A small butcher shop in Buenos Aires displays chicken breasts, thighs and even chicken meatballs to customers—an offering that would have been unthinkable years ago in beef-loving Argentina.

Poultry production has jumped in recent years and Argentine chicken now vies with beef in domestic and foreign markets.

“In the last six months, sales have gone up. If they didn’t rise that much it’s because there are a lot of new businesses offering poultry products and competing with us,” said Mariano Miguez, who runs the butcher shop.

From 2002 to 2005, poultry output rose 51% and Argentina became the world’s No.5 exporter and No.6 producer, thanks to the competitive edge provided by the country’s weak peso currency and growth in local consumption.

“The sector is growing a great deal. There is strong world demand and within a short time poultry will become a much cheaper alternative for the average Argentine consumer,” said Patricio Lamarca, the agriculture secretary’s cabinet chief.

Poultry production topped 1 million tonnes in 2005, marking its highest level since statistics began to be kept in 1980.

In the first three months of this year, output jumped 20% from the same period in 2005 to 266,000 tons. At the same time, domestic consumption rose nearly 20% thanks to overall economic growth, low prices for chicken and comparatively high prices for Argentina’s beloved beef.

Argentines eat about 26 kilos (57 pounds) of poultry per person per year, compared with some 64 kilos (141 pounds) of beef. Most of the poultry they consume is chicken.

Bird-flu pros and cons

Argentina’s poultry sector in the late 1990s began a planned expansion to increase sales abroad. Exports jumped from 11,000 tons in 1995 to a record 137,000 tons worth $136 million last year.

In the first quarter of this year, foreign sales jumped 53% to $35 million, representing volume of 35,000 tons.

This reflects the impact of a weak peso, which slumped 67% after a 2002 devaluation. Exports from Argentina and Brazil, the world’s top supplier, got a boost in 2004 when then-No.3 exporter Thailand lost markets due to bird flu.

Bird flu has killed 127 of the 224 people who’ve been infected since the virus reemerged in Asia in 2003, according to the World Health Organization. The highly dangerous H5N1 strain has spread from Asia to Europe, the Middle East and Africa, but has not hit the Americas.

The virus has dampened world demand for poultry, but bird-flu-free exporters like Argentina still have an advantage.

“We are not in the bird flu circuit. And I think this is very important to European consumers and to people in our export markets,” Lamarca said.

A sector-wide investment plan launched in 2002 targets 10% annual growth in production through 2010, with 60% of that growth going toward exports, according to the Center for Poultry Processors.

“These goals have been surpassed every year,” said Roberto Domenech, the center’s president.

The main markets for Argentina’s poultry are Chile—where 25% of products go—followed by China, South Africa and Russia.

“The impact of bird flu came in two stages for Argentina. Up to 2004, when it was limited to Southeast Asia, it represented a great business opportunity. But when the virus was wrongly associated with chicken consumption and it spread to Russia and Europe, overall demand shrank,” Domenech said.

Although Argentina’s exports have been surging over time, sales abroad did flatten out in the first quarter from the fourth quarter of 2005.

“We’ve already passed the low point in demand and for prices, and exports should recover in the second half of this year,” he added. 31 (Reuters)