Introduction
This article analyses
developments in Argentina’s cattle and meat market primarily from the point of
view of the country’s numerous ganaderos, who to this day number well in
excess of 100,000 (in 2018 there
were 130,929 explotaciones bovinas and 99,322 commercial cattle enterprises,
with an average of 388 cattle per enterprise, according to Argentina’s Censo
Agropecuario, 2018, p. 625). Beef in this period was often the dominant
factor in the farm export sector and also a very significant factor in the fast
growth of the domestic consumer market. This article assesses the political
strengths and weakness of this industry, charting its steady decline in its
role in Argentina’s economy over the forty years after 1935. The business of
meat production and distribution is notoriously lacking in transparency, but
both the price of the key ingredient, steers (and other cattle), and the price
of meat, quite frequently became critical political factors. The frequent use
of consumer subsidies made sure that interests of producers of cattle were not
generally misaligned with those of consumers of meat, particularly after 1943.
Over the following three decades, the attractiveness of the domestic market for
cattle producers steadily increased, and Argentina’s beef exports declined
significantly in their share of both the international and the domestic market,
with the large uk market proving
more and more difficult for export-orientated producers and frigoríficos.
Subsidies
were always crucial: price guarantees and floors were sometimes available to
producers (being funded in part from taxes on cattle sales), and subsidies were
paid often, though usually much more reluctantly, to frigoríficos. On
the other hand, whenever steer prices were controlled, black markets tended
anyway to make consumers’ beef prices rise. Throughout the period, cattle
markets were the subject of many government policy experiments, often
reflecting the close relationship between cattle producers and governments (in
Argentina, as also in the uk).
The government interventions and controls were haphazard and generally of
short-lived effects, which tended to strengthen the close links between cattle
values and inflation and inexorably led to sustained inflationary expectations.
The producers
Argentina’s beef cattle
producers themselves are an elusive breed; it is very hard to pin down the
average ganadero, or what the typical (or optimal) scale of operation
for a cattle producer should be.[2]
Although the development or accumulation of cattle pasture was, from 1880
onwards, closely linked to the appreciation of land values, particularly in
areas where cattle pasture could be turned into cultivated lands or converted
back from cultivation to pasture, it would be wrong to see cattle producers
only as latifundistas and land speculators, whether in the main pampa region or
elsewhere. Jorge Sábato (1988) explained clearly how pampa producers were
particularly well placed to optimise the use of land for cattle production
using the rastrojo (i.e. gleanings, aftermath and stubble) of both
winter and summer crops (particularly maize) as part of the process of
fattening cattle.
But
Argentina’s numerous cattle producers were never only from the ‘dominant
class’. In the 1940s Taylor, in a somewhat homespun comparison between
Argentina and the US, noticed that cattle production in Argentina was
distinctive as it was often carried out by tenant farmers, who were quite often
of recent Spanish origin. In two partidos in the breeding belt in
south-central Buenos Aires province and in two other partidos in the
fattening belt (western Buenos Aires province), Taylor found that about 70% of
cattle owners were tenants of their land, with cattle owned by both types of
producer averaging 700 per owner (Taylor, 1948, pp. 215-21). Subsequent
historians have consistently found small producers owning 100-500 cattle,
sometimes less, often on mixed farms (Palacio, 2004; Balsa, 2001; Blanco, 2007,
pp. 18-20).[3]
As Giberti’s (1981, p. 233) analysis showed, in the pre-war period
cattle-breeders tended to own smaller herds than producers in zones where
fattening predominated, but post-war the distinctions reduced and breeders’
herd sizes tended to increase). After 1940 tenant farmers turned towards
livestock, with much less cropping and more mixed farms, and they rented their
land for longer periods. This was encouraged by successive laws and decrees
with rent controls from 1932 through until 1958 and rents were also controlled.
For successful tenant farmers, this process eventually resulted in ownership of
the land. Imaz gave a first-hand account of a small town in Córdoba province in
1962 with five larger estancieros and a group of over 300 tenants and
ex-tenants producing mainly cattle, mainly of Italian origin, who ‘converted
themselves en masse into cattle producers’, being both breeders and fatteners;
they owned/rented 170-1,000 hectares each and were obsessed with the number and
quality of their cattle as the key feature of their increasing wealth (Imaz,
1962: pp. 48-56). Sáenz Quesada (2010, pp. 423-427, 432) found another
particularly successful Italian family, the Romagnolis, not very far away in
Monte Buey.
Sábato
showed that pampa cattle fattening required the optimisation of rotation of
crops and forage including alfalfa. Logistical precision was required, rather
than technical innovation, because there was only a forty-day window permitted
for chilled beef product between farm and fork. Nonetheless keeping cattle
could itself be a way both to accumulate wealth quite fast through reproduction
and also to store wealth with a value keeping pace, as we shall see, with
inflation. Cattle breeding also took many forms, sometimes combined with
fattening, but often not. Some breeding was carried out in a rudimentary way on
marginal natural pastures, but, in sharp contrast to that, pedigree cattle
breeding could be either a form of conspicuous consumption or a technically
sophisticated way of improving the potential of the breeders’ herds, or both.
Pedigree cattle breeding could be either a form of conspicuous consumption or
a technically sophisticated way of improving the value of herds, with thousands
of British pedigree bulls were imported at prices which, from 1919 onwards,
often exceeded £1,000 per animal. Argentinians were usually the uk’s leading pedigree bull buyers –an
indication of the profitability of top Argentinian breeders’ businesses as well
as their commitment to improving the quality of their product.[4] To
an ever-increasing extent after 1920, breeders turned to the specialist breeds
Aberdeen Angus and Hereford, leaving aside the dual-purpose Shorthorn breed,
which would remain highly popular for dairy cattle until the 1960s.
The processing/distributing
chain
The next part of the supply
chain, the eight large, centralised frigoríficos around Buenos Aires and
neighbouring La Plata (capital of Buenos Aires province), is well-documented.
After World War I, fresh investment continued from three of the Big Four
cartelised companies in the US, by one major uk
group (Vesteys), and two smaller groups, one uk
company (Smithfield and Argentine) and one well-established Argentinian company
(Sansinena). The uk was the only
substantial importer of refrigerated meat; it was chilled beef that came to
dominate the trade during the 1920s, as the
us and uk frigoríficos consolidated operations and
equipped their large new plants with improved machinery with new ‘assembly-line’-style
processes.
