Does Export Market Concentration Matter

DOES EXPORT MARKET CONCENTRATION MATTER
A CASE STUDY OF URUGUAYAN BEEF EXPORTS

LUCIA VILLAR

MASTER OF SCIENCE (M.Sc.) IN INTERNATIONAL AGRIBUSINESS
FACULTY OF AGRICULTURAL SCIENCESABSTRACT
As one of the 10 main world beef exporters, Uruguay with a relatively big beef industry,
exports 80% of its total beef production. Even though beef production has always been
a relevant sectorin the Uruguayan economy, during the last 8 years strong growth in
exports caused Uruguay to become competitive in the world beef market. Strong
investment by the country’s beef industrysignificantly increased the harvest and
processing capacity. Cattle harvesting records were set in 2005 and 2006. The export
destinations of Uruguayan beef have been changing drastically during the last 8years.
The outbreak of FMD (Foot and Mouth Disease) in 2001 with the consequent closing
of traditional markets, has determined new trade patterns and a different export
destination mix. During2005, 72% of the beef exports had the United States as
destination, increasing the fear of dependence in one country. If a Geographic
Diversification Index is calculated among the main world beefexporters, the results
show that in 2005 the structure of the Uruguayan beef exports is the most
concentrated among them.
The described scenario constitutes a start at evaluating the actualUruguayan export
mix. This study aims to discuss whether the actual export market concentration makes
Uruguay vulnerable and constitutes an economic problem and whether the
government can, andshould, attempt to diversify trade for economic reasons. The
main research questions that emerge from the above situation and that guide the study
are the following: 1. Should Uruguay follow itsneighbours and also try to diversify? Or,
should Uruguay continue to nurture the US and its growing demand? 2. Is it risky to
have most of the eggs in one basket? Does it mean the export revenue is...