Uruguay’s exports to Argentina continue to fall with no end in sight

Uruguay’s latest export data, released yesterday, showed a clear increase in Uruguay’s total exports. Soy remained Uruguay’s top export. However, the data also showed a clear decrease in exports to Argentina, which has maintained strong restrictions on imports despite the changes it has implemented to its macroeconomic policies.

Uruguay’s exports increased 7.8% in May over May 2013, according to data from the Instituto Uruguay XXI. Uruguay’s exports have increased 5% between January and May of 2014. The total value of Uruguay’s exports in May reached $1,128 million USD, $81 million USD more than in May 2013.

Brazil remained the number one destination for Uruguayan exports despite a .2% drop between January and May. China remained the second biggest destination for Uruguayan exports. Exports to China fell 14.4% since January. The Nueva Palmira free trade zone received the third most Uruguayan exports. Venezuela, following a 33.5% increase between January and May, was the fourth most significant destination.

Uruguayan exports to Uruguay fell 16.3% during the first five months of 2014 when compared to the same period in 2013. The value of Uruguayan exports to Argentina decreased $33 million USD over the same period. Argentina remains the fifth largest destination for Uruguayan exports.

With Argentina “something chronic” is happening, Álvaro Queijo, the president of Uruguay’s Exporter’s Union (UEU), told the newspaper El Observador. “On one side trade is not good and on the other, Argentina’s changes to the exchange rate at the end of January caused [Uruguayan exporters] to lose competitiveness”. “That the official exchange rate has gone from $ 6 (Argentinean Pesos) to $8 which has changed the numbers a little. Whats more, the restrictions have not changed, they have remained the same; Argentina’s industry is very reluctant to buy imports”, explained Quejio.

Quejio does not believe that there will be any significant changes in the short-term to produce an opening for trade or an improvement in Argentina’s macroeconomic conditions. “This is a process that has been going on for some time, for some two or three years, with a continuing deterioration of exports to this country. If we compare it to 2012 the drop is bigger and if we use 2011 the decrease is even more pronounced”.

Quejio reported that the sectors most affected have been clothing, graphics, chemicals and plastics. He added that Brazilian demand does not make up for the fall in sales to Argentina. The decrease in exports to China, nearly 15%, can be attributed to the significant increase in exports to the Nueva Palmira free trade zone as most products are usually shipped from there to China.

Soy Stays In Front

Soy remained Uruguay’s principal export in May. Sales to abroad increased 14.7% over May of 2013 and represented 39% of Uruguay’s total exports in May. “Despite decreasing 2.8% over sales in May 2013, frozen beef was Uruguay’s second biggest export, making 9.3% of the total” reported the Uruguay XXI institute. Concentrated milk came in third with 4.9% of the total. Exports of live cattle saw the biggest increase in May. Sales of live cattle in May of 2013 did not even reach $300,ooo USD, in May of 2014 they topped $15 million USD.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

The Value of Uruguay’s Beef Exports Increased 3.6% During The First Five Months of 2014

The average value of Uruguay’s beef exports during the first five months of 2014 increased 3.6% compared to the same period in 2013, reaching a an average value of $3,951 USD per ton of meat from the front of the carcass and an average value of $3,812 USD per ton of meat from the back half.

Beef exports fell 5% as a proportion of Uruguay’s foreign currency inflows compared to the first five months of 2013, according to Uruguay’s National Meat Institute (INAC).

The volume of meat exports fell 9% amounting to 142,624 tons.

China held its position as the leading destination for Uruguayan beef. Uruguay exported 37,479 tons of beef to China, a 10.6% increase in volume. The value of Uruguay’s 2014 beef exports to China has reached $109.7 million USD so far, an increase of 7.8% over the same period in 2013.

