by Félix Sanmartino and Carlos Correch
Thursday, May 29, 1997
PARIS. Yesterday was a festive day both for livestock producers and for the country. During the 65th general meeting of the International Office of Epizootics (IOE) the 146 member countries declared Argentina as an aphtous fever-free country with obligation to vaccinate, a resolution which will be formalized in a plenary meeting.
This leaves behind our sad status of aphtous fever-affected country which accompanied us for over sixty years. Argentine beef and aphtous fever (foot-and-mouth disease) were two expressions which ended up together at one point or another of any talk, discussion or business report. This took a heavy toll on livestock breeding; some economic surveys claim that during the last years sales dropped by 800 million dollars a year. On the other hand, the campaign against aphtous fever cost the private sector about 120 million dollars per year and the National Service for Agriculture and Food Quality and Health (Servicio Nacional de Calidad y Sanidad Agroalimentaria, SENASA) around 30 million.
At 2:00 p.m., the chairman of the IOE Committee on Aphtous Fever presented the General Assembly with the results supporting the recommendation for Argentina to be accepted as an aphtous fever-free country with obligation to vaccinate. During the time assigned for discussion, no country made any objection and the motion was approved.
The Argentine delegation, one of the most numerous including officials, technicians and agriculture and cattle breeding leaders, warmly celebrated the piece of news. The Secretary of the Department of Agriculture, Felipe Solá, pointed out: "The stamping out of aphtous fever is a sample of joint capacity for the transformation of an adverse reality; the effort made by Argentine breeders, the support of technicians and of the scientific community and the existence of an effective vaccine were elements which enabled to achieve the control of the disease and meet a goal which had been considered utopian for a very long time."
One of the first consequences of the recently acquired sanitary status was the chance to reformulate the export agreements negotiated under the label of aphtous fever-affected country.
There will be a real chance to introduce higher quality cuts in many of the 94 countries today buying Argentine exports. Canned meat will gradually make room for high-value fresh meat. The IOE resolution is a very significant stimulus for cattle breeding, an activity which has been crowded out by agriculture due to better prices.
Dr. Luciano Miguens, vice-chairman of the Rural Society, pointed out that the new sanitary status will have an enormous impact on breeders, adding that the arrival of better prices should not take long. "The support given by the IOE is a very good signal for breeders to keep or increase their stocks; otherwise we will run the risk of not being able to cater for the new demand in the medium term", said Miguens.
The new sanitary status is not definitive but provisional if we consider the final goal of being an aphtous fever-free country without obligation to vaccinate. This is the next stage, but, according to the chairman of SENASA, Dr. Luis Barcos, it must be undertaken with much caution. "We must bear in mind that when we stop vaccinating, the defenses of the national livestock will drop to zero in a year¹s time. Any virus entering our country might cause a real disaster. Before taking the decision of stopping vaccination, frontier control must be ensured, mainly in the frontier with Bolivia and Brazil, in order to diminish the risk of introducing infected animals."
For the sake of preserving the new sanitary status and meeting the goal of eliminating vaccines, SENASA has a project associated with the meat smuggling which will surely cause a huge stir. "SENASA considers smuggling as a sanitary issue, because clandestine cattle are not very likely to be vaccinated. For that reason, we are preparing a resolution ruling that any herd which is driven without the corresponding sanitary documentation will be slaughtered right away. Besides, we will shut down and inspect the field belonging to the cattle herd owner", said Barcos to La Nación.
The sanitary opening up of markets entailed by the IOE certificate does not automatically guarantee the export of our meat and the prospects will only be confirmed as far as there is a real will and effort to start selling. After the initial excitement, the silent and combined work of the whole sector must inescapably ensue.
In this sense, a great number of questions can be brought up, for reality still shows us some inconsistencies which are very much related to our breeders¹ anti-export bias. Markets have been opened up, but can they be catered for?
However, worries about the problems to be sorted out in the future are out of place in these hours of happiness. And it only fair, because there is not enough reason for casting shadows on a true victory which must be celebrated in every cattle pen and chute in the country. The wisdom of a soccer player indicates us the right attitude after a victory. When asked about the next opponent, he invariably answers: "That we leave for tomorrow. Today we are going to celebrate."
Solá: for this official, to reach this last stage will mean to be able to introduce fresh meat in countries which are still clinging to the zero risk qualification.
The Secretary of the Department of Agriculture, Felipe Solá, stated that the qualification of aphtous fever-free country with obligation to vaccinate given by the IOE represents the formal certificate of something which Argentina had already achieved and which is the real status of being a country with a minimum risk in its exports of boneless beef.
According to this official, the new sanitary status certifies what is now evident in the country as regards the absence of focuses of this disease, a good epidemiological system, a sanitary service fighting its battle in a very conscientious way, well-aware breeders who are organized and have a strong legal support, and a very strict export control.
"This is what has been done in Argentina. Now it has been formalized", said Solá to La Nación, adding that this is something like "half the final badge", meaning the next step: the definitive stamping out of the disease with the elimination of vaccination.
How long will it take? The decision calls for prudence. "To do away with vaccination", said Solá, "would mean the introduction of our fresh meat into Japan, Korea, Taiwan and Indonesia, which are still clinging to the zero risk, but doing it too quickly would be an act of recklessness which could make us lose everything we have won."
