Decline in meat processing industry due to drop in consumer demand and increase in prices

Employees of a meat processing plant work with beef, in Buenos Aires (EFE)

The meat processing industry is beginning to see a slowdown in activity due to a drop in slaughter levels, as a consequence of a decrease in consumer demand, increases in farm prices and a lower supply of animals. for meat production. Thus, the signs of stagnation in the year-on-year comparison and of decline compared to previous months brought concern in the sector, which already sees the growth rate it had been showing as distant.

You may be interested in: Consumption: retail sales fell 4.1% in August and have been in decline for eight months

According to a report from the Argentine Meat Exporters Consortium (ABC), slaughter during August grew 0.4% compared to the same month last year, but fell 4.4% compared to July, an issue that raised alarms in the sector. , since it meant a stop in a process of constant growth that had been maintaining activity in the first seven months of the year. In fact, cumulatively, the increase in slaughter is 11.5% compared to the same period last year.

However, if measured by day, the decline was even worse. In dialogue with Infobae, the vice president of the Federation of Argentine Regional Refrigeration Industries (FIFRA), Daniel Urcía, explained that “the second half of August was very hard, with a drop in daily work in August compared to July of 10%. ”. This means that the slaughter of animals went from 62,500 heads in July to 56,500 in August, which “means that in some slaughterhouses slaughter fell by more than 30% in the month.”

Source: Argentine Meat Exporters Consortium (ABC)

For Urcía, “this happened due to lower consumption (due to increases in the price of meat), due to the increase in the price of meat above 1,000 per kilo and the lower turnover that produced a rearrangement of prices. Now we are seeing with these prices what the pace of activity will be. It must be taken into account that there is less replacement in the pens, but it must also be seen that the rains have started, there is grass in the fields and the livestock began to have color and there will be a shortage of supply. “I see that in 2024 there will be price tension.”

You may be interested in: Buy without VAT: the Government will raffle cars, motorcycles and appliances between buyers and merchants

That is why in the sector “there is concern” and he explained that “the refrigeration industry needs volume of activity to be efficient and lower costs. When activity falls by 30%, as happened, the fixed cost that existed before still exists, but it must be distributed among fewer kilos of reproduction. Immediately, if this drop is going to be permanent, fixed costs must be readjusted and that can lead to fewer days of work, fewer hours of work per worker with a lower salary and not having distribution on all days of the week.

For their part, export sources explained that the drop in slaughter was a consequence of a combination of the fact that “it started to rain and mitigated the drought, added to the corn dollar that increased the price of food, the post-STEP devaluation, the expectation due to the election and inflation, among other points. This led to a sudden increase in the property and no market can support this price, neither the local nor the export market. That’s why the task falls.”

The spike in prices hit demand hard and activity in the meat sector suffers (EFE)

“Of course there is concern in the sector,” said the source, although he considered that “at some point the situation will adjust due to improved prices in international markets or the price of livestock.”

As previously stated, one of the reasons that explains the drop in slaughter is a decrease in consumer demand due to the jump in meat prices. According to the Institute for the Promotion of Argentine Beef (IPCVA), during August the value of the product had an exponential increase of 30.2% compared to July, as a consequence, on the one hand, of the implementation of the corn dollar, which made it more expensive. production costs and the post-STEP devaluation of 22 percent.

You may be interested in: Soybean dollar 4: bean marketing exceeded one million tons six days after the measure came into effect

Thus, after more than half a year of meat prices being up to 40 points below the accumulated annual inflation, with this jump in consumer values, it managed to reach 124.9%, positioning itself at the same levels as inflation. Likewise, the price of fresh chicken showed a variation of 16.1% compared to July, with an accumulated increase of 118.2% in the last 12 months, while pork breast rose 19.6% during August, which It implied a year-on-year jump of 105.4 percent.

2023-09-15 17:16:00
#Concern #grows #refrigeration #industry #due #drop #work #plummets #plants