During a press conference, the President and the Vice president of INAC, Messrs. Alfredo Fratti and Fernando Pérez Abella respectively, gave details on the main beef indicators, in the framework of the 2009 closure forecast.
Economy of the country in 2009
We said that probably Uruguay was better prepared than in the past to overcome a crisis and it was. Not only was there no recession, but also the GDP will grow by at least 2%. An exception even in South America.
Situation of the meat sector
We said the problems of international markets would find the meat sector in a firm position, owing to a good cycle of accumulation and growth between 2005 and 2008. In Uruguay no industry went into bankruptcy, unlike what happened in Brazil, where important economic groups faced great trouble.
Cattle slaughter
We said that despite the economic crisis and the drought, there would be a good number of cattle heads slaughtered, over 2.2 million, and the year might end with a slaughter of about 2.3 million heads slaughtered in the industrial circuit. Forecasts were confirmed. There was no significant liquidation of stock (130,000 cows more than the previous year were slaughtered, which presumably were not pregnant after the failed summer mating).
Sheep slaughter
We will end this year with a high figure of heads slaughtered, although this is not such good news as for cattle because sheep slaughter has proven not to be sustainable through time (the stock has fallen). Sheep slaughter will be over 2 million heads, and this has supported an important growth of sheep meat exports.
Average values of the beef exports
At the beginning of the year we said that in spite of the economic crisis, Uruguayan beef price would be of about 2,500 USD ton cw. The average on the closure of the year will be QUITE close of that value (2,470 USD ton cw): almost an exact forecast. To take the right reference (2007), in 2007 the average price of beef exports was of 2,140 USD ton cw. Therefore, in 2009 the average price is more than 300 USD ton cw higher than the price of 2007, it going back to the normal trend followed by the Uruguayan beef price, which has risen between 100 and 200 USD ton cw a year in average since the country overcame the FMD crisis in 2002.
The meaning of 2008 for the livestock sector
The year 2008 was absolutely exceptional: Uruguayan beef was paid abroad an average price of 3,250 ton cw. The good thing is that thanks to the intelligent policies that balance the domestic consumption and exports, all companies took advantage of that situation: they sold what they wanted abroad and capitalized themselves. This made the industrial sector stronger, which allowed companies to overcome the economic crisis without facing any trouble.
Exports volume
Most probably beef exports will reach a volume of 385,000 ton cw at the end of the year. This will be 10,000 ton greater than the figure of 2008, which was of 376,000 ton cw. Big countries such as Brazil or Australia will face falls on their figures of total exports because they had difficulties in placing great volumes. Uruguay's commercial capacity to place almost 400,000 ton in more than 100 countries is a very good capacity. Greater volumes will demand more commercial strength, if we do not want figures to drop.
TOTAL value of the exports of the meat sector
Beef exports will reach about 940 million USD, a figure 100 million greater than that of 2007 (the latest normal comparable year). This number is in turn 30 million lower than that of 2006, but it must not be forgotten that during that year the slaughter was not sustainable (almost 2.6 million cattle heads, due to a little drought season) and almost 500,000 ton cw were exported (nowadays it would be very difficult to place that volume). Instead of celebrating VOLUME records (in 2006 - 2.6 million cattle heads slaughtered, 477,000 ton cw exported), we should celebrate VALUE records.
If we consider meat products in whole (beef, sheep meat, offal and byproducts), we will reach a figure of 1,150 million USD. This dollar figure is the greatest of the history, if we exclude the absolutely exceptional year 2008. This will for sure account for 25 % of Uruguay's total exports in all sectors, thus showing the validity and importance of the meat chain for the country.
Destination of Exports
Despite the bad forecasts about the undeniable difficulties that Russia would face this year, it continued to be our main market: at the end of the year it will have imported from Uruguay almost 100,000 ton cw (over 25 % of the total).
The European Union will also account for about 25 % in volume, but it will represent almost 40 % in value.
Uruguay continues to have a "luxury insurance policy" for beef exports placing in the NAFTA, a market to which we are only selling 14 % of our beef exports. This is one of the reasons why the effect of the economic crisis has not been strong in Uruguay: we did not have a very important placing in the NAFTA.
Livestock prices
The price of the fat steer has been relatively stable over values of 2.20 USD/ kg in the second control point. The average accumulated value of exports would be around 2.47 USD/kg, i.e., 12 % higher. This is more like the historical relationship that had been quite missed during the year 2008 (particularly after the economic crisis began).
In order to keep growing, it is a key point that good international prices are transferred to livestock prices: price signals are the factors that generate investment. These signals must not only be transferred to fattened livestock, but also, and specially, to new livestock (calves). We will not be able to maintain this growth cycle if we do not have a strong breeding: this is the responsibility of us all.
In summary: considering that this year the world crisis has had its greatest effects, the performance of the sector has been a very good one. Just as we forecasted at the end of last year, the crisis found a stronger sector since good results had been being harvested in the past, and other problems (such as farmers' indebtedness) had already been solved.
Uruguay has a great export force and in 2010, when the world begins to recover, it will find the national livestock sector working at full capacity. To take advantage of these opportunities, it is essential that the coordination between the links of the sector improves, so that price signals are seen and there can be a future of shareable prosperity.
All of this has not been casual: it has been the result of the joint work of private companies and the public sector. It has been the result of defending the country's serious image, of working to open and consolidate markets, of innovating in promotion strategies, of defending the quality of products from edge to edge.
Uruguay is on its way to become a world leader as to quality in the meat sector. In this decade we have built the foundations to reach this dream: now we have to make it come true