He explained that the access to the US and Canada markets and the IOE resolution imply that our country should undertake a "tougher" sanitary policy, so as to ensure more safety with reference to epidemiological control. Provided the goals are achieved, the decision to stop vaccinating will be hastened. This could happen gradually, in different degrees depending on the region, starting with those having natural barriers, such as Argentine Mesopotamia.
"In itself, the status of aphtous fever-free country with obligation to vaccinate does not necessarily involve the opening up of markets, but it does mean that Argentina has a scientifically testable minimum risk", said Solá. Thus, for instance, the US, Canada, Mexico and Cuba did not need the IOE resolution. Their technicians evaluated the risk in our country and concluded it was minimum.
Canada already opened up its market and the others are being slower for bureaucratic reasons.
Apart from those countries, there are others, even in the Asian South East, which opened up their markets and are already receiving our product, though in almost symbolic volumes due to the absence of a strong promotion action.
Other countries, such as Japan, Korea, Taiwan and Indonesia, are waiting for Argentina to be declared as an aphtous fever-free country without obligation to vaccinate. But the fact the US, Canada, Mexico, Cuba and other countries have already recognized our minimum risk and the new IOE formal qualification will enable to exert greater pressure on the Asian nations which are not accepting the risk analysis. Now we can protest before this situation by means of panels in the World Trade Organization, because those countries have signed the sanitary and phytosanitary agreement establishing the concepts of regionalization and minimum risk.
"Which price levels can be expected in the new minimum risk markets?"
"The prizes of the different cuts resulting from slaughtering in the aphtous fever circuit countries do not differ too much from those in the non-aphtous fever circuit, except for differences in their purchasing power. However, we claim that we are having higher prices in the non-aphtous. Why? Because we will be able to introduce high-value fresh beef cuts and not only cooked or canned meat."
Argentina produces 40,000 tons of "rump and loin" for export (17,5 kilograms?? of the best cuts of export-type veal) and out of this total, 28,000 tons are surely to be marketed at a high price through the European Hilton quota.
The remaining 12,000 tons are also going to Europe, but as a part of the GATT quota (which pays high export duties) and for values which are half the Hilton quota. If these 12,000 tons could be traded for 5,000 or 6,000 dollars in the American market, the exporting industry purchasing power would grow about 15 or 20 cents per kilogram (about 2 pounds) of carcass meat which could be partly or totally transferred to the production.
"Does this difference make cattle breeding a profitable activity?"
"It is already profitable today; the complaints derive from the lesser relative profitability as compared to agriculture. But with this improvement it would be more attractive to breed export-type calves and the price of the fat cow would also improve."
"Which changes might this new minimum risk status involve for the cold storage industry?"
"As far as we can increase our export markets and cattle breeders understand that this can improve price, the exporting industry will stop being biased against it: the double sanitary and taxation standard which we are trying to leave behind establishing equal demands for all. On building up this new strength, exports will compete on an equal footing with consumption. This will benefit cattle breeding and is likely to attract a significant flow of investments in plants which can be country-oriented and overseas market-oriented."
"Is production prepared to cater for an increasing export demand?"
"The central element is price. It is naive to prepare production if price is not an indicator or an incentive. Production is profitable for the current level, but for it to grow there will have to be more incentives. It is not the State that must make cattle breeding grow, but the price."
"How long will it take to start seeing the results of this new sanitary status, according to your estimates?"
"One year. In this period we will surely have a different framework. We will be able to stand up and ask ourselves: All right now, how much have we changed?"
Positive: Argentina¹s new sanitary status is the starting point of a stage of export growth. In the industrial and cattle breeding environment no one doubts that the new sanitary status Argentina has just obtained from the IOE will have favorable economic effects for these sectors.
However, very few dare to quantify the benefits from the economic point of view and set a term for it to start giving signals.
Joining the club of the minimum aphtous fever risk countries does not magically open the market doors, but it puts us back in the competition arena and means the promise of recovering part of a past splendor, when Argentine led the international meat market, not many decades ago.
The Department of Agriculture, Livestock, Fishing and Food has made projections, which were updated this month, about the impact of our exports now that we can reach markets which until yesterday only belonged to the non-aphtous circuit and to which we were only able to sell low-price meat products, such as thermo-processed and canned meat.
The estimates of the official agency reflect an almost immediate impact on our exports, which will be gradually increasing over the years.
By 1997 exports of 550,000 tons are expected, as against the early estimates of 510,000 and the 460,000 shipped in 1996. This is a consequence of the imminent return of our meat to the North American market (a step ahead of the IOE decision), which will receive 20,000 tons, and of the consolidation of others recently conquered, like Russia and Iran. With the latter there is a 20,000 ton-business deal to be closed as soon as a few details are settled.
The official projection marks an increasing trend for the next years as a result of the estimated consolidation of the Argentine products, mainly in the Asian South-East markets, whose demands are growing due to the sustained economic growth of the region. The projected volumes are: 1998, 650,000 tons; 1999, 740,000 and 2000, 800,000 tons.
The private sector is not handling figures but concepts with a certain degree of caution. The new status awarded by the IOE is regarded as "good news", the start of a favorable stage. But this must be accompanied by the sustained effort of the sector to achieve the status of "aphtous fever-free country without obligation to vaccinate", so as to pull down the last barriers (countries which only accept the zero aphtous fever risk, like Japan and Korea). Furthermore and most particularly, there is the need to promote our meat in the new markets and thus awaken the interest of its consumers and importers.