Vesteys had started their international business only in
the 1890s, but it had grown exponentially since then. In particular they had
profited from their privileged position as a supplier of Argentinian meat to
the uk in the World War I and
afterwards, and expanded their meat-packing business and market share. In the
1920s Vesteys constructed the massive new Anglo frigorífico at Dock Sud,
the prime location in Avellaneda right opposite the Federal Capital’s southern
port entrance. Lord Vestey told a 1925 Royal Commission that they owned 450,000
cattle in Australia, Colombia, Paraguay, Venezuela, Brazil and Southern Africa
and controlled the Blue Star Line of refrigerated meat ships, for which nine
new vessels were about to be built. They also then owned nine cold storage
installations covering all of England and Scotland, plus the largest wholesale
distributor of frozen meat and 2,500 butcher’s shops.
Both then and since then, Vesteys have never owned any
land or cattle in Argentina, seemingly taking the view that land values were
too high in Argentina. Elsewhere they always had enormous cattle (and sheep)
operations with small regional frigoríficos,
for example even at that stage in both Brazil and Venezuela.[5]
Even so, Vesteys regarded Argentina as the key to their meat production
business, claiming that the cost of slaughtering cattle and preparing quarters
for shipment in Argentina was then less than one-fifth of the equivalent cost
in northern Australia, due much more to labour costs than to transport costs (Imported Meat Prices, 1925).
Retailing Argentinian meat in the uk was relatively straightforward. Argentinian hinds of beef
were usually sold for less than prime English sides of beef (which in turn cost
always less than Scottish sides), but Argentinian hinds were actually the
dominant force in the wholesale market, and quality was never an issue (and
Argentina’s domestic market had at this time an entirely compatible taste for
the animals’ forequarters). The uk’s
Food Council discovered in 1926 that the wholesale and retail margins on
Argentinian beef at the main London market at Smithfield were always
significantly higher than on English or Scottish beef (or lamb or mutton) and
were usually over 50% of cost, sometimes over 60% of cost (37% of turnover),
and that Argentinian beef was 75% of beef traded and 66% of all meat traded
there (Profits on Meat, 1926).
Thus, Argentinian cattle fatteners were highly competitive internationally and
were able to make sustained profits of over 10% per annum (p.a.) on finished
cattle. Argentina’s dominant role in the uk
beef import market was accompanied by its dominant role in uk feedstuffs imports and its
substantial role in the uk wheat
market, but the latter two positions were very soon to change.
The 1930s crisis
Argentinian frigoríficos’
chilled beef chain was a mature, well-developed system when the Great
Depression hit the world economy in 1930. The result of the collision of these
two things was a perfect storm for cattle producers –a combination of
over-production, a collapse in market and price, and the determination and
market power of the frigoríficos inside and outside the main cartel to
maintain or increase their margins (Board if Trade, 1938, pp. 60, 70-71). The
cattle cycle meant that the dip was both progressive and prolonged, with
producers liquidating herds which they could not afford to keep feeding. The
crisis persisted longer than before and the effects of the crisis were felt
much less by the producers of higher-quality chilled beef than by producers of
frozen beef and volumes and prices were both lower throughout the 1930s than in
the previous decade.
First, the frigoríficos’ purchases of steers also
declined steadily (after a peak in 1927); prices fell from 1930 onwards and for
a short time purchases almost dried up in 1932 as prices of food products kept
falling worldwide and the uk beef
market seem to be about to close completely for imports. Cattle exporters’ peso
earnings were hit by a revaluation of the peso when sterling went off the gold
standard, and the peso briefly remained tied to gold. In these peak years of
the world depression, world economic conferences came and went. The uk introduced protection for the first
time and organised the Ottawa Conference of July-August 1932, where the uk agreed preference from then on to
meat suppliers in Australia and New Zealand. Already in 1932, as uk demand fell, the uk agreed its first informal beef
quotas, with Argentina as the main importer. The uk next introduced subsidies for its own cattle producers in
1934. Compared with peak years’ volumes in 1924-26, Argentinian frozen beef
exports fell by 88% before 1933 (and only another 2% after 1933), volumes for
Argentina’s chilled product fell by only 10% at the most.
In early 1933 Julio Roca (hijo), the Argentinian vice-president,
negotiated an agreement with the uk
to normalise Argentina’s trade and payments –tied to some sterling capital
market funding for the Argentinian government– the Roca Runciman Treaty. Roca
has been much criticised for claiming, at the time he signed it, to have
achieved a kind of ‘colonial status’ from the uk
government. In fact, this treaty actually guaranteed and underpinned –with a
guaranteed level of shipments– the uk
market for Argentina. Because of the Ottawa agreements uk gave some preference to Australian (and some New Zealand)
beef, but at the same time it excluded from its markets beef supplies from both
Canada and Ireland (exports of live animals and, in Canada’s case, also frozen
beef, were common).[6]
In practice uk cattle production
barely increased, even after cattle producer subsidies were introduced for the
first time in 1934. The uk 's 1930s trade negotiations favoured its
investors' interests over its agricultural producers and its half-hearted new
'Ottawa' protective tariff system neither helped uk cattle (or overall farm) production to grow at
all nor gave Commonwealth producers any effective protection against
Argentinian chilled beef (Rooth 1993).[7]
The recovery, and market institutionalisation
Argentina’s meat business in
fact staged a sustained recovery after 1933. Steer prices, after falling 30% in
1930-33, rose 27% from 1933-36. From 1936 on the uk set up new beef import quota arrangements which in the
following years stabilised chilled beef shipments from Argentina. With the
shift from frozen beef to chilled beef more marked than before, volumes of
chilled shipped rose to a 1934 peak of 80% of Argentina’s total beef exports
and then stabilised at around the 1933 level of 360,000 tonnes p.a. and
remained at that level until 1940, though prices were a little lower than
before 1932 (Gebhardt, 2000, pp. 370-371). This recovery of the market for
Argentinian beef was easily strong enough to survive continuing pressure not
only from Commonwealth meat producers, who had not achieved the increased
market they had expected from the Ottawa agreements, but also from British
cattle producers, who continually complained about the cheap landed cost of
top-quality Argentinian chilled beef. These complaints led in December 1936 to
a second, slightly more restrictive, trade agreement being signed by
Argentina’s ambassador to the uk,
Manuel Malbrán, and uk foreign
secretary Anthony Eden. This agreement was focussed directly on chilled beef and
provided a guaranteed volume of 336,000 tonnes p.a. exports of Argentinian
chilled beef to the uk. It also
provided for a brand-new tariff on this beef of 15-20% ad valorem,
one-third of which was paid for by the cattle producers. This tariff provided some
funding for the uk’s new domestic
cattle producer subsidies and also was the justification for a new domestic
subsidy for Argentinian producers. This agreement did not, in practice, reduce
Argentinian exports to the uk. In
1937-39 the UK Board of Trade also put in place an International Beef
Conference, which successfully planned and stabilised imports into the uk, keeping uk retail prices on a slowly increasing trend while
preventing excessive margins.
