According to the latest data published by the INDECmeat continued to increase below the level of inflation in June. Thus, the gap widened between the average price of beef cuts and the CPI in the last twelve months. A fact that, among other factors, drives domestic consumption.
This was reflected in the latest report of the Chamber of Industry and Commerce of Meats (CICCRA), which highlighted the 10.3% year-on-year increase in production in the first semester and a 12.3% rise in exports.
“Which implies that domestic consumption would have absorbed a volume 9.5% greater than that of January-June last year”, the study explained, based on which it was estimated that “in June 2023 the moving average of the last twelve months of the apparent consumption of beef stood at 50.8 kg/inhabitant/year, exceeding the level registered in June 2022 by 4.7% (+2.3 kg/inhab/year)”.
Thus, the data was above the average for 2020 (50.4 kg per inhabitant per year), 2021 (48.6 kg/h) and 2022 (48.5 kg/h). “Despite the increase in beef production associated with the increased slaughter forced by the drought last year, current per capita consumption of beef was still 4.0% lower than that registered in the first half of 2019”, they explained from CICCRA.
It also continues to be far from all-time highs. Although, as they point out, there are different factors that affect this aspect. “Consumption is recoveringbut at historical levels they are not going to recover no matter how much prices fall or wages rise, because they are going to changing consumption habits”, he explained to Ambit David Miazzo, chief economist at Fundación FADA, who added: “For example, chicken, beyond the fact that it is eaten because it is cheaper, is also eaten for diet or health reasons, to reduce the consumption of red meat. There is a slightly deeper question there. In the same way, there is a greater consumption of pork, because we got used to incorporating it, because it is more present in the offer: pork production grew and it is more available, one sees it on the shelves and begins to incorporate it”.
“There are some issues of changes in consumption habits, which go beyond the price or the purchasing power of wages. But, in a context where it becomes cheaper, consumption is encouraged. If it’s a little closer to a pound of chicken or pork, then people always end up preferring beef. Then it consumes it a little more”, remarked Miazzo.
meat prices
This recovery in consumption is explained, among other factors, by a rise in prices below the general level of inflation. According to data published by the Institute for the Promotion of Argentine Beef (Ipcva)last month the average price increased by 1.5%, while the year-on-year rise was 71.3%: considerably by below the 115.6% that presented the interannual variation of the CPI.
“While, Regarding the value of the whole chicken, the beef cuts had a price decrease of 11.0%. These figures are consistent with the recovery shown by the apparent consumption of beef in the last twelve months”, they explained from CICCRA.
When analyzing what this evolution in meat prices is due to, the Mediterranean Foundation pointed out: “In the last two months, the internal price of meat has grown by less than 2% per month. Behind this phenomenon there is strong growth in meat production (which accumulates 10% in the first semester), which has a lot to do with the drought, the lack of pastures, financial problems and the need for many producers to get rid of animals (significant increase in the extraction rate of females) and shorten fattening periods through intensive systems. There is also a firm external demand in volumes, but with a much lower ability to pay than last year”.
Although, they warned, this trend could be cut in the near future: “The confinement levels and the replacement rates in feedlots guarantee a significant influx of animals for the coming months. Therefore, an eventual recomposition of prices (of a certain magnitude) could only arrive towards the end of spring or during the summer, when the corrals begin to empty and internal demand strengthens due to seasonal factors”.
Source: Ambito
