Argentina’s beef exporters struggle as strong peso drives up costs

ARGENTINA – Argentina’s beef exporters are grappling with a steep decline in overseas sales as a stronger peso drives up local production costs, making their products less competitive globally.

Data from Argentina’s animal health agency Senasa shows that beef exports dropped nearly 20% between January and April compared to the same period last year, totaling around 255,000 metric tons.

The decline has been most severe in China, the country’s largest customer, where shipments fell to 137,000 tons from 203,000 tons in the same period a year ago.

Chinese buyers, who accounted for roughly two-thirds of Argentina’s beef exports in 2024, are now only willing to pay about US$5 (per kilogram), according to local meat processors.

This drop in prices, combined with increasing production costs, has led to shrinking profit margins for exporters.

At the Villarroel meat plant near Buenos Aires, workers continue processing beef, but company managers say the current business environment is becoming unsustainable.

Yahir Auad, who oversees operations at the plant’s parent company, said they can’t compete at current prices, especially as input costs have surged.

Last month, President Javier Milei relaxed long-standing currency restrictions in a bid to stabilize the national economy and attract investment.

While the move brought more exchange-rate consistency, it also strengthened the peso, which has in turn increased production costs in US dollar terms.

Auad explained that producing one kilogram of beef now costs between US$4 and US$4.50, even before taxes and additional expenses are factored in.

This situation is affecting major meat companies operating in Argentina, including Swift, Quickfood (owned by Brazil’s Marfrig), and Minerva, all of which are facing financial pressure.

Industry leaders say Argentina’s beef is now the most expensive in Latin America, with tenderloin cuts priced at around US$4.70 locally, compared to US$3.60 in Brazil and US$3.50 in Uruguay.

Rising Costs Force Plant Closures and Layoffs

The economic pressure has pushed some meatpacking firms to reduce their workforce, with some cutting more than 10% of employees, according to the ABC meat exporters’ chamber.

ABC analyst Miguel Jairala said the combination of high domestic expenses and falling prices abroad is making it hard for firms to close deals, especially with Brazil offering similar or better quality meat at lower prices.

On top of production costs, exporters are burdened by export tariffs, including a 6.75% duty on beef shipments, which companies say is further eroding profitability.

Auad revealed that they were forced to shut down another facility in Las Heras because they could no longer meet contract obligations under the current financial strain.

Despite industry appeals, Argentina’s Secretariat of Agriculture has yet to respond to calls for tax relief.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.