30 March 2007

1 minute read

South America

Rounders herd cattle at the Liniers Market in Buenos Aires, Argentina. Beef price and export controls have reduced by nearly 50 percent the numbers of cattle passing through the market, which is the country's biggest.

Since its founding more than a century ago, the Liniers Market on the outskirts of this capital city has been an institution in Argentina's famed beef industry.

Thousands of cattle - as many as 20 percent of those sold nationwide - passed through the sprawling market on any given day, and the prices paid here guided buyers and sellers all over Argentina.

Now, however, many of the pens are empty, and sales have plummeted by half, thanks, say cattle producers, to botched government policies aimed at holding down inflation that have actually spurred beef prices.

Argentines eat more beef per capita than anyone else in the world, so government regulators tried to check rising inflation by controlling beef prices. First, they prohibited most beef exports. Then they capped prices paid for cattle at Liniers.

Cutting beef exports, government regulators believed, would increase domestic supply, while controlling prices at Liniers would have a nationwide effect. Beef sales amount to 4.5 percent of the country's inflation index.

Instead, cattle producers stopped selling their stock or switched to other, more profitable crops such as soybeans.