packed (left). This is the only packed fresh beef available in La Gallega supermarket in Rosario.

With the current system, consumers are completely happy with the beef that’s available on the market and there’s no demand for things to change. However, Argentina’s drive to make more of its export markets means that changes are afoot.

Animals produced for the EU export market are already larger than those for the internal market, with steers averaging over 450kg live weight. However, the Argentinian farming industry has recognised that more needs to be done to produce quality beef that meets the EU consumer’s more specific tastes surrounding quality and traceability.

As a result, Sebastian Bendayon from The Chamber of Abattoirs in the Province of Santa Fe, told me that the industry is overhauling the “Argentine Typification” for grading meat.

“This system is currently being revised to differentiate between the colour of the meat, the colour of fat, whilst also taking into account marbling,” he explains. “The farmer today is being more consciousness about meat quality, but up until recently, they only sold meat. There was no differentiation.”

IMG_0748Sebastian Bendayon says beef classification guidelines are changing to meet export market requirements.

The new meat classification guidelines are in the draft stages, however it looks likely that they will look towards the American system of beef classification. This considers age, type of animal by gender and weight and also marbling, meat colour, fat colour and other meat quality characteristics.

Sebastian says the changes are purely being implemented because of the demands of the export market. He explains: “It’s basically to do with the external market and to have a classification that’s valid for the foreign market and foreign consumer.”

Farmers will continue to sell animals live weight, but the idea is that certain producers will gain a reputation for producing animals with the desired meat quality characteristics and thus achieve a premium from buyers.

“So farmers will be more conscious about raising and fattening of animals and take into account feeding and genetics as well,” Sebastian adds. “Previously Argentine farmers had the luxury of just having generic beef and the market would give them a good price. Now we’re moving into a stage where the market rewards for efficient, conscientious farmers.”

The effects are already being seen on the ground. Pedigree producers are already selecting for rib-eye area and marbling. A vet also told me that he was ultra-sounding commercial beef animals for these parameters on some of his client’s farms (unfortunately I wasn’t able to find out more about this whilst I was in the country).

As the new classification standards will be national, all producers – regardless of whether they are producing for internal or external consumption – will have to comply.
The challenge may come in convincing the Argentinian shopper that they want different meat and will pay extra for rib-eye and marbling. With beef so engrained in Argentine culture and the consumer so sure about what they want, it could be a struggle.

 

 

Drought impacts Argentine soya yields and beef forage supplies

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  • Soya and maize yields plummet as result of drought
  • Argentina imports soya bean from USA for the first time in 20 years
  • Special measures introduced to lower minimum slaughter weight of heifers
  • Farmers forced to change feeding and weaning strategies

The main cropping and beef producing areas of Argentina are experiencing the worst drought in decades, leading to a predicted 27% reduction in soya bean yields, whilst beef farmers are also struggling to feed stock.

The impacts of the drought have been felt in the central area of the country which is the main powerhouse for crop and beef production, known as The Pampas.

Emilce Terre, head of the research department at Rosario’s Board of Trade, says the main crop growing region around Rosario is experiencing the worst drought since 1988. However, some farmers believe it to be the driest period in 100 years, with beef producer in some areas of the Pampas reporting a January-March rainfall of 80mm, compared to the usual 250-300mm.

Crop yields plummet

At the start of the drilling season, soya bean output was predicted to be around 55t, however Emilce (below) now estimates this to be below 40mt. “We have already lost 15mt of soya beans in the last 3-4 months,” she told me.

IMG_0785Soya beans are either planted in October-November or December, with both harvested in April-May. Due to a high water table following higher than average rainfall over the last two years – particularly in October-November last year – the drought has largely affected the later planted crop.

Maize yields are also predicted to be down by around 10mt, with this figure likely to increase as the harvest progresses.

Ms Terre believes the shortfall is likely to have a significant impact on Argentina’s economy, considering the fact a large proportion of soya is processed in Argentina and exported as soya bean meal and oil. Exports of maize are also expected to be down.

