Meat shortage in Chile: unions point to imports, AFP withdrawals and China

RIO DE JANEIRO, BRAZIL – Butchers and unions indicate that problems in international trade and the high domestic consumption after pension fund withdrawals have caused a lack of meat stock throughout the country. Meanwhile, cattle farmers criticize the lack of incentives for local production, which has been practically destroyed by the importation of Paraguayan and Brazilian cuts. For this reason, they have had to take refuge in a new commercial ally: China. “They take the whole animal, even the hooves, unlike other countries,” they say.

A mixture of internal and external factors have had an impact at the same time and have caused, according to butcher companies and unions, a shortage of cuts in the market.

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There are three main reasons for this: an imbalance in the market between imports and exports; a higher level of meat consumption due to the large amount of money circulating after the withdrawal of social security savings and the IFE; and the new approaches that national cattle farmers have had to develop.

Radio Bío Bío’s Investigation Unit spoke with three actors in the butcher’s trade and with beef producers and exporters’ associations, who gave details of the state of the current market and the interference of China and the new tastes of the Chilean consumer.

“THEY ARE KILLING THE NATIONAL INDUSTRY”

The first thing to keep in mind is that a large amount of the meat we consume in Chile is not national. It says category V, but it is of foreign origin.

And the fact is that the low cost of importing meat from abroad has meant that for some years now the grills, frying pans and ovens of Chileans have been used to prepare Brazilian, Argentinean and, to a great advantage, Paraguayan meat.

In fact, practically 40% of the beef imported into Chile is of Paraguayan origin: of the $1.68 billion dollars that were imported in 2021 according to customs figures, $702 million came from the country of Chaco.

This is why, if there is any problem in the international trade logistics chain, this is immediately reflected in the stock in stores throughout the country.

The general manager of the Chilean Meat Processing Plant Association (Faenacar), Rafael Lecaros, has been on the warpath for almost 20 years trying to get the national livestock industry to recover ground. The union is made up of 14 companies. According to Lecaros, they represent 90% of the meat exporters and 60% of the national slaughter.

Lecaros recognizes that there are several factors that can explain the shortage of meat in the market. One of these is the lack of incentives for domestic production. Since the mid-1990s, the trade has been flooded with imported cuts. This has led to the decline of cattle breeding in the country.

“The livestock mass has dropped between 30% and 40% between cattle censuses. It is decreasing and being replaced with imports. Today, 70% of the meat we consume is imported,” he says.

Therefore, he explains, there are few businessmen “encouraged to have standing cattle (in breeding, grazing) because of the imports that arrive very cheaply, without any counterweight, with practically zero tariffs. This has been killing livestock and the Chilean, as he is consuming much more, finally the national livestock is not enough to supply them”.

Miguel Barahona is one of the owners of Los Plomos butcher’s shop, which has two branches in the eastern sector of Santiago. When asked, he confirms that there is a shortage of meat, mainly due to the low production in Chile.

“I discussed it with my supplier and there are several reasons. There is a shortage of heifers, as they are being exported to China. There are also water problems in the south, which causes a lack of fodder, feed for cattle. There has also been a decrease in cattle production. Many people have converted the fields from cattle raising to farming. I was talking about the cherry crop, because they export it and get more profitability,” he says.

LACK OF STOCK

Nicolás Rodríguez is the manager of the La Reinita butcher’s shop in the Huechuraba district. He confirms that although “we never run out of anything”, he has found it difficult to obtain meat. “It’s scarce,” he says. “And if I do get it, it’s more expensive.”

One of the reasons for this, he notes, is the pandemic. Due to the lack of personnel, “not as much meat is coming in from outside. And since there is little imported meat, domestic producers take advantage of it. Or if they don’t send it abroad, they export it.

At La Reinita, he says, most of the meat they sell is Paraguayan, because of its cost-quality ratio: it comes at a good price and has positive attributes. Another meat that has a lot of outlets is Brazilian, because of its low cost.

Bastián Chandía is the manager and son of the owner of the Balmaceda butcher’s shop in Renca. He also says that they have had meat shortages, mostly related to imports.

