The Argentine meat supply chain continues to experience growing difficulties in passing on cost increases to Argentine consumers in a context in which even the price of livestock remains “stretched”.
The retail prices of Argentine beef lag behind the general average of food inflation by almost forty points.
In the last year, according to the latest data published this Thursday by INDEC, the “basket of beef” recorded year-on-year inflation of 55.2% against 94.5% for the average of food and soft drinks in the shops and supermarkets of the city of Buenos Aires (CABA-GBA).
The main cause of this phenomenon is the impoverishment of the purchasing power of Argentines, who, in the face of accelerating inflation, buy fewer cuts of beef to favor the acquisition of cheaper alternatives, such as pork or chicken.
While Argentina’s social crisis is nothing new, it is the fact that international demand, which was very strong until the first part of this year, began to slow down last August.
This reality, combined with a progressive loss of competitiveness in the meat export sector – favored by export quotas, export rights and “exchange retention” – prevents the excess supply present in the domestic market from being diverted abroad (as happens in every normal country economy).
But in Argentina, an exemplary model of anomalous country, making export activity impracticable and depressing internal consumption through an inflationary explosion, the meat industry has no other alternative than to fill the internal market with beef to favor the deflation of prices.
The alternative, faced with such a scenario, is to shut down slaughterhouses or suspend refrigeration activities until the supply of cattle is balanced with the actual demand. Meanwhile, in the productive field, farmers implement defensive actions aimed at preserving working capital, such as holding bellies and abandoning intensified fattening systems.
