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Argentina, Sociology 145

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Priscila Arellano

on 20 April 2010

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Transcript of Argentina, Sociology 145

Argentina Priscila Arellano. Morgan Miller. Jared Pinsky. Anna Ruddle. David Shapiro. The Beef Industry.
150 pounds consumed a year per capita

3rd largest beef exporter in the world after Brazil and Australia

2009 total revenue on beef: $5 billion USD

13 million head of cattle are now slaughtered per year in Argentina, and beef exports contribute $500-700 million USD per year.
The world's biggest consumer of beef..... First period: 1880-1930 Independence in 1980
Cattle the basis of the economy
1880-1930: the Golden Period of Argentine development
Economic policies favoring the agrarian export sector
WWI slowed down Pampa development
Pampa region Second Period:1930-1943
The great depression had a large economic and social impact
Election of the Radical Party
Economic policies did not deviate very much....
Military uprising in 1930
Country tried to reduce its dependency by fostering industrialization Roca-Ruciman Pact:
Trade deal with UK. In spite of treaty Argentina had to reduce its imports. Reduction of demand, resulted in the drop of commodity prices
The government established a secial board- Junta Nacional de Granos- to set minimum support prices Third Period:1943-1960
•1943: government was toppled by military coup that led to government of Juan Domingo Perón (lasted until 1955).
•Government pursued import-substitution industrialization.
•Agricultural surface declined by more than fifty percent, while the cattle herd and meat production increased.
Fourth Period:1960-1990 •Perón was toppled in 1955 by a military uprising

• 1955-1983: succession of civilian and military governments with frequent reversal of policies

•Import substitution industrialization was eased

•To control inflation, price and exchange controls were established

•Trade imbalances and foreign exchange crises
currency devaluations to encourage exports and reduce imports.
Fifth Period:1990 on 1989: Carlos Menem's election to the presidency.
Return to export-led development
Export taxes and Junta Nacional de Granos abolished
Reduction of state intervention in agriculture
Lowering of export taxes helped profitability
Tax burden continues to be high Environmental Effects of Cattle/Beef Industry
Deforestation is a major problem where (rain) forests are cut down for cattle ranching

Loss of Biodiversity

Local Authorities have set out guidelines for agricultural usage and cattle ranching, and try to ensure the legislation is strictly enforced
Deforestation: Grasslands: In 1997, the US lifted the ban on fresh meat imports from Argentina. Agreed quota of 20,000 metric tons of meat a year with mixture of processed and fresh beef products.

Increased export of Argentine beef requires an increase in cattle cultivation in the grasslands. As cultivation expands Argentina has to confront the destruction of this ecosystem by overgrazing practices.

Farming of hay for cattle consumption = way for Argentine beef industry to grow without overgrazing. Difficulties with "range-fed" cattle, which are produced by ranching on grasslands. Taste is due to the cattle consuming native grasses. Switch to farm-fed beef would mean a change in taste; the meat produced would be more like the US meat standard which has more fat. Pollution: Burning fossil fuels to clear forests create pollution through the introduction of carbon dioxide into the air "It is said that today in Argentina deforestation contributes more to global warming than do the country's cars, trains, planes, and boats combined." Labor Livestock Farming (Ganaderia) work:

2005:14, 251,529
2006: 13,402,549

Number of establishments...

Number of employees...

Wages and salaries of employees...
1984:$276,142,857 USD
1993: $554,246,175

Number of female employees in 1985:10,593

Cattle raising is fairly evenly distributed over the entire pampa region.
Skill Level Large meat packing plants- general machinery knowledge
Farming requires specialized knowledge. Workers must know how to use farming machinery and pesticides, for example.
If looking to have a higher working status in the industry there are management skills and communication skills involved in the buying and trading aspect.