The cattle producers’ position vis-à-vis the frigoríficos
was now strengthened by the findings of the 1938 Report of the Joint Committee
of Enquiry into the Anglo Argentine Meat Trade, a commission set up jointly by
the uk and Argentinian
governments of Neville Chamberlain and Justo and headed by the trade expert,
Sir George Schuster. This Report was produced jointly by the Governments of the
uk and Argentina, and it was
designed to illustrate and resolve some of the issues faced by cattle producers
in Argentina, particularly regarding the risks of over-production and as
regards their sales to frigorificos. Despite lack of cooperation from
frigorificos, the Report reached some firm and stark conclusions about the frigorífico
business. The Committee’s authoritative, very detailed calculations suggested,
for 1934, a very high net profit margin, jointly for the frigoríficos, for chilled beef alone, of 16.84% (Board of Trade,
1938, p. 56).[8]
The Committee in conclusion placed the frigoríficos
on notice that regulation of their local profits would happen; it pointed out
that this would be difficult to achieve, but would be helped by stabilisation
and regulation of local production (Board of Trade, 1938, p. 71).[9]
The Committee also attributed considerable weight to the new regulations for
Argentina’s cattle industry which had gradually been put in place since 1933.
These regulations were mainly implemented by the Junta Nacional de Carnes (jnc): the supervision and statistical
control of the key cattle markets, regulations for the pricing basis for cattle
sales to allow more flexibility for producers, transparency of the market
prices at the central Liniers market and, in 1941, the introduction of
standardised grading of types of cattle. Not all of these measures, however,
would actually take full effect[10];
their most visible achievement was the capitalisation of a cattle-purchasing
(and eventually meat-producing) organisation, the cap –or Corporación
Argentina de Productores–.
The cap was set up in 1934 funded by a levy
from cattle production and had a completely sui generis capital and
shareholder voting structure which treated the cattle producers as
shareholders, but with a controversial distribution of voting rights, intended
to reflect the trading of cattle during the cattle finishing process. Under its
dynamic first director, Horacio Pereda, the cap
became active very quickly in the cattle market in early 1935 (Saccomanno,
2014). It focussed mainly on purchasing cattle at Liniers so as to provide
transparency and counteract the frigorificos’ propensity for buying cattle
routinely en bloc at the estancia from their large semi-captive fattened cattle
producers. The cap established
Liniers as the place where prices were signalled for the whole market for
frozen and chilled quality animals and drove prices upwards, from a low point
of Argentinean pesos (A$) 0.20 per deadweight kilo in 1934, by 25% to A$0.25 by
1936 and A$0.26 at the start of World War II (Saccomanno, 2014, p. 160-161). It
was hardly surprising that the agitated comments of cattle producers in public
and to the press about their own financial issues and the depredations of the frigoríficos declined sharply after
1935-36. Exporters had a stable market and also benefited from a major (30%)
devaluation of the peso in 1938, although the government did deduct from their
earnings a substantial portion of the proceeds of the devaluation, the first
‘loss’ or ‘tax’ of a kind that they would continue to suffer from in the event
of future devaluations.
The cap’s market interventions now provided
stable and consistent prices for different types of cattle which from now
enabled both export and domestic markets to be supplied in a much more stable
manner. By 1939 Argentina had developed a well-regulated cattle and beef
production industry, with a less concentrated meat processing side than before,
and thus it could sustain its privileged market position in the uk, the world’s major food importer.
The wartime production system
Many things changed for the
meat business almost as soon as war broke out in Europe in September 1939. Soon
the uk was now effectively the
only buyer that could even produce ships to take any of Argentina’s farm
products to market. The disappearance of most of Argentina’s normal export
markets meant that the frigoríficos
became merely agents of the actual buyer, the uk
government, just as in World War I; but now the frigoríficos’ margins were much more tightly controlled. Despite a
crisis in 1940 caused by the near insolvency of the uk when it was under immediate threat of invasion, wartime
supply issues were resolved. There were difficulties with both grain crops and
shipping for grain, but the uk
government was very clear on the importance of shipping frozen meat from Argentina,
and it was ready to prioritise ships carrying Argentinian beef on various
occasions (Hammond, 1962, pp. 527-528). The uk
moved quickly to organise itself as a buyer of meat and grains, with payment in
the form of gold-linked deposits held for Argentina’s Banco Central in the uk and payable by the uk (earning interest, though frozen).
But there was another major change for Argentina’s meat producers: war caused
the disappearance of regular shipping schedules required for chilled beef. The
main product that Argentina shipped now became at once, in late 1939, frozen
beef, not chilled beef - and the producers of quality chilled beef would have
to wait until 1954 before shipments of chilled began again. The significant
second wartime beef product was canned beef, for which the market now very
significantly expanded. There had previously been a market in the us; now the us government very quickly became a large buyer in addition
to the uk government. Both these
countries fed their armies and navies to a considerable extent on canned corned
beef, with the uk theoretically
guaranteeing its servicemen a ration of 12 ounces of meat (of all kinds) per
day. uk non-military demand for
meat, on the other hand, was rationed for almost all the whole war to the equivalent
of just 400 grams per week. Despite this, the tonnages of beef shipped from
Argentina remained at pre-war levels from 1939 to 1942 (with a slight
dislocation only in 1940) and prices rose significantly as the uk signed a succession of five further
beef contracts with Argentina in 1940-42.
The
Junta Nacional de Carnes in 1941 very quickly established a pricing and purchasing
regime which enabled all producers benefited from these prices, and the cap’s price per kilo for steers at the
Liniers market rose from A$0.25 per kilo in 1938 by over 40% to A$0.357 per
kilo in 1942 (after a spike at A$0.39/kg in some markets in 1941), when
inflation indices rose by less than 15% in the same period. There were thus
strong incentives in place for the production of high cattle volumes and the uk and Argentina quickly introduced new
products (boned beef and new types of canned beef), while great efforts were
continually made to ensure that shipping was diverted to the River Plate.
When
the Ramírez military government took over in 1943, it soon took charge of both
the Junta and the cap and changed
their priorities, with the emphasis being on keeping subsidised retail beef
price increases under strict control. From 1943 until the end of the war,
exports to the uk were lower,
although the Argentinian and uk
governments also failed to reach agreement on upwards export price adjustments,
which meant that prices were adjusted months or years after sales took place.