The country imports soya from The USA

Higher Argentine soya prices as a result of the drought have coincided with the announcement that China plans to place tariffs of 25% on US soybeans in response to Donald Trump placing US penalties on Chinese goods. As a result, last week, soybean prices dropped as much as 5% on The Chicago Board of Trade.

Consequently, Argentina took the unusual and “punctually convenient” step of buying 120,000t of soya beans from The States.

“This is the first time in 20 years that we have imported soya beans from the United States,” explains Ms Terre. “We do import soya beans from Paraguay, Bolivia and from other countries in South America. If we have a production of around 55mt, we may normally import up to 2mt – that would be the most. Because of this drought we are estimating that this year we will import almost twice that volume, but most of it will still come from South America.”

Emergency measures placed on finishing weights

With the drought also affecting forage supply on many beef farms on the Pampas, on 10 April, The Ministry for Agro-Industry also announced emergency measures for slaughter finishing weights. This lowers the legal requirement for the minimum live-weight of finished females from 300kg to 260kg for the next 90 days.

This is due to the fact some weaner animals are arriving to feed lots smaller than the ideal entry weight of around 220kg. If these animals are kept longer than the usual 90 days in order to achieve the standard minimum weight, this will result in them laying down fat, which will reduce meat quality.

Farmers rethink feeding strategies as crops yields drop

The effects of the drought are being seen by many beef farmers on the Pampas.

Vet and farmer, Jeronimo Gau is experiencing, what he believes to be the worst drought in 130 years.

Jeronimo (below) runs a mixed system on two farms totally 1,300ha in General La Madrid. He grows wheat, barley, sunflower, maize and soya and finishes cattle produced from his 700 cow, predominately Aberdeen Angus herd.

The drought has meant crop yields are down 20-30%, whilst he has also been forced to finish all of his cattle on a ‘confinement system’ – a temporary ‘feed lot’ style system.

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Jeronimo’s business strategy is focused around finishing cattle as cheaply as possible on forage, with around 70-80% of steers usually finished on grass at 15 months old. The rest then go on to a ‘confinement system’ for 2.5-3 months. Here, they receive maize grain and a protein blend including minerals and monensin.

However, this year, a lack of forage has meant all animals have had to be moved onto this ‘confinement system’, with everything finished at 18 months.

Jeronimo believes this will have a marked impact on the bottom line. Based on 2017-18 figures, he says: “Without confinement, the cost of a kilo of meat (live weight) produced is 20 peso (70 pence). The last 60-70kg added in the confinement system costs 38 peso (£1.32) each,” he says. “We will lose money this year.”

“We will lose money this year.” – Jeronimo Gau.

Weaned heifers and steers are usually grazed on “winter greens” which are oats or barley fed at at mid-human calf height. However a lack of rain meant they were drilled later than ideal in March. As a result, yields are not sufficient to support all stock meaning that they can only be grazed by males. The heifers are now either on grass or Sorghum, which would normally be reserved for cows later in the year. Maize yields are also down, which has lead to the decision to graze the crop, rather than harvest it.

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Miguel Pertino (above) produces breeding bulls and females from his 600 cow Aberdeen Angus, La Trinidad herd. Half the usual summer rainfall in Partido de Magdalena, has meant calves have had to be weaned one month earlier than usual.

He adds: “Once they’re weaned, they usually go to pasture, but this year we’ve had to feed them and put cows on pasture to build body condition as they’re not in peak condition,” he explains.

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Martin Vergara of Buen Retiro (above), has also had to start feeding breeding bulls that are approaching sale earlier than usual because of the drought.

Martin usually sells the majority of his bulls in June, however with Argentina’s beef industry in a period of recovery, more producers are looking to serve heifers now, in the country’s Autumn. As a result he was planning on doing a “pre-sale, sale” in April. However concerns that there will be less heifers on the ground as farmers reduce cattle numbers in response to the drought, means this might not be necessary.