Working in the slaughterhouse: semi-specialized. Have certain skills.
Most dangerous is the manufacturing/packaging aspect- 29.3% suffered injuries and illnesses (1998).
Unions March 9, 2006- ban on beef exports for 180 days. Damaged ability to sell overseas and forced a reduction in suppliers.
4 months ago government raised the tax of beef exports to 15% from 5%.
Hurt one of the nations fastest-growing export industries and a sector that employees more than 30,000 people in the country.
Consumers' group called for a meat boycott to lower prices- which did drop prices and demand and directly affected the activities of the Argentina Beef Industry Union.
Despite a price increase from in the last three months, Argentine meet workers marched to the labor ministry protesting expected job cuts amid fears that beef production will lead to plant closures.
"Some 10,000 workers risk losing their jobs...Lots of plants are not working and while the government assures we get paid for the equivalent to 140 hours work per month, we want jobs not subsidies."

-Secretary General of Meat Industry Workers Union The State Development History June 1985 – World Bank approved high lending program. Fourfold increase from an average US $160 M/year an average US $640M/year.

1989 – Carlos Menem of the Pernoist party elected president.

Menem imposes economic austerity program

Due to uneven economic performance, World Bank does not approve new loans between October 1988 and December 1990.

Instead of loans, the Bank participated intensively in reform process. Industry Historically Argentina's beef market has been dominated by a domestic demand. All aspects of production managed to stay within Argentina, driven by local buyers and sellers, until very recently.

In the last five years soy beans have become a highly profitable crop. Argentina is the 2nd largest supplier to the world market. The US is number one.

Soy beans have replaced grazing grounds for cattle.

This has caused Argentina to start importing beef, which is unprecedented.

Increased Fragmentation of the production process.

Countries that Argentina has recently imported from include Brazil and Uruguay. This has caused a 1.5 billion dollar displacement of export income.

The increased demand for imports has placed pressure on Brazil and Uruguay to increase their outputs. BUT..... Focus is on the domestic market. Exports make up for less revenue than that gained from within.
The Liniers Livestock Market is the major livestock trade center in the country.

Bidding takes place daily, the final price rule the value for the whole national livestock, which impacts both the domestic prices and the prices of export.
A varying amount from 12,000 to 18,000 cattle are auction sold for slaughter everyday.
There is an Extraction Guide issued which includes all data concerning animals, buyers and transport vehicles.
Buyers range from meat processors, butchers, supermarkets, and slaughterhouses.
These interactions create a day-by-day livestock value. Firms Influence

Even though Argentina only makes up about 7.36% of worldwide beef exports it still influences market prices in places where Argentina has direct exporting contracts.

However, it has been difficult for Argentina to change the established quotas due to its inability to meet its own domestic demand.

The government has started to supply farmers with subsidies and the grazing culture may have to switch over to feedstock. Branding Because this industry has boomed from within there has been no real need to label or brand Argentine beef.
In fact, there is no food and safety labeling system for beef. Certification, like Angus certified, only comes from private organizations.
It will be interesting to see how farmers, buyers, and sellers react as the government becomes more involved in regulating the industry with regards to food safety.

• Devaluation led to a fall in prices
Shortage in supply of beef

•The government taxed exports, reducing profits for the rural sector

•Since 1960, profitability depended on international prices and demand

•Export taxes reduced profitability

•Hoof-and-mouth disease was a deterrent to gaining world market share

•1992 – Introduction of new currency, the peso (pegged to the U.S. dollar) to stop hyperinflation and adoption of far-reaching market-based policies.

•Dismantling of protectionist trade and business regulations

•Reversal of half-century of statism via implementation of ambitious privatization program.

•Increase in investment and growth with stable prices through most of 1990’s.

•Convertibility defeated inflation yet undermined export competitiveness. – chronic deficits in balance of payments financed by massive borrowing.

•1995 - Menem re-elected.