This problem began seriously to affect the working capital cycle of the frigoríficos and also the cattle
producers themselves, which suited both governments, as they were fully aligned
in wanting to avoid any suggestion of high profits (i.e. profiteering) from
wartime prices. The wartime dynamics of the frigorífico
industry were also affected by cost increases, particularly for imported coal
and also labour costs, which increased significantly from 1943 onwards. After
two years of high profits early in the war, the smaller uk meat companies (Smithfield and Argentine, Liebig’s and
Bovril) began to lose money in Argentina.
Between
1941 and 1946, the national price index rose by over 50%, as did cap’s Liniers steer prices, though the
latters’ increases decreased after the sharp rises in 1941-42 mentioned above.
As the war ended cattle producers were well placed to capitalise on very strong
domestic market demand. As Giberti showed, the conflicts between breeders and
fatteners caused by the high margins on pre-war chilled beef (and therefore by
the power of the frigoríficos in that
market) quite rapidly disappeared in wartime when a highly-standardised frozen
product replaced chilled). Contemporary observers also thought they saw the
beginnings of an alliance between cattle producers and beef consumers –the
theory being that the producers would support governments that encouraged
growing domestic markets for beef by increasing the purchasing power of
Argentina’s new, beef-hungry industrial working class.
Contradictory post-war
pressures
In 1945, as pressure for the
supply of more cattle to the booming market began to increase, the Argentinian
government decided to intervene to try to incentivise production for the
domestic market, which required smaller, less fat animals with a production
cycle often as much as two years shorter than for the fatter animals raised for
export. This intervention does not seem to have worked to increase production;
instead, there were meat shortages for the export market and new price rises in
all meat markets in 1945-46. Increases in producers’ prices for their cattle
selling through cap had been held
at below inflation since 1943, so until 1947 there was no real incentive for
producers to bring forward their animals for slaughter. This was to accentuate
the eventual upward pressure on the price for both meat and cattle.
There
was also very high pent-up demand for export meat in European markets, not just
the uk, but exports were still
dominated by the uk government,
which until the end of 1946 (and indirectly beyond that, for a time) exercised
effective control over all of Western Europe’s meat purchases. In 1945 the uk managed to negotiate a small rise
over the 1943-44 meat price –barely 10%– but with it came a dramatically
increased volume targets, up from around 400,000 tonnes p.a. in wartime to
850,000 tonnes (Hammond, 1962, p. 275). But, after Perón’s election victory in
April 1946, the uk had to contend
instead with a much more demanding government in Argentina, which in 1946 also
set up a new export trading organisation, the Instituto Argentino de Promoción
del Intercambio (IAPI), which quickly developed its own agenda in relation to
the meat business and exerted much more direct government control over the
whole business than previously.
In
1945 and 1946 frigorífico workers’ pressure for better conditions and
better pay across the board increased and strikes ensued. The work-force had
grown significantly during wartime, particularly in the canning departments of
the frigorificos, which were much more labour-intensive, with much higher
proportions of unskilled workers and female workers. But the end of the war
would see the larger frigoríficos laying off considerable numbers of
extra workers recently recruited on a short-term basis. After the end of the
adjustment process in 1946, there were 60,000-70,000 unionised workers in the
meat industry, concentrated in Avellaneda and Berisso, with a smaller
concentration around Zárate. Working conditions in the frigorifico plants were
such that grassroots strikes were the rule rather than the exception; plant
unions and inter-union disputes were also commonplace. Communists, led by José
Peter, had been the first to organise the frigorifico workers during wartime,
but Peter was jailed by the military government and the union-organising
momentum passed to syndicalists led by Cipriano Reyes.
12,000
workers had been sacked in 1945, but only half of them had got their jobs back
when, in March 1946, Reyes led a new strike, partly to try to help cement the
power of the syndicalist union federation, the Federación Obrera Industrial de
la Carne (foic). Failing to get
concessions then, the foic struck
again six months later for better pay and conditions just as the first post-war
beef export contract with the uk
was being concluded. The union first extracted a government promise to
introduce an Estatuto de la Carne guaranteeing a series of worker’s rights
(including some forms of equality for female workers), but then continued its
strike for six weeks, holding out (against public threats from Perón) for a pay
increase and improved conditions, until Perón gave in and imposed the workers’
full terms on the reluctant frigoríficos
by decree (Contreras, 2013).[11]
At
same time as Perón was manoeuvring with the unions, he was also negotiating in
public with the cattle producers –making promises in relation to the price to
be paid by the uk for the first
post-war meat contract, which was finally agreed in October 1946. Soon after he
came to power in June 1946, Perón had promised cattle producers that they would
get a three-fold increase in the price for their steers of at least A$600 per
steer. To do this meant Argentina had to break the existing contract with the uk (using the expiry of Roca Runciman
as well as the leverage of the railway and sterling balance negotiations, which
the uk was keen to conclude) and
negotiating a new contract period and amount and a new ‘post-war’ price. The
negotiations lasted about two months with the uk
refusing to raise the price above £50-52 per tonne, 7.5% above the price they
had agreed in 1945, which was represented to the public as 45% above the
pre-war price. The agreed volume was up to 100% of Argentina’s available
exports, and for two years, renewable for a further two. The whole export beef
production cycle would now come under immense pressure.
During
the course of these negotiations Perón and his economic supremo, Miguel
Miranda, decided that they had to involve the cattle producers directly in the
negotiations. The uk tried to
conduct negotiations on the basis of expert opinions from external auditors
about changes in production costs. The uk’s
livestock expert Henry Turner met a chosen group of producer representatives,
on one occasion with neither Miranda nor Perón present. Turner was confronted
with some exaggerated calculations by Nemesio de Olariaga, the leader of
Confederación de Asociaciones Rurales de Buenos Aires y La Pampa (carbap), the smaller-scale cattle
producers’ organisation, to prove that producers were working at a loss, a
claim which Turner was able to refute by producing audited evidence that they
were making 5-6% returns (Turner Report, 1946). Turner also deflected the
negotiations away from the cattle price and towards the government’s taxes of
producers. He pointed out that the producers were earning much less than their
counterparts in Australia and New Zealand, because they did not get as good a
share of the exchange benefits accruing to the government from their exports
and also did not get any benefit at all from the hides and non-meat by-products
that the government would be able to sell on their behalf. Turner reported the
conclusion of the meeting as follows: ‘At the end of the meeting Olariaga came
in and said that he was happy with the agreement and, as he is Peronista, I
expect that this will satisfy the producers and may lead to increased
production’ (Turner Report, 1946).
