Actors involved in the meat agribusiness and the government constantly monitor what is happening in Chinathe main client in the list of destinations for placements from Uruguay, concerned about a change in their demand that has had impacts on the domestic market.
The consequences are adverse for the livestock producer and the industrial companies, they will also be for the national economy if this reality is accentuated and extended, however they have determined an advantage for the consumer, since the price in butchers and supermarkets has decreased significantly since the beginning of September.
Juan Ignacio Buffa, undersecretary of Livestock, Agriculture and Fisheries (MGAP), commented to The Observer that “It is clear that Uruguay has a high concentration of its exports in China and when a market where we place more than 60% has some slowdown, it is inevitable that there will be an impact on domestic prices, both for fat cattle and on the replacement market”.
The weight of a giant
In 2022, US$ 2,549 million entered the country for meat exports, 19% more than in the same period of 2021, after the placement of 523,829 tons (shipping weight), at an average value of US$ 4,867 per ton.
China explains 57% of that amount (US$ 1,445 million).
Of the 411,900 tons (carcass weight) of beef that Uruguay exported this year, China demanded 65%.
Of the 14,237 tons of sheep meat exported in 2022, China captured 46%.
The hierarch pointed out that Uruguay’s strategy “is clear and rests on two legs.”
One is improve insertion in foreign markets. “The MGAP in this administration every five calendar days has made an effort to open a market or to sustain a market,” he said.
The other, he noted, “is improve the quality of our international insertion through free trade agreements.
China, Turkey and the Transpacific
In that sense, he explained, progress is being made towards a Free Trade Agreement (FTA) with China, progress is being made in this style with Turkey and in a few weeks the note will be sent for Uruguay’s formal application to join the Trans-Pacific Economic Cooperation Agreement.
The latter generates important expectations, he admitted, given that it is an area of the world “deficient in food, which imports US$ 245 billion in food, therefore we have an enormous opportunity there to improve the quality of our international insertion” .
Buffa noted that “only 10%, in round numbers, of our food exports is subject to certain tariff preferences (…) Entering the Trans-Pacific Agreement would automatically take us to almost 50% of our production with tariff preference and that is what we are working on”.
In addition, he highlighted During the current government administration, it was possible to enable the entry of 33 new products to different markets.based on what he defined as “a permanent agenda” to advance the role that the MGAP has in international insertion, which he called “proactive health key.”
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This year the cattle slaughter totals 1,878,800 heads, 5.5% less than in the same period of 2021.
systematic descent
Buffa made these comments after participating in the Forrajeras 2022 conference, organized by Calvase, at the San Alberto ranch (in Florida), where, at a time of severe water deficit, management was appreciated that, based on high-quality plant genetics, allows have an abundant stock of food for rodeos. That, it was highlighted in the activity, affects the profitability of agricultural companies and is essential in order to maximize good times in the markets and minimize problems when, as now, the wind blows against it.
Alberto González, director of the establishment, commented on the market issue: “Unfortunately, a sum of causes have caused the international meat market in the last two months to have had a notorious break, a clear deterioration”.
On the reasons, he pointed out internal issues in China, where there are 200 million people confined by the covid pandemic, but also that the five continents are facing an increase in the level of consumer prices, even double digits.
González commented that taken as a unit, the most important market for meat is domestic, however globally 75% of the meat produced by Uruguay is exported.
The drop in the international price, week after week, has been moving not only to the price of fat cattle and replacement, with notable drops also in both cases.
In the last six weeks, moreover, there has been “a systematic decline” in the value of meat in the domestic market, which he estimated at US$200 per ton per week, with an accumulated value of US$1,200.
That, moreover, it has been transferred to the consumer, hand in hand with a drop that only in this last week was US$ 0.23 per kilo on the hook at butchers and supermarkets.
