Argentina Suffers Beef Shortage Due To Price Controls

BUENOS AIRES - Argentina - a country famous for its abundant cattle - is suffering a shortage of beef, as retailers can't find suppliers willing to sell their products at the prices imposed by the government in its effort to control inflation.
calendar icon 18 April 2007
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Local media attributed these shortages, also seen for some dairy products, partly to heavy demand and recent flooding in northern Argentina. But a trip to supermarkets in Buenos Aires tells another story.

A branch of Jumbo, a super market chain owned by Chile's CencosuD in Buenos Aires' Palermo neighborhood, put out placards this week apologizing to its clients for the shortage of some beef cuts, blaming a lack of supply at the prices suggested by government price controllers. Meanwhile, the meat counter at a locally owned Coto supermarket chain store in the Barrio Norte district had a similar tale and sign blaming price accords.

Coto was also missing some dairy products, a clerk said.

"There's plenty of expensive milk, but you can't find the cheap price-accord milk anywhere," said Patricia Umanski, an Argentine shopper, as she returned from a Coto in the Bella Vista suburb.

The government has sought to impose maximum prices on twelve of the most popular beef cuts at Liniers, Buenos Aires' principal wholesale meat market.

As a result, volume passing through Liniers has plunged to less than half of normal levels as ranchers instead send cattle to smaller regional markets not under the federal government's price surveillance.

The attempt to control prices is spurring the development of two parallel markets - one with high prices and ample stocks, the other with low prices and empty shelves.

Source: MarketWatch
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