These
two meetings between the British and the producers were actually used by
Miranda to create time and space for him to have separate discussions with
Turner in which they agreed on a supplementary payment to the government of
£5m, disguised as exchange rate compensation. Miranda then also allocated about
half of that to producers in the form of a more favourable peso-sterling
exchange rate for their meat. In the end the disclosed price increase that the uk wanted –limited to 7.5% in sterling
terms– was maintained, but there was also a disclosed surcharge of £2m (i.e.
approximately 3%), which helped the government pass on a price increase of
effectively 50% to producers.[12]
Perón also told Turner that he would make the producers spend most of their
increase in price on wages and housing for farm labourers, referring presumably
to the Estatuto del Peón,[13]
which the government now attempted to use more consistently to raise labourers’
wages and improve conditions.
Perón’s
policies to cattle producers were ambiguous. Smaller producers were encouraged
to switch from crops to cattle production by adjustments to the law on
tenancies freezing rents and making leases longer and much more flexible.
Larger producers were hit by higher wage costs, frozen rental incomes and high
input costs, all adding cost to the fattening process. Many producers continued
investing to improve cattle quality as well, with an ever stronger emphasis on
Angus and Hereford (Winsberg, 1970), leading to another boom in imports of
these bulls in 1946-47, when the uk
pedigree bull export trade resumed.[14]
Foreign ownership of land and cattle was not a direct issue, but high rates of
tax were introduced on absentee foreign landowners, plus tax penalties against
remitting dividends (“Liebig’s Extract
of Meat”, 1947).[15]
When
the 1946 uk beef contract price
was eventually passed on to cattle producers as a 22-36% price rise in
mid-1947, cattle supplies rose fast, but the unfavourable exchange rate and the
unprofitable prices paid by IAPI to exporting frigoríficos now began to disrupt the whole supply chain. Unlike in
the 1930s, the uk price was no
longer the real benchmark for cattle producers, as Perón’s focus was on
subsidising the explosive growth of Argentina’s domestic urban meat markets.
The supply chain was not primarily focussed on exports but on the subsidised Buenos
Aires market, often through smaller unregistered purchases by smaller
processors. In addition to continuing with the market exporting cattle on the
hoof to neighbouring countries, producers accelerated the supply of cows and
heifers to a much greater extent than steers, thus slowing the recovery of
cattle numbers in the next cattle cycle. In the meantime, the meat business was
now booming. Cattle numbers were growing faster than at any other time after
1910. Supplies to the domestic market increased very rapidly by 40% between
1945 and 1948, and steer prices once again closely matched inflation, with both
increasing by 40% between 1945 and 1948.
Even
though Miguel Miranda was pressing further export contracts onto a compliant uk government, the export steer supply
chain was now in effect marginalised. Post-war meat exports peaked at over
350,000 t in 1947 and higher volumes were a major feature in the Argentina/ uk Andes Agreement, signed by Miranda
in January 1948, and offering the uk
increased volumes and percentage shares of Argentinian beef in return for uk exports. Though the uk agreed to pay about 25% higher
prices, no new export steer prices were announced and the top-up payment agreed
by the uk in this Agreement (as
in its predecessor), including substantially increased meat volumes, was
swallowed in part by iapi and in
part by the frigoríficos.
The
Perón government now had the frigorífico
industry exactly where it wanted: with the IAPI’s strict control over export
sales, the frigoríficos were left
providing very little other than purchasing and butchering services. The frigoríficos were also forced to fund
working capital to cattle producers. The government could delay subsidies and
thus completely controlled the frigoríficos’
own cashflow and their margins.[16]
The
effects of government payment delays and working capital shortages immediately
affected the two British frigoríficos
for which there are published accounts, Smithfield & Argentine and
Liebig’s.[17]
Both companies were under severe working capital pressure, because they had to
face steady increases in the prices at which they had to buy cattle. Using the
pressure of these debts, the government gradually took control of Smithfield
& Argentine and also, effectively, the Sansinena frigorífico, plus both these companies’ export quotas, which then
became very useful for Cap to
export with.
Illiquidity and crisis in the
meat business
During 1948-49 the problems
building up in the export steer supply chain led to a deficit of around 100,000
tonnes on the minimum volume contracted for in the Andes Agreement. The
financial pressures being exerted on the frigorificos became still stronger. As
Daniel Lema has recently shown, this was the period in which differential
exchange rates took an even larger bite out of the margins of cattle producers
and frigoríficos than at any other
time before the 1970s (Lema, 2020, pp. 234-35, 242). The iapi also now took over buying cattle
by-products as well as cattle from the frigorificos, which had earlier been
able to generate liquidity from those products, thus removing another source of
their profits. This difficult situation for producers from the fatteners’
perspective in early 1949 was well evoked, by a Special Correspondent writing
to The Times from his estancia in the pampa (Argentine Meat,
1949). The correspondent explained how the disappearance of chilled beef as a
regular, coordinated product had been replaced by irregular payments dependent
on government subsidies paid in arrears and often delayed, which meant there
was very little incentive for ganaderos like him to bring forward their
product to market.
However,
because of Argentina’s major balance of payments problem, the Perón government
still needed to restart the uk
beef export business: Argentina could not get
us dollars by exporting to the uk,
but it still had no alternative large market for beef, and Spain and Italy were
proving to be bad payers. Argentina instead could use its sterling to buy not
only British coal and steel, but also sterling oil from Iran, the Middle East
and the western hemisphere (Trinidad). The uk,
on the other hand, still badly needed Argentinian meat imports to fill a
temporary gap of 300-400,000 tonnes p.a. uk
livestock production had still not recovered from the uk’s wartime switch to home grain production. With animal
feed grain rationed and the livestock cycle (other than for pigs) a slow one,
it would take three more years for uk
farmers to reconvert to pre-war livestock production levels. Meanwhile, uk consumers continued to suffered as
the value of the meat ration was reduced from 1948 onwards, and the price of
the meat available rose, reducing the weekly ration from around 400 grams per
person in wartime down to a low of around 260 grams in mid-1949.
From
early 1949 on, Perón’s new economic team under Alfredo Gómez Morales brought in
a series of new economic measures, including expenditure controls and
eventually devaluation, as dollars were very short; meat exports were slightly less high on the
agenda. On March 29th, before negotiations towards a new uk export contract started, Guy Ray, the
us chargé d’affaires, told Foreign Minister J. A. Bramuglia, when
stipulating a list of fourteen conditions for us aid in resolving the country’s
us dollar shortages: “Cattle raisers and meat packers uninterested [to]
increase production. Prices too low and cattle sold at low weights causing big
losses. Meat packers fear gradual expropriation constituting confiscation as
effective as if performed in single operation” (Ray, 1949b).
