Another of the factors that influence this “perfect storm” is that the international market also collapsed due to the cooling of the global economy, due to the war between Russia and Ukraine and due to a very complex scenario of covid 19 in China, a market that represents 77% of our meat exports.
Winners and losers
Faced with this reality, the consumer chooses beef and this is confirmed by the data linked to the increase in consumption in the last part of the year. However, the producer suffers enormous damage that in the future will have a boomerang effect and harm consumers.
The end-of-year sales in supermarkets where top-quality roasts were offered for only $699 per kilo are almost ridiculous figures for a product that takes 3 years to reach a shelf. Even more so if it is compared with other foods that require less productive effort.
According to Tonelli, “the value of cattle in December fell by 40% in constant currency compared to the values of the first four-month period of the year, that is to say that its value not only was not maintained but also fell while inflation in that period rose by 45% . When you adjust the value of April and bring it to today, it is 40% cheaper”.
For these reasons, in the next two years the supply of property would fall. This “summer” of cheap meat will soon end, but when prices recover, it will do so abruptly. Tonelli warned that “we will feel this impact from March, which is when we will begin to see less amount of finance.” In the meantime that the forage supply recovers, the producer will find his field with less livestock load and more forage with which he will be able to recover what he lost in terms of stocks. Greater retention and longer fattening cycles will lead to a temporary supply slump that will be felt especially during the first half of the year.
The key question is what the government will do if the price of meat increases in an election year. Judging by recent experience, it could be thought that the Ministry of Economy and its areas linked to the sector will seek to activate some cross-compensation scheme so that this does not happen. Although there are mechanisms that -paying high production costs- could mitigate the damage, everything will depend on the real supply of animals, because it will be impossible to control the market if there is a lack of livestock. The margin of action is very limited and the jump in prices seems to be inevitable in the short term.
Source: Ambito
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