LDN - Business

Less meat, more pasta: how the economic crisis is changing Argentina's diet

[October 30, 2018] By Nicolás Misculin

BUENOS AIRES (Reuters) - Like most Argentines, Sabrina Pozo used to eat meat several times a week. But soaring inflation and the collapse of Argentina's currency, the peso, since April have forced her to abruptly change her diet.

"My habits changed a lot. Before, maybe I made beef Milanese (breaded cutlet) once a week and roast beef once a week," Pozo, 36, said.

"Now, maybe I won't make roast beef or I choose to make chicken, which is a little cheaper," said Pozo, a flight attendant who lives with her daughter in an apartment in Buenos Aires. "More pasta, more rice."

Beef is making a rarer appearance at the dinner tables of middle-class families as the country spirals deeper into economic turmoil, a Reuters review of meat industry data and interviews with consumers, butchers and ranchers has found. It's one of the clearest signs of how far Argentines have seen their purchasing power slashed by inflation, which is expected to surpass 44 percent by year's end, according to the latest central bank poll.

Argentines interviewed said they cannot afford to eat as much beef as they used to and now regularly swap it with less expensive foods. Butchers told Reuters they had seen sharp falls in beef sales in recent months. Ranchers and meat packers, who depend on domestic consumers for most of their sales, said they were being kept afloat by growing exports to Russia and China, the main foreign buyers of Argentine beef.

None of this is easy for Argentines to swallow. Most see eating beef as a part of their cultural identity.

"The people are carnivores. Argentines always, for their whole lives, have eaten meat," said Javier Madeo, 45, who owns a butcher shop in Buenos Aires.

While Argentines have been slowly reducing their meat consumption over the past 60 years, they have remained among the most carnivorous people in the world. But in September a little-reported statistic published by the country's beef industry chamber, Ciccra, revealed a new reality: Meat consumption fell to an annual average of 49 kg (108 lb) per person that month.

That was down nearly 17 percent over the previous month. A major month on month drop. But much more significantly it was one of the lowest levels of consumption recorded in 60 years, according to a Reuters review of data compiled by the country's main body for promoting Argentine beef, which goes by the Spanish acronym IPCVA.

There were two other months during the period reviewed when meat consumption plunged to about that level - in February 2017 and March 2008 - but those falls were due to shorter months, holidays and a dispute between the government and the agriculture sector.

This is all potentially bad news for President Mauricio Macri, who is deeply unpopular and faces an uphill battle in his bid for re-election in October 2019. His steep cuts to electricity, water and cooking gas subsidies are aimed at breaking his country's boom and bust economic cycle, but they have made life much more expensive for Argentines. He risks losing support among the middle class voters who helped him win the presidency in 2015.

The impact of Argentina's economic crisis reaches far beyond the dinner table. As inflation soars, people arrange trades for everyday items like clothing and food that they otherwise could no longer afford in a resurgence of Buenos Aires' traditional barter clubs, now organized through Facebook.

Inside the home, the subsidy cuts have sharply increased household bills. Many people have scaled back on utilities, including gas for heating their homes through Argentina's winter months, and will likely do the same for air conditioning this summer.

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A butcher cuts meat at a butcher shop in Buenos Aires, Argentina October 29, 2018. REUTERS/Marcos Brindicci

HUNGRY FOR MEAT

Last year, Argentines - together with their Uruguayan neighbors - led the world in meat consumption, according to the Organization for Economic Co-operation and Development (OECD). From steaks to sausage, the country's famed high-quality beef dominates the menus of its cafes and grills, known as parrillas.

But in September alone, meat prices jumped nearly 9 percent from the previous month, and beef was 39 percent more expensive than it was the same month a year earlier, according to the IPCVA data.

Higher prices have curtailed a popular practice among Argentine construction workers, preparing an "asado," or barbecue, at their work sites during Friday lunch hour. Once a common occurrence on city streets, it is now a rare sight.

"Before, people came and bought a kilo or a bit more. Now, they buy a half kilo," said Alcides Benitez, 41, a butcher. He worries he may have to close his shop in the historic San Telmo neighborhood of Buenos Aires.

Inflation in Argentina increased 6.5 percent in September alone. Adding to the pain, salaries have been slow to adjust.

Argentines have experienced soaring inflation in the past. During the country's devastating financial crisis in 2001/2002 economic hardship undercut meat consumption. But an outbreak of foot-and-mouth disease in Argentina prompted a plunge in the country's beef exports, forcing meat producers to sell at home at lower prices. As a result, despite the crisis, Argentines were still largely able to sate their appetite for meat.

SERIOUS BLOW

The new drop in consumption is a serious blow for Argentina's meat industry, which was already reeling from the worst drought in years that scorched pastures in cattle-producing areas from late 2017 to mid-2018.

The meat industry relies on the domestic market for about 86 percent of sales, according to Ciccra. Strong demand from China and Russia has helped the beef industry offset losses in the domestic market, but exports, while growing, still account for only a small portion of overall sales.

Despite being famous for the quality of its meat, Argentina exports at a much lower rate than other major meat exporters like Brazil and Australia, said Matias Sara, a private consultant for the Argentine meat sector. For years, red tape and government policies that favored the domestic market have been an obstacle to export growth.

Macri, a free-market advocate, slashed export taxes upon taking office in an effort to boost economic activity in the previously closed economy. He has since reintroduced taxes on some exports as he tries to balance the country's budget.

"If it weren't for China, particularly, and the rest of exports, in general, there would be a collapse," said livestock producer Ulises Forte, who is also a director at IPCVA.

(This story was refiled to remove an extraneous word in paragraph 13)

(Additional reporting and writing by Cassandra Garrison; Editing by Ross Colvin and Paul Thomasch)

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