Though
earlier threats to nationalise the frigoríficos
has been denied by Peron, in March 1949 the issue arose once more when a
presumption in favour of the nationalising service industries was inserted in
the new Constitution. Under pressure from the frigorificos, the us Embassy belatedly got Perón to commit once
more that he would avert the threat of expropriation. The government then
decreed a further increase in frigorífico
workers’ salaries. But the frigoríficos
responded with threats to stop production completely in April if the government
did not pay them compensation for unpaid price losses stretching back to the
end of 1946.[18]
During 1949-50, given Argentina’s us dollar trade deficit and
debts and the Perón government’s search for us government support, the us frigoríficos
would lose no opportunity to press their government to help them with their
issues with local cashflow issues, and with remittances from Argentina. The us
companies continued to operate at a loss; they would present accounts to the
government’s Junta Nacional de Carnes, which, under pre-war meat laws, was
supposed to subsidise those losses. The Argentinian government would increasingly
only fund these losses after disputes and delays, as there was never clarity
over what the
law meant when it said that frigoríficos
could operate ‘at a reasonable profit margin’.[19]
When
the uk
sought and negotiated a one-year meat contract extension from June 1949, there
turned out not to be any leverage for either us or
uk
frigoríficos,
in spite of the Perón government’s now straitened economic position.
Argentina’s negotiator, Roberto Ares, asked for a larger adjustment on historic
meat prices than before and a substantial beef price increase in sterling terms
plus a us dollar guarantee. The cost of the guarantee would
eventually (nearly two years later) work out at £17m, double the guarantees
paid by the uk
for the 1946 meat agreement. Argentina agreed to ship reduced, but still
significant volumes of beef, 300,000 tonnes in the first year, with once more
the promise of increasing volumes afterwards. In return, the uk promised reasonably attractive exports from the uk to Argentina, and agreed a further beef price
rise to £97.54, well over 30% above the 1948 contract price.
Cattle
prices now rose substantially, pushing new volumes to the still-subsidised domestic
market, but the meat business’s supply chain problems continued to fester,
particularly as regards both frigoríficos
and their workers. Under the 1949 uk meat contract, cattle producers started shipping
again at new prices in the second half of 1949, but their costs continued to
rise. Returns on exports were also greatly reduced by the effect on producers
of a highly unattractive exchange rate for meat exports, even after
devaluations of both sterling and the peso against the us dollar
in the third quarter. By this time, of course, domestic inflation had escaped
the government’s control; both demand for meat and its rising price were
signalling the end of a very long rising cattle production cycle. Then, in the
context of strong consumer demand and accelerating inflation, from late 1949 on
domestic beef price subsidies were suspended.
During
1950 Argentina’s domestic beef market continued to expand, with higher than
ever slaughter, and cows and heifers outnumbering steers. Carlos Emery,[20]
the Agriculture Minister, managed to generate increased political support for
meat producers, and in June 1950 the government’s targets for cattle prices
were raised, for the first time in excess of inflation and then for a time in
step with inflation. This may well have been meant as a signal to the uk as negotiations for a new export
beef price were due to start. In any event, irrespective of its overall policy
of supporting import-substituting industries, the Perón government would now
remain committed to supporting cattle producers.
In
the uk, however, beef was not
nearly in such short supply as before, the recovering uk livestock industry was no longer so short of feed.
Argentina now had no grain or oilseed to bargain with as before, so the
government was also now in a much more difficult negotiating position
vis-a-vis the uk, which, after
its 1949 sterling devaluation moved rapidly into a much stronger economic
position worldwide. The uk now
demanded a reduction in the sterling prices it paid for meat, citing lower
costs of production in Argentina (although producers’ actual costs were not
reduced, because of the artificial exchange rate at which they in effect sold
their products). Negotiations were broken off in July 1950 and there were no
frozen beef shipments for over six months in 1950-51.
Escalating
labour costs in the labour-intensive frigorifico industry were moderated to an
extent, when the government now supported the Confederacion General del Trabajo
(cgt) in finally gaining
effective control over the frigorífico workers’ unions, after a major frigorífico strike in April-June 1950.
The timing of this move suggests that it was agreed between the government and
the frigoríficos, as part of the
negotiations over the timing and level of frigorífico
subsidy payments. It also suited the frigoríficos
that negotiations over the annual wage settlement were not completed until
November 1950, by which time union problems in the industry had considerably
diminished and export prices were much better.
The
unions present in the frigorífico
business remained as numerous as they had been in 1946, and as much plagued by
internal disunity. Wages had been raised in March/April 1949 and were due to be
raised again twelve months later, supposedly just before fixing a new uk meat price. Many outstanding labour
issues which could have been dealt with in the Estatuto de la Carne were
completely unresolved, so the next wage negotiations were very complex.
However, at the same time new pro-cgt
groupings were being encouraged by the government.[21]
There followed a wildcat two-month strike, leading to the de-recognition of the
industry’s main union federation by the government for not following the
government’s directives to end the strike. This led to the federation’s
replacement by a new cgt-affiliated
entity, the Junta Intersindical de Trabajadores de la Carne, which agreed a
settlement for a 15% lower wage rise, with reduced disparities for women
workers, and some improved pay for workers who were minors. Some, but by no
means all, of the key Estatuto de la Carne issues were addressed after the
strikers all returned to work (and most strikers got their jobs back) –for
example those relating to relativities for the most skilled workers (Contreras,
2013).
Against
this background, us frigoríficos
once again requested fresh subsidies to compensate for higher labour costs and
for the suspension of export shipments. But the frigorificos were now actually
making profits –in November 1950 they admitted as much, privately telling their
embassy that they were profitable because they could cross-subsidise losses on
domestic meat sales with the extra profits now available on exports, especially
canned meat at high Korean War prices (Mallory, 1950).
So,
while the uk trade was suspended
other parts of the meat export business took a temporary upwards turn.
Increased global inflation due to the Korean War meant that upwards pressure on
prices continued. Despite the overall decline in export shipments, domestic
market beef prices continued to rise in the now unsubsidised local market, and
consumption also rose as slaughterings reached a new peak in 1950.
Market shortages and policy
failures, 1951-54
The cattle production cycle
now turned decisively downwards, in spite the various types of encouragement
given by the Perón government for the production of export cattle; so cattle
supplies remained very tight, even though prices rose. After a series of dry
years starting in 1949, drought took a firm hold during 1951 and continued, and
deterioriated in 1952, which made the cycle worse.
