“There’s no money”. The slogan of Javier Milei’s government has multiple expressions and one of these is the consumption of meat, a central good in the Argentinians’ basket whose price has shown a significant recomposition in the last four months, forcing consumers to ration purchases. According to a report from the Argentine Chamber of Meat Industry and Commerce (Ciccra) Apparent beef consumption decreased by 8.2% between February 2023 and February 2024and amounted to approximately 349,100 tons of bone-in beef.
To understand the phenomenon there are several variables to consider. The first that emerges is the general context of inflation and fall in purchasing power. In February, consumer prices for beef in Greater Buenos Aires increased by 15%.which is in addition to the increases of 25 and 19.6% that occurred in December and January respectively.
In the formation of prices there is also an interaction of imperfect variables. Butchers are faced with rising electricity costs, expenses and supplies. And in the purchase of meat itself, supply and demand this time play in favor of the increase.
In the first two months of the year, as detailed in the Ciccra report, The beef processing industry produced a total of 504,000 tonnes of bone-in meatwhich represented a decrease of 8,100 tonnes compared to the first two months of last year, or approximately 3.8%.
In turn, the export sector demands a larger share of that production. In January 2024, 49,571 tonnes of beef products were exported13.5% more than shipments recorded in January 2023.
The decline in local consumption fits into this context, which in February stood at 44.6 kilos per capita annualized, the lowest consumption since February 2011. A central figure is that of the Ciccra report, which clearly illustrates the policy adopted by current Government has taken regarding the production of beef, is that the weight of domestic consumption on the total volume produced fell at the beginning of this year to 69.2% and is the lowest since at least 1996. Exports in the first two months exceeded 30% of the total volume produced for the first time at the beginning of the year.
But to give nuance to the analysis, livestock market specialist from the consultancy AZGroup Diego Ponti warns that currently the export business is not particularly attractive and that in the coming months there will be a shortage of livestock meat in the local market. due to a natural issue of the production cycle.
“We are heading towards a year in which, due to the legacy of livestock cycles and their dynamics, there will be lower meat production, because the initial stocks will be lower. This can be explained by the drought of recent years, which has led to more cow slaughter and a smaller supply of calves. Now the fields are recovered, there is fodder supply and the producer keeps the animals, so there will be less agricultural work and less meat supplyeven if the average slaughter weight is destined to increase”, he explains.
He then comments that this lower production is divided between internal consumption and export. “The increase in exports will not be explosive because we already come from a good level and because the dollar is not competitive. Today, local meat production is expensive for export, which awaits devaluation, and at the same time there is little room to increase prices on the domestic market. What will adapt the most will be consumption, which will certainly drop to around 4 or 5 kilos of meat per person”, says Ponti, and clarifies: “Meat prices today are not lower than inflation or the exchange rate, therefore it is more difficult to expect a price increase.”
Source: Clarin