Beef exports to the European Union continued to bring in more foreign currency than any other destination. So far in 2014 they have earned Uruguay $160.3 million USD, that is a 9.7% increase of the amount generated between January and May of 2013.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El Observador by Hugo Ocampo. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay’s government finds meat processing and tanning industries are not over consolidated

Initial analysis by Uruguay’s government has concluded that while a few businesses control a significant amount of the market in both the Uruguayan meat processing and tanning industries that doesn’t mean either sector is over consolidated.

In July, President of José Mujica mentioned the possibility that consolidation had reduced competition with these industries and requested the Agriculture, Industry, and Labor ministries analyze the situation.

In the August 6th cabinet meeting Roberto Kreimerman, Uruguay’s Industry minister presented an advance of the study Mujica had requested.

Eduardo Brenta, Uruguay’s Labor Minister briefed the Uruguayan newspaper El País on Kreimerman’s presentation. Brenta reported that within Uruguay’s meat processing industry three Brazilian firms (Marfrig, JBS, and Minerva) control 38% of the Uruguayan market. However, they’ve actually lost market share since 2005 when they controlled 40% of the market.

Eduardo Brenta, Uruguay’s Labor Minister, spoke on possible over consolidation in Uruguay’s Meat Packing and Tanning sectors

Brenta explained that JBS’s market share has increased, while Marfig’s has decreased. “From this point of view we don’t seem, in principal, to have a problem; it would be different if one company bought the other” Brenta said. “It seems clear that the participation of one or others is very linked to prices. They are negotiating with producers that are strong and the climate has helped enough, therefore those that pay more are slaughtering more [cattle]”.

Brenta also reported that in the tanning sector, Zenda (which Marfrig sold to JBS) and Paycueros (owned by Argentineans) control 50% of Uruguay’s market. The other 50% is divided between five firms that control approximate 10% of the tanning market each.

The cabinet found that neither the market distribution in the tanning sector nor in the meat processing sector was concerning, although both industries are still being analyzed.

“[The analysis] reassured [us that no company] has obtained a dominant position nor can a group of businesses effect the rules of the game in either of the two markets” Brenta said.

Meat processors have participated in Uruguay’s tanning market for several years. Brazilian ownership of Uruguay’s tanneries has led in many cases to processed hides being sold in Brazil.

This Uruguayan Business Reports news article is a summarized translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay’s meat processors raise prices for third consecutive week

Following a change in the price of cattle, the two meat processors that dominate the Uruguayan market raised the price of beef to butchers between $3 pesos and $5 pesos per kg and offal meat between $3 pesos and $14 pesos per kg.

It is the third consecutive week that the domestic price of beef has risen in Uruguay. Normally the smaller meat-packing plants align their prices with the two that major ones. According to butchers the price has risen around 10% this year and half a cow is at the highest price in years, round $94 UYU per kg.

The new prices include a rise of $3 UYU per kg for bone cuts including steaks and $5 UYU per kg for pre-packaged ground beef. The organ that saw the greatest increase was gizzards which rose by $14 UYU per kg.

“This new increase could produce resentment among beef consumers; the people are going to notice” Herbert Falero, the vice-president of Uruguay’s Union of Meat Venders (UVC) told the newspaper El País.

“The new prices are in effect starting today” he said and signaled that butchers could not assume the costs. Previous price increases have been passed on to consumers and Uruguay’s consumers are turning increasingly to chicken and pork.

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

9,000 calves approved for export from Uruguay to Tunisia

Problems exporting to Turkey, the traditional market for live calves born and raised in Uruguay (both castrated and un-castrated), remain but interest is growing from other destinations.

Uruguayan cattle ready for export

Uruguay’s MGAP (Ministry of Livestock, Agriculture and Fish) has approved the export of around 9,000 calves to Tunisia. Those calves had been quarantined as part of the complications exporting to Turkey.

“The permission to export 9,000 calves to Tunsia is welcome, even more so given the moment we are in” said Gastón Fernández, the secretary of the Union of Live Cattle exporters. “It is a good signal for the breeding sector and live cattle exports which has to always be open”

MGAP’s animal health division, is studying a proposal from Turkey’s veterinarians which calls for an additional test prior to export as well as a prolongation of the quarantine period which is already around 20 days. A longer quarantine would raise the costs on Uruguay’s exporters whose competitiveness has already been hurt by high cattle prices from producers.

