Argentina’s voters are going to the polls to elect a new president. The choice is between Sergio Massa - the Minister for the Economy in the current administration - and the populist libertarian candidate Javier Mile - who has been active in politics for just two years.
Polls which were unreliable in the first round of voting show both candidates neck and neck. This is something of a surprise, as the domestic economy is in chaos, which would normally be bad news for the candidate from the current government.
However, the challenger is perhaps too controversial for many voters, with the idea of abandoning the failing peso in favour of the US dollar as the national currency causing some voters to be cautious because such a change would add to chaos rather than be a quick-fix solution.
From a farming and beef exporting viewpoint, Javier Mile will be an attractive choice. As well as locking into the US dollar as currency, he has also promised to eliminate export tariffs on beef, the complete opposite position to the current economy minister.
The present more-left-of-centre administration actively discourages beef exports. Beef is very much the national dish in Argentina and if exporters are earning good revenue in US dollars, it has the effect of making beef sold in the domestic market feel very expensive.
In response, the current administration has had a temporary beef export ban and periods of short-term restriction on exports.
At all times, there is an export levy - currently payable at 9% - on beef exports, which has the effect of reducing Argentina’s competitiveness in international markets. Javier Mile has promised to remove this should he be elected.
Argentina’s place in world beef market
Argentina has had a turbulent past in exporting beef. Between 2005 and 2015, exports were effectively banned by the then-government, which has currently been in power since 2019.
In the intervening four years, Argentina elected a right-of-centre president who removed restrictions on beef exports.
When he lost the 2019 election and the present government was restored, it increased the tariff on beef exports and, apart from flirting with a beef export ban, has allowed beef exports continue relatively undisturbed.
Argentina is consistently the fourth-largest beef exporter in the world, behind Brazil, the USA and Australia.
The cattle population, which was 55 million head in 2019, has fallen year on year to the point that the United States Department of Agriculture (USDA) forecasts it will be 52.5 million head in 2024, down from 54.1 million this year.
Prolonged drought has caused many farmers to cull cattle that would otherwise be used in breeding.
As a result of this extra beef in the system, the USDA is forecasting that Argentina’s beef exports in 2024 will reach 900,000t carcase weight equivalent, the highest this century.
Argentinian beef is a premium product in EU markets, where it is subject to a prohibitive import tariff for any product imported outside the limited quota available.
Currently, they have access to 7,500t approximately of the Hilton beef quota, with a preferential tariff of 20%.
China is the main destination for Argentina’s beef exports, currently taking three-quarters of all beef exports. This market has grown rapidly over the past decade, as China’s demand for beef surged and Argentina, along with Brazil and Uruguay, is the highest volume suppliers apart from Australia.
This level of exposure causes some concern, but it has been by far their best market option and has greatly reduced their dependence on the EU.
However, if the Mercosur trade deal gets ratified as rumoured before the end of this year, then a generous reduced tariff quota would very much put the EU market in play for higher volumes of Argentinian beef.
Irish beef producers and exporters, as well as Argentina’s citizens, will be watching the election results with interest when polls close on Sunday night.