The
government now began making subsidised credit available both to import substituting
industries and also to some agricultural producers, but there is evidence that
these policies, for example the interest rates applied to these credits, were
applied inconsistently, without impartiality (Girbal Blacha, 2002). Producers
began once again to invest in the highest quality British pedigree bulls at
what were now even higher record prices. A renewed worldwide boom in the prices
of uk pedigree bulls started in
the early 1950s, with new record levels being reached in 1953-54, and
Argentinian breeders again often among the main buyers. Carlos Hogan, the new
Agriculture Minister (also of Irish extraction), had earlier, while attempting
as ambassador to the uk to reopen
the uk market for chilled beef,
complained to the uk government
about the unrewarded effort that Argentinian producers were putting in, in
‘buying Scottish bulls for £7,000 and their progeny being slaughtered for
canning’ (Foreign Office,
1950).
The
declining cattle cycle meant many fewer cattle available throughout 1951-52,
and only slightly higher prices with meat shortages exacerbated. This situation
was scarcely compatible with restoring or developing the beef export business,
but the Perón government also remained anxious to reopen and expand the uk trade. So a new uk beef export contract was finally
agreed in April 1951; promised in theory around £30m of uk exports totalling 200,000 tonnes, with another price
increase to £126 per ton and another sweetener payment, just as in 1946 and
1948. In
us dollar terms, the £126 price meant a reduction by comparison with the
1949 price (because of the 30% sterling devaluation of late 1949), but in
sterling terms the price was still 29% over 1949. This result did not give
great encouragement to Argentina’s cattle exporters, as once again they did not
receive from the IAPI anything like the full benefit of the devaluation of the
peso against sterling, making them, in effect, still less export-competitive
in terms of their increased, inflation-powered peso costs of production. Worse
still, no sooner had the uk
export contract been signed than Argentina banned beef exports from May to
October 1951, and subsequently export volumes continued their substantial
decline.
As a
result, in October 1951, the uk’s
Labour government, in the very last week of the election campaign which it lost
after six years in power, which had been able to raise meat rations slowly
since mid-1950, was suddenly forced to reduce them again. Just three months later, once Perón had
himself been re-elected, the Argentinian government was also forced, in its
case for the first time, to introduce restrictions on the consumption of meat
in the domestic market –la veda- which became more drastic for the next
two years, though evasion was commonplace.
Similar
shortages continued to affect Argentina’s meat business in 1952. Steer prices
increased again, but producers could not supply, so export volumes fell. In the
uk, the new Conservative
government of Winston Churchill (1951-55) at once faced extreme beef shortages
and the same supply planning problems as before; the beef ration was reduced to
240-260 grams per person per week in mid-1952, a little lower even than in
1949, the lowest under Labour. Argentinian beef supply shortfalls already meant
that its beef was now considered unpopular as well as unreliable, and
successive Conservative governments from 1951 on also remained committed,
considerably more than its Labour predecessor, to more effective Commonwealth
trade preference.[22]
Nevertheless, for both Argentinian and uk
governments, the beef trade was also still essential. In December 1952, they
signed another trade agreement, this time a less ambitious one in which beef
was again the most important element; the terms were similar to those of the
1951 contract, with a significant sterling price increase per ton of frozen
beef of 28% (equivalent to usd450
per tonne) and a similar Argentinian undertaking of 250,000 tonnes of exports.
A brief opportunity for beef
exports, 1953-58
In its last three years in
power, the Perón government, while attempting for a time to stifle domestic
inflation, also tried hard to stimulate the export trade. Primacy was given
once again to the export frigorificos and subsidies promised (though then
delayed), but attempts to set ceiling prices failed. Cattle prices were in fact
now adjusted upwards several times, auction markets were given free rein, and
the percentage of steers in the market began to increase for the first time
since 1946. Unsurprisingly, however, the cattle production cycle failed to get
restarted until price controls were finally reduced in 1953. A great
opportunity was seen to restore the business in chilled beef, which had not
been exported since 1939. The Conservative uk
government now deregulated meat purchases completely. uk shipping lines re-equipped and rapidly reorganised
themselves along the lines of the 1920s conference cartel, with new entrants
also joining the market. The big central frigoríficos’
new influence on the market was further enhanced by the abolition of the iapi in 1954.
As
far as cattle producers were concerned, their net negative protection was only
(finally) reversed in 1954 (Lema, 2020, pp. 234-235). But now it was the
frigorificos who received the bulk of the government’s support; in May 1955 the
Perón government began to pay prompt subsidies more promptly and entered a
formal agreement promising the frigoríficos
a reasonable return with the promise of retrospective effect for some past
years (Peffer, 1961, pp. 47-48; Basualdo, 2010, pp.156-157).[23]
By
the end of 1955 cattle stocks had recovered, and the cattle production cycle
was accelerating, as producers had been able to regrow their cattle stock
levels and were embarking on a restored export trade in chilled beef to the uk, and other markets (e.g. to Italy
and Spain, both now able to afford to import). The world market for exported
meat beyond the uk was growing substantially,
starting now with Western Europe, later also in Japan and Eastern Europe. But
in 1955, after a brief period of high prices, high volumes of Argentinian beef
ran straight into collapsing uk
prices. In addition to oversupply of imports, uk
beef prices were kept down by deficiency payments, i.e. subsidies paid to their
domestic producers. The years 1953-55 saw the all-time peak of uk beef consumption, but also a new
peak for uk beef price subsidies,
at over £60m per annum. The uk
even subsidised Australian beef producers in these years, as part of
Commonwealth preference measures, but repeatedly continued in 1955-56 to
increase subsidies to uk cattle
producers (as well as small amounts of subsidy to Australia), the opposite of
what it did for lamb (Bowers, 1985, p.70). Against this background, in March
1955 Argentina and the uk signed
their last meat agreement. The agreement was silent on beef prices, and was
more focussed on an offer of credit to fund uk
exports; beef volumes were reduced significantly to less than £20m p.a. of
beef. This agreement helped trigger large new volumes of beef exports from
Argentina, but now uk retail beef
prices continued their fall through 1956-57 (by over one-third from the peak at
the 1957 low point).
From
1956 on, there were also new tax incentives for Argentinian producers to invest
in farm infrastructure, and new technology was available for cattle-breeding
(Barsky and Gelman, 2003, p. 393-394).[24]
However, when it came to buying pedigree bulls to improve product quality,
breeders persisted in making the mistake of investing in ever smaller, stockier
animals (later deprecatingly known as ‘belt-buckle bulls’, because the bulls
were only around 90 centimetres high at the shoulder), which is what the top uk Angus and Hereford breeders were
still producing; this they then continued to do right up until cattle
stockiness finally peaked in the early 1960s. Only then did they slowly begin
to adapt, by introducing bulls first from India and Africa for the Litoral
herds, and later bulls from France (as producers did over the whole world), in
order to meet the market’s preference for much leaner beef (Voth, 2016).[25]
But the Argentinian market’s taste for young, unhung beef was not readily
compatible with new European tastes in beef.
