Development Blog Post 3

Development Blog Post 3

            In a world of increasingly advanced information technology, new applications can yield substantive added-value to products and economies previously subjected to the infamous resource curse. Uruguay’s adoption of high-tech tracking in their beef and cattle industry illustrates the ability of developing nations to use emerging information to their advantage.

            Companies and economies that focus on production of raw material type resources, like agricultural goods or minerals have consistently been subjected to the rise and fall of prices as a result of shifts in resource demand. Because of the relatively low profit margins on such goods, these actors are consistently subjected to periods of loss and periods of extremely high profit, however these periods of loss can be exceedingly disastrous and lead to defaulting on loans and periods of extreme economic stagnation. Uruguay’s economy relies heavily on the import and domestic consumption of beef and other cattle-based products, an economic activity that falls prey to this resource curse. The prices of beef are subject to international markets and should something happen across the world to adjust the prices of beef, such as an emerging cattle market in another country or an increase in agricultural subsidies in one of Uruguay’s primary markets, Uruguay’s economy is likely to see a significant dip. Uruguay has devised a technologically sophisticated solution to this historic problem; Ironically, as a result of an outbreak of a food-borne illness in Uruguayan beef.

            In 2001, an epidemic of foot and mouth disease initiated a massive recall and halt on Uruguayan beef exports. While temporarily a massive blow the Uruguayan economy, this crisis turned out to be the key to alleviating Uruguay’s historic economic fragility. In response to this crisis, Uruguay began work on a collaborative effort between cattle ranchers and distributors in Uruguay to develop a complex system of block-chain based computer tracking for each piece of beef. The program is both legally mandated and fully financially supported by the Uruguayan government, though strong collaboration and coordination within the cattle industry has played an important part in its successful implementation. Through this system, each cut of beef sold domestically and abroad can be traced back both to its farm of origin and the individual cow it was taken from. Should an outbreak be detected, the cattle industry can quickly identify the point of origin and quarantine a much smaller section of the cattle economy, in addition to decreasing the lag time in production following detection of a food-borne illness. Furthermore, this system significantly increases accountability of individual cattle producers, as their culpability can quickly be identified in the midst of an epidemic.

While this clearly assists Uruguay in reducing the frequency of and fallout resulting from food-borne illnesses, a second and potentially more valuable benefit is gained from this technology. By being a world leader in beef traceability, Uruguayan beef can be priced higher due to the perceived safety associated with its consumption as well as the potential branding possibilities in a culinary world of ever-growing farm-to-table emphasis. This added value gives the Uruguayan economy an added cushion in times of reduced beef demand, as a much higher reduction in price point is needed to precipitate economic losses. Uruguay, a consistently progressive and pioneering country, has demonstrated its adaptability and creativity once again through their application of a new model for adding value to a traditionally vulnerable product.