Argentine beef farmers are holding back investments on expectation the government may increase export restrictions to help control surging inflation.
The government’s “strong intervention” in the beef markets is leading producers to “invest cautiously and there are no new players investing,” Ernesto Ambrosetti, chief economist for the Rural Society, the country’s biggest farm group, said today in an interview in the city of Santa Fe.
Beef exports were first restricted in 2006 by the government of late President Nestor Kirchner, and have been kept in place by his successor Cristina Fernandez de Kirchner, who was re-elected for a second consecutive term on Oct. 23.
Fernandez issued a decree on Oct. 25 ordering mining and oil companies to bring all future earnings from exports to Argentina and buy pesos. The government also last week increased controls on the acquisition of foreign currencies. The measures came as capital flight accelerated to about $3 billion a month, draining central bank reserves to $47.6 billion from a record $52.6 billion in January.
In 2008 farmers blocked roads and hoarded farm produce for four months to protest against a planned increase in export tariffs on cereals and soybeans. The protests ended after Congress dismissed the increase. The Rural Society was one of four leading organizers of the protest.
Argentina went from being the world’s fourth largest beef exporter in 2006, with 552,000 metric tons, to an expected eighth with 300,000 tons in 2011, according to estimates by the U.S. Department of Agriculture.
The country’s cattle herd shrank by about 20 percent between 2008 and 2010 after the worst drought in 70 years. A shortage of beef supplies has led domestic prices to increase about 189 percent over the past three years.
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