During
1955-58 Argentina’s domestic market for beef hit new highs (with the country’s
highest ever per capita consumption)[26]
before falling back sharply in 1959. Argentinian beef export volumes also grew
back nearly to pre-war levels, averaging over 550,000 tn per annum (p.a.) from
1955 to 1958. In 1958 the foreign exchange rate regime was clarified and
improved for meat exporters and their price realisations began to rise again,
and the frigoríficos even began to
receive payment of their subsidy arrears since 1946.
Domestic market instability
and continuing export stagnation, 1958-1975, and conclusions
After 1958 Argentina’s meat
export business again declined and the struggle to export to the subsidised uk market became tougher. Argentina’s
domestic meat consumption levels also ceased to show sustained per capita
increases, and then briefly fell back significantly in the early 1970s (Graphic
1). The business suffered slightly less intrusive market interventions than
before, but there were now sharp swings in the levels of consumption, which
quite closely reflected ups and downs in the country’s urban masses’ purchasing
power. Argentinian inflation levels were a special problem, because, in spite
of high short-to-medium correlation between inflation rates and Liniers steer
price rises, inflation would usually penalise producers on the cost side (and
if either steer or domestic meat prices ever got ahead of general inflation,
political intervention would surely follow swiftly). Producers’ costs remained
under permanent pressure because of the penal exchange rates that were usually
applied to beef exports, which rendered Argentinian beef uncompetitive against
other suppliers and often actively disincentivised export production.
Graphic 1: Argentina, cattle killed,
export and domestic, vs per capita consumption, 1935-1975
Source: Ferreres, 2010.
Argentina’s
export product was still attractive in the uk,
and a recurrent feature of the Argentinian meat business after 1958 was the
periodic sharp rises in meat exports to the uk.
These were short-lived, as the uk
government would soon threaten to bring in caps or quotas on Argentinian meat
imports. The reason for this hostility to Argentinian beef was not merely
Commonwealth preference and the public’s (and politicians’) attribution of
earlier problems with the beef ration to Argentinian under-supply; there was
also the perception that, as Argentinian prime beef product enjoyed
preferential pricing as compared with all but the very most expensive cuts in
the uk market, it continued to
threaten directly the uk’s own
beef producers. uk producers were
now subsidised so as to cover their costs, but the cost of subsidy after 1957
was in effect locked in by new farmer support legislation in 1957. In the
following year the uk’s ministry
of agriculture, led by Joe Godber, a dynamic young junior minister,[27]
carried out a lengthy study into whether it made sense to adopt a specific
quota for Argentinian beef, but despite strong political pressures, the
government eventually decided against it (Ministry
of Food, 1958).[28]
Sure
enough in the 1960s, the uk
government reduced the rising cost of these domestic subsidies by periodically
applying carefully-managed import quotas. A simultaneous rise in the price and
availability of Argentinian steers in 1962 led to a sustained rise in exports
to the uk, culminating in the Minister
of Agriculture announcing an annual beef quota limit of 203,500 tonnes p.a. for
all beef exports to the uk. The
distribution of this restricted quota caused consternation among the frigoríficos
and even more so among the business’s shipping lines.[29]
Steer prices and export prices began to fall once again and Argentinian
producers’ opportunity for capturing higher volumes at good prices was soon
gone.
There
were further brief periods of strong exports in the next three years, but a
major blow to ganaderos came with the aftosa ban which the uk placed on Argentinian meat in 1967.
The fact that the ban was rescinded so quickly and the uk market reopened shows the resilience of Argentina’s meat
businesses. Nonetheless, in 1969-70, there was a third period of limitation of
Argentinian beef sales to the uk,
after a spike in international demand for beef drove another sustained rise in
steer prices and beef prices. In early 1970 the uk government asked their Argentinian counterparts to put in
place a voluntary export limit of around 300,000 tonnes p.a. but Argentina
refused cooperation; a quota was imposed, so prices rose, but exports to the uk fell.[30]
However,
by the 1970s radical changes in uk
dietary habits took firm hold. These were trends which, as regards meat-eating,
had started soon after uk
rationing came to an end. uk meat
consumption, after a brief post-rationing rise in 1955-57, began to fall in
1958 (with lamb falling faster than beef) and then continued to fall, by 2000
to less than half the war time level (and less than one third of the 1957
peak). Chicken began a spectacular rise which was much the highest contributor
to the decline of the beef market for the next thirty years (Godley and
Williams, 2009). Finally, the classic retail joints based on Argentinian chilled
were gradually being superseded by other products, and by much leaner joints
than Argentina’s classic product, which were gradually being bred into cattle
produced in Argentina.
Moreover,
frigoríficos in Argentina were slow
to adapt to new conditions and the role of the large frigoríficos in purchasing steers declined rapidly after 1956-57
and the trade in chilled quarters also declined. Swift maintained and grew the us market
for canned beef and introduced new vacuum-sealed joints for the European
market, and the industry responded well to new uk phytosanitary requirements in 1968. But, other than by
Swift, no new production capacity and new technology was put in place by
Argentina’s major frigoríficos[31];
adding both of these might have enabled them to find new markets to replace the
uk and smaller European markets
after the enlargement of the European Union to include the uk and Ireland in 1973.
The
final blow to the historic meat business came with the ban on imports of fresh
meat to Europe imposed by the European Union in 1973-74. All attempts to find
substantial replacement markets for top-quality beef exports, proved elusive.
Argentina’s domestic market boomed until 1979, but then per capita consumption
of beef in Argentina began its long-term decline. By then Argentina had already
lost its world beef market dominance to other producers, in the first instance
to Australia, which enjoyed advantages from its lack of aftosa and from
its proximity to promising new markets in Japan and elsewhere in Asia.[32]
In
conclusion, in the thirty years after Argentinian cattle production had proved
resilient but had not expanded much export markets had proved fickle and often
illusory and the country’s leading world market position had gone for ever.
Ganaderos nonetheless could count on
growing demand from domestic consumers, who, for the moment were not losing
their taste for beef. In the domestic market inflation and the need for beef
volume/price controls and/or subsidies were factors which could interact
negatively with the cattle cycle itself. The enduring attraction of owning
cattle as a hedge against inflation also helps explain the resilience of a
substantial and varied population of ganaderos.
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