•1996 – Dismissal of Finance Minister Domingo. Economic hardship leads to general strike in September.
•1998 – Recession Starts
•1999 – Fernando de la Rua wins presidency.
•$114 billion public debt.
• Strikes and fuel tax protests
•Foot-and-mouth disease –Beef exports slump.

•Concerns about use of genetically modified varieties
•IMF grants Argentina an aid package of nearly $40 Billion.
July –Much of country brought to standstill – general strike in protest against proposed government spending cuts.
Country’s credit ratings slip.
October – Peronists take control of both houses in parliament in Congressional elections.
November – President de la Rua meets U.S. President George Bush – in hope to avoid economic crash in Argentina.
Share prices reach record lows.
December – Economy Minister Cavallo announces restrictions to halt exodus of bank deposits
IMF stop $1.3 billion in aid
December 13, 2001 - 24-hour strike on withdrawals, delayed pension payouts etc.
President de la Rua resigns

2001 •January – Congress elects Peronist Senator Eduardo Duhalde as caretaker president.
•Devaluation of peso ends 10 years of parity with U.S. dollar
•April – Banking and foreign exchange activity suspended
•Prediction that financial system could collapse
•June – anti-government and IMF protests in Buenos Aires.
•Protestors, “piqueteros”
•July – Duhalde calls early elections for March 2003, later but pack to April.
•November – failure to re-secure IMF aid, Argentina defaults on $800 million debt repayment to World Bank
•World Bank refusal to consider new loans.

2002 Robust recovery following severe 2001/2002 economic crisis.

•Post-economic crisis more flexible exchange rate regime, sustained global and regional growth, boost in domestic aggregate demand.

•Accumulation of substantial official reserves, higher tax burden, improved tax collection efforts, tax revenues. 2003
•May – Nestor Kirchner sworn in as president.
•September – Argentina and IMF agree on debt-refinancing deal

•March – Kirchner declares restructuring of country’s debt to be a success.
•Argentina offered to exchange $100billiion+ in defaulted bonds.
•November – Argentina hosts 34-nation Summit of the Americas
•Violent protests 2006
•January – Argentina repays multi-billion dollar debt to IMF
•May – Argentina files environmental complaint at Internatoinal Court of Justice in the Hague – court rules against Argentina.

•December – Christina Fernandez de Kirchner succeeds her husband, Nestor Kirchner.

Global financial turmoil and rapid declines in world commodity prices end Argentina’s rapid rate of economic expansion.

•July – President Fernandez cancels tax increases on agricultural exports
•Farmers protest
•August – Lower house of parliament approves government’s plan to nationalize pension funds
•Necessary to protect assets during global financial crisis.

2009: Deterioration of domestic and international demand complicates fiscal situations.
•January – worst drought in decades = state of emergency.
•February – Farmers protest agricultural export taxes.
•July – President Fernandez’s Peronist party lose absolute majorities in both houses of parliament

•Argentina’s exchange rate policy
•Average exchange rate: 3.87 pesos/dollar (in September 2009).
•Undervalued in previous years + high global commodity prices = record levels of export volumes and values.
•Nearly 500 U.S. Companies in operation in Argentina
•Employing 155,000+ Argentine workers.
•Manufacturing, information and financial sectors.

•Outstanding debts remain
•$20 billion in default claims by international bondholders
•$7-$8 billion owed to official creditors.
Today/Conclusive Remarks Recent Trends Recent Developments...

In 2001 a public non-governmental organization was founded to promote Argentine beef within Argentina and around the world. It was founded prior to the government becoming more involved in taxing, establishing quotas, and taking over the industry basically.

The IPCVA (Instituto de Promocion de la Carne Vacuna Argentina), known as The Argentine Beef Production Institute, has encouraged certification and labeling of Argentine beef in Argentina and abroad.

Internationally the IPVCA has participated in food exhibitions and is currently researching consumer data in order to better promote Argentine beef in different cities and among different cultures.

The IPVCA itself characterizes Argentine beef as a quality product rich in history, tradition, and prestige.
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