Nevertheless Uruguayan businesses are still receiving requests from various countries, signaling there is strong demand for live cattle.

“We have been in contact with Algeria, Tunisia, Saudi Arabia, Russia and have received inquiries from France and Spain, European Union countries that we cannot do business with because Uruguay is free of foot and mouth disease [only] with vaccination. There is demand” said Mr. Fernandez

This Uruguayan Business Reports news article is a translation of a news article that appeared in the Uruguayan newspaper El País. The original article is available in Spanish here. Uruguay Business Reports translation by Donovan Carberry.

Rumors that JBS will acquire Marfrig’s meat packing plants trigger official comments

Rumors in the Brazilian press that Brazilian food processing giant JBS will acquire four meat processing plants in Uruguay from competitor Marfrig prompted President José Mujica to warn his cabinet ministers about possible over consolidation within the meat-packing industry in Uruguay.

Uruguay’s Minster of Labor Eduardo Brenta, who relayed President Mujica’s comments on consolidation in Uruguay’s meat packing industry

The minister of Labor, Eduardo Brenta, told a Uruguayan morning radio program that President Mujica had proposed looking into how any new deal between JBS and Marfrig would affect competition within the Uruguayan meat-packing industry before letting it go forward. JBS has already acquired Marfrig’s Uruguayan tannery Zenda.

“If this (new deal) happened, this group (JBS) would be in a dominant position in the Uruguayan meat market” said Brenta. He explained that the possible transaction’s impact on negotiations between Uruguay’s meat producers and meat processors provoked President Mujica’s concern.

If JBS adds the four Marfig plants in Uruguay to its own meat-packing business in the country (Canelones) it will become the principal meat packer in Uruguay with 33% of the marketplace. In a distant second place would be the Brazilian company Minerva with 8.4% according to market data from INAC.

Brenta said the that the government first intends to talk and negotiate with the businesses involved in the deal (Mafrig and JBS) to achieve the optimal result. Should that fail the government will consider whether the Defense and Promotion of Competition law should be invoked.

This Uruguay Business Reports news article is a translation of a newspaper story that appeared in the Uruguayan newspaper El Observador. The original news article is available here. Uruguay Business Reports news translation by Donovan Carberry

Uruguayan live cattle exports to Turkey effectively barred

Turkey has stopped health inspections of Uruguayan live cattle exports effectively barring access to Uruguay’s principal market for live cattle.

The president of Uruguay’s Live Cattle Exporters Union (UEGP), Alejandro Dutra, said that “the reality is that the animals can’t be exported. One group of Italian operators are working on a deal in Uruguay and have 8,000 animals in quarantine. If this deal, one of many that are in progress, falls apart it will result in a loss of $1,700,000 USD”.

Dutra said that veterinarians never arrived to perform Turkey’s health inspection process. Meanwhile, other companies purchased 1,000s of animals that haven’t been collected and are still in their former owner’s fields.

According to Dutra, the situation is complicated because of other countries, some exporting countries have the same problem getting health inspections as Uruguay but various European nations have had no problems getting their exports inspected and are continuing this type of trade with Turkey.

The ministry of Livestock, Agriculture and Fish (MGAP)’s director of animal health Federico Fernández, said that he understands the concerns of operators but does not have any official information on the issue.

“The reality is that Uruguay is authorized to export sanitary live cattle to Turkey, that is the only official information that exists”, he said.

The director explained that they have tried to raise the issue at the Turkish embassy in Argentina, without success, since the relevent type of diplomatic representation is not available in Uruguay.

Fernández also sent an email to his counterpart in Turkey, without receiving a response. “At the moment we don’t know what more we can do to solve the problem” said the director.

Sources in the cattle industry said that exports from Mexico, Brazil, Hungry and Bulgaria are also facing the same problems.

