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The importance of two contrasting Argentinian livestock markets

There are two price forming markets for beef cattle in Argentina – Linears, Buenos Aires’ traditional market, and Rosgan, a much more modern, national online auction. Aly Balsom reports.

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Around 10,000-head of cattle are auctioned daily at Linears
Around 10,000-head of cattle are auctioned daily at Linears

The horse-mounted gauchos and traditional livestock auction atmosphere of Linears market in Buenos Aires are in stark contrast to Rosgan auction where bidders sit at their laptops and place bids based on video recordings of cattle.

 

The two sale platforms may seem poles apart, but both form the price setting beef markets for the whole of Argentina - a country of 2.78 million km2.

Linears sells around 10,000 cattle a day and sets the price for finished cattle, whilst Rosgan has sold 2.5 million cattle over the last 10 years and sets the price for fattening animals.

 

Both, not only influence cattle prices, but also land values.

 

And the two markets have seen some changes over the past decade, mainly driven by the political situation in the country.

Linears market - the price setter for finished cattle

What is it?

 

Linears has been in existence at the same site in Buenos Aires since 1901. All cattle in Argentina are sold live weight with Linears purely selling finished beef cattle that go direct to slaughter. Around 10,000 head of cattle are auctioned daily for domestic consumption or non-EU exports.

 

How does it work?

 

The site operates like a conventional livestock auction. However, 55 different auction houses work on site with vendors choosing which company to sell stock through. Bidders are largely abattoirs or supermarkets. The auction is transmitted on TV and radio.

 

How are cattle managed?

 

On arrival, cattle are split into different liveweight categories for sale: 300-350kg - male or female ‘calves’; 350-430kg - small steers or small heifers; and 430kg+ steers and bulls. These are then classified as “good” or “bad.” All information - including origin, vaccinations and feeding – are recorded on the website, which is freely accessible. Groups of cattle are weighed on arrival and after sale.

Linears market stats

  • 32ha (79 acres) site
  • 10,000 cattle sold a day
  • 2,200 pens
  • 25 cattle entry and exit points
  • 30 weigh scales
  • 200 cattle trucks arrive daily
  • 15 full-time vets in market

Rosgan auction - the price setter for fattening cattle

What is it?

 

Rosgan auction sells 25,000 head of cattle a month via internet and television broadcasts. Auctions are broadcast on The Rural Channel, which reports on farming matters 24/7.

There is one main sale a month, with smaller specialist sales. The main auction is broadcast from the Rosario Board of Trade, which owns majority shares in the company. Eleven auctioneers from around the country own 48 per cent of the company. Most cattle sold are fattening or breeding animals. Finished cattle make up just 2 per cent of sales.

 

How does it work?

 

Farmers or traders will choose to sell their cattle via one of the 11 auctioneers. Cattle are be filmed on farm, prior to the auction.

These videos - together with information about the stock - are uploaded onto the website four days before the auction. This includes class of animals, age location, diet and whether they are suited for internal or export markets. Information about the weight of the group and minimum and maximum weights within it are provided, together with payment terms. A printed catalogue is distributed 48 hours before the sale.

On the day of the main auction, auctioneers will place phone bids on behalf of farmers, feed lots or abattoirs. Pre-registered buyers can place their own bids via the phone or online.

 

How much does it cost?

 

The seller only pays when his livestock are sold. In general, the seller will not pay more than 5 per cent in commission and the buyer, no more than 4 per cent. The buyer pays transportation costs.

 

How is it a market setter?

 

Rosgan, together with the University of Rosario, has established the Rosgan Wintering Index for fattening cattle. This gives buyers and sellers a reference price for fattening cattle which are defined as male and female animals up to three years old that require fattening.

Rosgan and The Rosario Board of Trade have also produced a futures index for cattle prices. This allows buyers to ‘hedge’ and buy animals at a set price in advance.

Director of Rosgan, Raul Mario Milano, says this helps create “medium-term stability for the export markets” so traders can be confident they can fulfil contract requirements.

 

What are the benefits?

 

Rosgan provides farmers throughout Argentina with access to a national fattening market, rather than being restricted to regional markets, says Mr Milano. It also reduces health risks and transportation costs for the seller when selling at a physical auction.

Beef prices in Argentina

Rosgan Wintering Index (fattening cattle, male and female):

• $37.08 Argentinian peso/kg (£1.29/kg) (April 2018)

Linears market, average 2018 price for finished heifers, 350-390kg live weight:

• $2US/kg (£1.47/kg)

Cattle movements in Argentina

  • All cattle movements are recorded on a central database called SIGSA. Farmers have to have a permit from SENASA (the government’s animal health authority) to move cattle. The permit specifies all animals have received compulsory vaccination for foot-and-mouth disease (depending on area of country) and brucellosis
  • All cattle are also tested for brucellosis and TB prior to sale (TB is not a significant problem in Argentina, but is monitored)
  • All cattle must have individual ear tags and be branded with the farm’s specific brand. Animals destined for the EU must be movement recorded as individuals
  • For internal consumption, movement are dealt with in batches of animals. The Argentine consumer has no desire for individual animal traceability. Ear tags are predominantly used for disease control traceability

Politics shape market set-up

 

The turbulent political environment in Argentina has largely been responsible for changing market dynamics at Linears market, together with the formation of Rosgan.

The socialist government of 2003-2015 placed huge taxes on beef exports in an attempt to drive domestic prices down. They also intervened in the beef markets at Linears, pushing prices down to a low of US$0.68/kg (49p/kg) for 350-390kg heifers in 2016.

Beef became unprofitable for many farmers, and many converted to soybean production. Crop farming replaced 15million ha (37m acres) previously under livestock on The Pampas.

Subsequently, some cattle production has been pushed away from the main markets for beef, which are in the central and more highly populated areas of the country, close to Buenos Aires.

Rosgan director Mr Milano says: “Livestock farming almost disappeared around Rosario.

"That was where the idea began. Instead of bringing livestock here to be sold, why not just bring information or videos of the animals instead.”

Linears has also seen a shift. Despite a new centre-right government being elected in 2016, the hangover from the past remains.

During socialist rule, people sold outside of the market, direct to abattoirs to avoid intervention. Permits and taxes were placed on people wanting to operate in the market, also encouraging cash exchanges outside of the market.

The market is now looking to relocate to a new location on the edge of the Buenos Aires.

This is largely in response to changing regulations which disallow the transport of live animals in the city. It will also enable the market to modernise.

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