History

Since the 1930´s there have been several experiences involving the formation of consortiums of beef producers that managed export quotas and that constituted the mechanism to determine reference prices.

Afterwards, the Argentine Corporation of Beef Producers (CAP, in Spanish) was an agency made up by the compulsory contribution of cattle breeders themselves to ensure product demand and fairer prices, and which was in charge of exports and the management of meat packing plants.

Once its lifecycle ended, in the year 1993, several producers' organizations, breeders' associations and cattle breeding cooperatives brought their concern to the Government regarding the need to recreate the quota system for the producers allied with meatpackers, as the best tool to give transparency to the beef market and give cattle breeders access to all the productive and commercial chain.

Thus, in that year the first 50 tons were awarded as a reference project, and in July of the following year 1,200 tons were assigned in the first public award of the Hilton Quota for joint projects involving groups of producers and exporting meatpackers.

On the basis of the satisfactory outcome, in the following years it was determined that 6% of the export quotas be allocated among this kind of consortiums and, finally, during 2004 the Government set the quota to be 10%, which has been maintained until today, allowing an idea conceived more than 80 years ago to be still valid.

Supporting the consolidation of the pioneering groups and the access of new members to the system, after some years of informal existence, the Association of Argentine Exporting Producers (APEA, in Spanish) was created in 2002, obtaining its legal personality in October, 2003.

Its founders were a dozen groups of producers and cattle breeders' associations that had already been operating individually.

Its foundational goal is

"to carry out, without a profit, all kinds of promotional, technical, scientific, research and management activities whose objective is, or collaborates with, the business activity of the groups of exporting beef producers."

Other goals comprise

"to promote the participation of producers in association efforts"

"to spread the advantages of the direct presence of producers in leveraging beef export quotas awarded to Argentina"

"to integrate and collaborate with the links that make up the productive, industrial and commercial chain of the beef industry."

The groups of producers and the breeders' associations who are members of APEA show great diversity in terms of organizational structure and integration.

• Non-profit civil associations or breeders' associations
• Cattle breeding cooperatives
• Groups of producers and partner managing companies

It is important to highlight that, throughout more than 20 years of existence of the group of producers' current participation model, the development of its administrative and business structures —which are true companies— has been attained without applying for or obtaining any subsidy, exemption or privilege whatsoever from the national authorities.

Another common aspect of the groups of producers, regardless of their functional structure, is their status as SMEs established with 100% domestic capital.

Regarding the number of members, there is no common pattern and small groups with no more than ten producers coexist with bigger organizations that have more than one hundred members.

That is also the case with the size of the members in each group —the system is made up of both small producers with a few hundred heads and major producers who own several areas of land and a great amount of livestock.

Within the universe of producers, regardless of their scale, those who look forward to this kind of alternatives are basically the ones who are leaders in the adoption of new technologies or at least seem more eager to reformulate their production and marketing schemes, followed by others that join the project by imitation.

In all cases, they are united by the drive to:

• Form partnerships in their search for a greater scale that allows them to position themselves and negotiate better with the other links in the chain
• Cut costs related to structure and commercial management
• Add value to their production

The groups of producers and breeders' associations define a productive and business strategy, determine production protocols and the appropriate quality and health systems considering their market targets and analyze the common advantages they share with a view to raising the value of their own brand. Finally, they develop promotion actions to make the product known among consumers.

• Scale: This is the central aspect of the rationale for the groups of producers since for an individual producer it is virtually impossible to have enough livestock to be able to meet delivery commitments —in quantity and quality— consistently.
• Quality: This is a relative concept that varies according to the target market. For the local consumer, quality is associated with organoleptic features such as color, taste, tenderness or juiciness. In other more developed markets, the term involves other attributes: harmlessness, guarantee of origin, nutritional characteristics or process certification.

• Standardization: This is included in the concept of quality and requires adapting the production to a common protocol designed for that purpose.
• Information: A key element for the functioning and development of a group of producers in that it allows processes and products to be corrected and adapted according to the needs of the demand.

• Alliance: This involves the need to perceive the group as an alliance of different levels: producers, meatpackers, importers, supply chain.
• Differentiation: It is one of the essential tools for the groups, who are limited to compete on volume; it implies an effort to develop brands and logotypes and develop race or quality certifications and guarantees of origin that are attractive for consumers.
• Promotion: Another tool exploited by consortiums when trying to contact the end consumer directly. It requires imagination and knowledge of the target market considering its high cost and the limited resources available.