Impact of export control policy measures in an attempt to tame Argentina's inflation

Starting in mid 2004 and as a result of an increasing domestic and foreign demand, pressure was put on prices of a staple food in Argentina: beef. The government reacted by launching an aggressive plan to fight inflation which included prices control programs, slaughter restrictions and finally, when these measures were not enough, export bans. But such policies, in any case, are short-run, circumstantial measures that do not attack the root of the problem. When it is true that hadn’t had the government intervened in the sector both farm and retail prices would have been higher than what they were, the cost of the intervention has been harmful for the economy and it did not solve the real structural problem. Cattlemen blame the government that the constant change in the rules is detrimental to investment and development that go hand by hand with production. The ban on exports has damaged the country’s image as a reliable supplier when international contracts had to be broken. Moreover, the latest shifts in trade flows within the Mercosur members should be read as a sign of warning to the Argentinean authorities when deciding to isolate the country, since markets unattended by Argentina quickly find alternative sources of supply even within Argentina’s neighbors.