It is not clear if the problem is sanitary or bureaucratic. It only recently began affecting exports from several nations, and does not fit with Turkey’s established norms, sources said.

Granting sanitary permission for exports has been one of the most contentious topics in the livestock sector during the last few months.

Producers and cattle operators have repeatedly complained to the executive branch that sanitary approvals are affecting exports and that sanitary inspections aren’t being given at the same pace as previous years.

MGAP suspended issuing sanitary inspections during the month of February while they carried out vaccinations for foot and mouth disease.

After that period ended the state immediately resumed inspections at a face pace, which also annoyed ranchers and operators who complained that switching from one extreme to the other and the lack of certainty about how and when they would give the inspections made it difficult to complete transactions.

In response to the repeated complaints, the head of MGAP reiterated that the agency is understaffed and the staff they have are primarily allocated to maintain and improving the health of Uruguay’s livestock.

This Uruguay Business Reports news story is a translation of a news article which appeared in El Pais. That original Spanish language article available here. Uruguay Business Reports translation by Donovan Carberry.

Uruguay will be seat of the 2016 world meat congress

Uruguay was selected as the seat of the International Meat Secretariat‘s  21rst World Meat Congress in 2016 during this year’s World Meat Congress in Paris.

The International Meat Secretariat is a non-profit association of meat and livestock producers from around the world. It “provides a forum for the exchange of ideas and experiences on the issues affecting the international meat and livestock sector” and represents the industry at international organizations such as the FAO, OIE, WHO, OECD.

The World Meat Congress is the International Meat Secretariat’s largest meeting. It is held every 2 years. The next congress, in 2014, will be located in China.

The current World Meat Congress assembly also confirmed that Fernando Gil of Uruguay’s National Meat Institute (Inac) will become a member of the International Meat Secretariat’s board of directors.

As the host of the 2016 congress, Uruguay will see an influx of  more than 1,500 people connected to the meat industry.

This Uruguay Business Reports news brief is a translation of a news article that appeared in Ultimas Noticias. The original news article is available here. Uruguay Business Reports translation by Donovan Carberry.

China seeks to import high value cuts of beef: Proposes deal for 100 metric tons of beef monthly

Chinese importers no longer only talk of buying offal, they are constantly seeking more beef including high value cuts pushed by growing domestic consumption that doesn’t seem to have an end in sight. At the recent Sial China trade show, a Chinese state-run business expressed their interest in buying 100 metric tons monthly of beef fronts with bone and ribeye steaks for distribution in six provinces to the Uruguayan National  Meat Institute (INAC). The news was confirmed to El País by the vice president of INAC, Fernando Pérez Abella, who led the official delegation at the trade show where they displayed only three freezers.

Mr. Abella explained that INAC will continue to advise the company, but it will be the industry which negotiates the deal and sets the prices.

“Our biggest concern is that the majority of Uruguayan beef continues to go to the mincer and is mixed with others in the final product. We have the quality to sell directly to the plate, so we need to target niches to beef that buy our meat for that purpose, because we can add more value [that way]”, emphasized the head of the INAC delegation.

“What surprised me is how they eat beef. There are millions of people who eat more beef every day in a potential market of 500 million people” he added.

For his part, the broker Alejandro Berrutti, representative of United Breeders & Packers that also was at Sial China, confirmed the market’s potential. “China is not the market of the future, it is the market of the present” and he emphasized the Uruguay’s advantage: that when a sale is completed the logistics are already in place. Offal which isn’t consumed in the west is sold to China, but the potential we see in high value and bone beef cuts is more interesting”, he said.

According to his talks with chinese importers, “the market can handle today’s high prices, the potential is enormous and there is a lot of interest in beef”.

This Uruguay Business Reports story was translated from an article which appeared in the Uruguayan newspaper El Pais by Pablo Antunez. The original article, in spanish, can be viewed here. Uruguay Business Reports translation by Donovan Carberry.