“Now with the truck stoppage there were suppliers who had their meats spoiled. We have also had problems bringing in some cuts. We have had to place larger orders or order more in advance, because vacuum-packed meats last three or four months,” he says.

However, Chandía points out one detail: imported meat, in addition to having a good price, does not have a bone. This is a big issue for butchers, because if they buy a whole animal for deboning, “a la vara”, they literally don’t know what to do with the bones afterwards.

“We have to throw away the bones because people don’t take them. The “cazuela cuts”, most of which have bone, we have to reduce them because they don’t sell as much as a vetted loin, which sells a lot. The bone is a problem. That is why butcher shops stop buying a little domestic meat, because the bone is still a problem,” he explains.

Barahona, from Los Plomos, supports this idea: “When the meat arrives vacuum packed you get rid of a problem when you work with steers, which is the bone issue. When you buy a steer you buy the whole animal. This means that you have to bring in customers to be able to sell the bones of the steer. There are Chilean slaughterhouses that work in this way, without bones, but they do not have such a wide offer. And many times the producers have their own stores, and they sell it to their stores rather than to the clients”.

CHINA IS THE SALVATION

According to Customs figures, the favorite destination country for Chilean beef exports is, by far and without any competition, China. It is followed far behind by Canada and Japan.

In fact, beef exports increased from US$21,150,730 in 2012 to US$99,287,601 in 2020. Of these, the same 2020 to China US$79,040,525 in meat was exported, a number that increased from 2019, when US$62,259,833 was exported to the Eastern power.

But, how did Chile come to export so much meat to the east? “Very simple,” says Lecaros. “Due to African swine fever, 50% of China’s pork production died. So, they started looking to replace pork, either with pork or beef.”

That is why China appeared and exports doubled: they went from exporting 5% of production to 9.5%. This had never happened before, as Chile always had problems finding a meat importing partner. But China had something that our country never found before: a market that would import the whole animal, not specific cuts.

“To export, you have to sell to each market what is most valued. We tried to do it with Mexico: they asked for three cuts: arrachera (portion of tapabarriga) and two more, and we wanted to sell the whole animal. Mexico died. Also the European Union at one point, about 8 years ago, was our traditional market, and it also disappeared. But China is a monster: it takes everything, the whole animal: the hoof, the tendons, the whole deboned animal. That is an incentive to export,” he observes.

However, he assumes that this will be temporary, “as they recover their pork production. In fact, the pork market, which was high growth, has already stagnated because China has recovered a large part of its production.

La Cascada farm is located between Pucón and Villarrica. They are mainly Wagyu producers. Esteban Plaza, their commercial manager, confirms that in a period of two years they went from exporting 70% of their production of 1,000 head of cattle to practically all of it, 99%. “Before, it was 80% Europe and 20% China. Today it is the opposite,” he says.

AN ASADO WITH “10%”

The Chilean population is consuming more meat. This is exemplified by Lecaros in numbers: although exports fell by US$13 million, imports rose by US$600 million.

“When you feel this sensation of scarcity, it is because the market is always in a pinch. It has been seen in the consumption figures as a result of the bonds, IFE, etc. There is more money, more circulation. There is more money, more circulation. And we have seen, due to the boom in butcher’s shops in this year and a half, that those who used to eat one asado a month, now eat two. The butcher’s shops had a boom and their sales have doubled”, he explains.

Rodríguez, from La Reinita, agrees with this idea: “With the first 10% it was notorious. People started to eat asado, it was very noticeable. It was more noticeable because there was a lot of money. It also happens at the end of the month and in the fortnights, there are more sales”.

Something similar says Chandía: “In December a lot of meat was sold and prices were much more expensive than now. That month was complicated, because the price of vacuum-packed meat and chicken was high. And in spite of that, a lot was sold.”

“If there is a little more money and you have been locked up, what do Chileans do? We eat an asadito, poh. That’s why consumption has risen a lot”, says Lecaros.

Even so, the cattle breeder maintains faith and optimism. “We are still happy, because the high price will encourage cattle breeders to produce more. For 20 years we had no way to defend ourselves against imported meat, because it fixed the price in the market, regardless of whether it was Brazilian or worse. It has been hard.