(Photo: The Argentine stand promoting the beef industry at the SIAL feria in China)

Buenos Aires, July 18th. Is Argentine beef value-chain committing suicide? Last May, beef exports reached 69,500 tons (carcass weight equivalent), a 72% increase into respect May 2018, mainly due to the Chinese demand. Clearly, the explosive passion for the beef in the largest populated country in the world is wiping the beef from the Argentinians’ table.

During the first five months of the year, Argentina exported 180K tons of beef (CWE), which of them 130K tons were destinated to China. This is equivalent to 72% of the total exports. The year to year growth of the exports to China reached a dramatic 106 percent.

But is the beef production accompanying the exports growth? Clearly not. During May 2019, a total of 1.17 million heads were slaughtered versus 1.14 last year. But female share (cows and heifers) grew from 44.9% to 52.3%. The cows stock is being sacrificed to meet Chinese demand. Last May, beef production reached 261K tons (258K tons in May 2018), but exports represented 27% of them versus 16% last year.

Every year, Argentinians are increasingly replacing beef consumption by poultry and pork. This year, the annualized per capita beef consumption drilled the 50 kilograms floor during March and April. Only during May, it experienced a rebound and it grew to 51.26 kilograms.

As the beef herd remains stable (even it decreased this year) and slaughter weight is also downing, it seems clear that this trend is not sustainable, only supported by the decreasing domestic consumption.

On the other hand, China is demanding cheaper beef cuts. The FOB average price during the first five months of the year rounded US$4,300 per ton, versus European countries that pay above US$10,000 or Israel that pays US$6,800 per ton.

But far to the euphory that some people shows thanks to Chinese demand, others are increasingly concerned about the future of the beef chain. They are saying that this demand represents a “mortgage” for the Argentine beef value-chain as cows and heifers are being slaughtered to satisfy the exports to China. Obviously, fewer cows imply fewer calves next season. The “calves factories” are being closed, these people opine.