FOOT-AND-MOUTH DISEASE HITS ARGENTINA AGAIN

UNCLAS BUENOS AIRES 000369

SIPDIS

SIPDIS

FOR WHA/BSC AND EB/ABT
USDA FOR FAS/CMP HOWARD WETZEL, APHIS/DEHAVEN

E.O. 12958: N/A
TAGS: EAGR ETRD ECON AR
SUBJECT: FOOT-AND-MOUTH DISEASE HITS ARGENTINA AGAIN

REF: BUENOS AIRES 00333 AND PREVIOUS

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Summary
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1. Argentina has recently confirmed an outbreak of
foot-and-mouth disease (FMD). Seventy animals on one ranch
in the northeastern province of Corrientes were diagnosed
with the disease. Argentina's National Service for Agrifood
Quality (SENASA) subsequently destroyed the entire herd of
approximately 3,000 animals as a preventive measure. SENASA
appears to have acted quickly and transparently in dealing
with the outbreak. Eight countries to date, including some
of Argentina's biggest beef export markets, have announced
restrictions on Argentine beef. The resultant economic
losses are difficult to calculate, but could be significant.
This outbreak underscores the Southern Cone's vulnerability
to this disease and the imperative for Mercosur countries to
implement an effective, carefully monitored regional FMD
eradication program. A silver lining for the Government of
Argentina (GOA) is that the curtailment of exports might help
reduce inflation in the price of beef sold domestically, a
major GOA concern. End Summary.

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The Outbreak
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2. An outbreak of FMD was detected in the northeastern
province of Corrientes the week of February 6. SENASA
confirmed the diagnosis in approximately 70 animals on one
ranch; all 3,000 cattle on that ranch were subsequently
destroyed and disposed of. The ranch's veterinarian, who
reported the outbreak to Argentine authorities, said that the
infected animals had been domestically bred and properly
vaccinated against the disease. However, SENASA officials
speculated that the outbreak was a product of contraband
cattle that had been smuggled into the country (presumably
across the Parana River separating Argentina from Paraguay).

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Argentina's Rapid Response
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3. SENASA President Jorge Amaya declared the outbreak a
"national emergency" and oversaw the implementation of a raft
of control and surveillance measures. The disease was
confirmed February 7. By then, Amaya had already notified
President Kirchner, sent epidemiologists to the scene, halted
the movement of animals within the affected area, posted
relevant information on SENASA's website (updated daily),and
contacted his counterparts in neighboring countries and other
major trading partners with the news. Amaya also held a
detailed briefing for the diplomatic community in Buenos
Aires February 13, and invited representatives from embassies
to visit the site of the outbreak so that they could form
firsthand impressions of the GOA's response.

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SENASA's Response Bolsters its Credibility
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4. The speed with which SENASA diagnosed and publicized the
outbreak stands in sharp contrast to its reactions to a
similar situation near the border with Paraguay in 2001,
which earned the agency an international reputation for
opacity. At that time, SENASA repeatedly mischaracterized a
major FMD outbreak to USG and other officials, an approach
that eventually led more than sixty countries to prohibit the
importation of Argentine fresh beef. Argentina was just
beginning to overcome that incident when another, smaller
outbreak hit in northern Argentina near the Bolivian border
in 2003. SENASA's response to that outbreak was criticized
as well, as many observers felt that the agency acted more
slowly than it could have in confirming the presence of
disease.

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The Economic Impact
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5. Although Argentina has yet to fully recover from the
economic effects of those earlier bouts with foot-and-mouth
(e.g. large importers like the U.S. and Canada still impose
restrictions on Argentine beef),beef exports have taken off
over the past several years. According to Argentine
statistical agency INDEC, total exports of beef and its
byproducts were valued at USD 735 million in 2003, USD 1.23
billion in 2004, and 1.65 billion in 2005. The outbreak
poses a threat to those gains, although at this early stage
it is difficult to tell to what extent. SENASA believes it
has contained the outbreak, but Brazil, Chile, Colombia,
Israel, Russia, South Africa, Singapore, and Uruguay have
already restricted or banned imports of Argentine beef. The
EU, a major importer of Argentine beef, has yet to announce
any restrictions but is said to be considering the issue.


6. Argentine losses might be mitigated because some of the
restrictions already announced have differing degrees of
comprehensiveness. That is, Russia and Brazil have banned
beef imports only from Corrientes Province. Chile, Colombia,
Singapore, and Uruguay have banned Argentine beef exports
from all but the Patagonia region, while Israel and South
Africa have restricted imports of all Argentine beef. A
spread of the outbreak could result in further restrictions.
Still, the restrictions already announced are significant:
Chile imported almost USD 150 million of Argentine beef in

2005. The figure for Russia was approximately USD 330
million, and for Israel USD 67 million. The remaining
countries that have imposed restrictions to date comprise
less than three percent of Argentina's export market for
beef.

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Comment
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7. It appears that SENASA has made a special effort that
should polish its reputation by acting quickly to contain the
outbreak while providing detailed information to Argentina's
public and trading partners. Such transparency is highly
positive and is likely to be received favorably by some
countries considering restrictions on Argentine beef.
However, this outbreak underscores the Southern Cone's
vulnerability to this disease and the imperative for Mercosur
countries to implement an effective, carefully monitored
regional FMD eradication program. Domestically, this
outbreak is not as disastrous as it would appear for the
Kirchner Administration. The GOA is concerned about rising
inflation (Reftel) that reached 12.3 percent overall in 2005,
with beef prices jumping over 30 percent. To increase
domestic beef supplies and ease price pressures, the GOA has
in the past year eliminated export rebates for beef, raised
export taxes on beef from 5 percent to 15 percent, and
threatened further increases if prices don't stabilize. The
GOA also imposed a beef export registry to limit the export
of lower cost cuts to countries like Russia. The silver
lining for the GOA of this FMD outbreak is that restrictions
on beef exports to some of Argentina's major trading partners
should help that inflation-fighting effort. However, foreign
companies that have invested in Argentina's beef industry in
recent years may be questioning the wisdom of those
investments. The last year's negative developments are more
than even the most conservative business plan would have
anticipated. End Comment.


8. To see more Buenos Aires reporting, visit our classified
website at: http//www.state.sgov/p/wha/buenosaires
GUTIERREZ